Today’s investors are discerning customers. They have vast information at their fingertips (both accurate and inaccurate), extensive choices and access to all the advice they need. So, what steers them to invest in one company over another?
Financial return is clearly an important factor, but increasingly investors are wanting more; they want to invest in a company they feel good about, one with a story they relate to. This puts a spotlight on the way a company behaves, what it values and what it is aiming to achieve. Investors want clear and compelling reasons why they would do business with a company. They want to know they are good corporate citizens. This makes brand identity more important than ever before.
Investor Brand is market perception of how the company creates long term value. Building the brand builds a reputation that develops trust with stakeholders. A strong brand is a promise of value that helps investors see a meaningful, long term investment view of the company, and gives them more confidence through the short-term ups and downs. And it adds up – companies that deliver on their brand promise, secure investor support and create better returns.
There is extensive evidence to support the link between strong brands and stock market performance. For example, recent research by global business valuation and strategy consultancy Brand Finance, found that investing in the most highly branded companies would lead to a return almost double that of the average for the S&P 500 as a whole. That’s a big impact, and one not only confined to the Apple™ companies of the world. Conversely, not managing brand development effectively leaves companies vulnerable to reputation damage. It’s not surprising that “Brand & Reputation” rated as the number one concern in the AON 2017 Global Risk Management Survey.
All companies need an authentic, consistent and engaging story to underpin their brand. But this should not be seen as a purely marketing activity. The brand promise must be embedded across the whole organisation. Company structure, corporate strategy, executive management team and their track record of delivering on promises are major factors in building a reliable brand, as is clarity, transparency and consistency of message. Financial discipline, competent management (including management knowledge of the industry) and frequency of interaction with the market all play their part. The Board and good corporate governance, including environmental, social and governance record also play a role. How these factors are presented and the way they are communicated within a cohesive and compelling company story determines the ‘brand’ presented to the investment market.
The more that analysts and investors can understand a company as a brand concept, the more it will help them comprehend the longer term opportunities available to the company
– John Palizza, Branding and Investor Relations
IROs are constantly contemplating the key question: how can I help investors form a meaningful, long-term investment view of my company? At Designate we believe the answer lies in developing and effectively communicating a well-defined overarching story, or Investor Brand.
A clear place to start is by applying a brand development process to the investor entity.
Incorporating audience and comparator analysis, and developing a consistent company story is the foundation.
What does the company stand for? What is its core value proposition?
In short, what is its brand? Everyone in the organisation must be able to answer these questions and embody the brand promise in their daily work.
Create the right communication environment by sharing the vision and strategy and showing how you’re delivering on your goals. This goes a long way to building investor confidence. Conversely, not communicating a strategy (even if you have one) signals to the market you might not have a clear direction or plan for the future. All content in communications must be clear and coherent to remind the audience about the company’s long-term value proposition.
Brand architecture portrays a visual representation of company strength and cohesion – showing how all the divisions / brands / operating units work together within the listed entity.
But brand architecture is a significant issue for many ASX200 companies. Complexity is introduced in many ways such as when consumer brands have conflicting messages to their investor brand, and hybrid brand architecture systems – typically evolved from acquisitions – which risks making it harder for the market to understand the strength of the overall business. Managing confusion or conflicting messages is an important element of effectively communicating the brand to investors.
ESG performance is becoming an increasingly important factor in investor decisions, and performance in these areas has become an essential component of company value and investor branding. Share your strategies and achievements in this area with the market.
A distilled picture of the organisation can act as shorthand for a complex array of impressions. It is essential that this picture is connected to the business strategy and integrated in all reporting communications. The message must be consistent and in one voice, to strengthen trust and reaffirm the company brand. It should also be consistent and co-ordinated across a range of communication channels.
Building investor brand requires a perspective that goes far beyond compliance. It involves consistent messaging rather than one-off directives. It depends on collaboration across the organisation and a centralised hub to integrate and align all the information into one powerful story.
Our aim at Designate, as a corporate communications agency, is to help listed entities develop, align and centralise all corporate messaging content, both written and visual; including text, images, video and infographics. We help our clients take charge of investor communications to tell their story, manage the conversation with stakeholders and build trust with authenticity and transparency.