July 17, 2009

In the battle for company resources during the downturn marketing must do more to promote its contribution to the bottom line in the annual company report. This is according to a new IPA guide published (12th August 2009), produced as a result of research carried out on the reports of those companies around the world with the highest consumer marketing spend and whose business models are largely based around the successful development and maintenance of brands. With the next wave of reporting due to start in September the IPA is urging marketing directors to get more involved.

Best practice in narrative reporting: an international perspective analyses 50 reports from the 2008- 2009 financial year, including the top 10 consumer marketing spenders from the USA, Europe and Asia, as well as a further 20 UK reports, representing top media spenders in the UK. Even though most of the companies state the importance of their brand they fail to provide enough information or analysis on why their brands are successful, highlighting a relatively untapped resource for marketers to show their credentials

Just two reports out of 50 are the exception to this: Reckitt Benckiser in the UK and Procter & Gamble in the US.

Reckitt Benckiser gave a great deal of coverage to its brand outlook and the strategy it has adopted to exploit its numerous brands, all of which brilliantly linked into the company's overall strategy. It also distinguished itself by its use of KPIs to explore its branding strategy. It had KPIs, over two years, on its media investment (media investment as per-cent of net revenues), on its brand positions (percent of net revenues in No.1 or No.2 brand positions), and the revenue from its top branded products. These KPIs offered metrics that provided strong factual support to the rest of the brand reporting narrative.

Procter & Gamble's marketing strategy is incorporated into the chairman's message and throughout the report into the overall strategy. They also explain on a brand by brand basis how their focus on innovation, and understanding of consumer needs delivers value; for example, enabling them to create a flexible product and brand in Bounty, which offers sub-brands for different needs (cost, absorbency), each of which can then be successfully marketed to different groups.

By drawing on current best practice, this report provides insights, hints and tips for marketers generally, about how to provide more effective communication to shareholders about the role and impact of marketing.

Says Hamish Pringle, Director General, IPA, “We hope that this global perspective will provide new insights, hints and tips for all preparers of annual reports, who seek to offer better quality in their communication with stakeholders and convey the full intangible value of their brands. We hope it will inspire more CMOs and marketing directors to engage with financial reporting practices and to ensure that their voice is heard in the board room.”

Says Janet Hull, IPA, Consultant Head of Marketing and Reputation Management: “The IPA continues to engage with the corporate world, analysts and institutional investors, and make the case for marketing in value creation. The more marketers do this themselves, by taking the opportunity presented by the annual report and related online literature, to highlight, and explain, how sound investment in marketing activities and brand development leads to profitable organic growth, the better it will be for all of us.”

Says Seamus Gillen Narrative disclosure specialist for the Institute of Chartered Secretaries and Administrators: “ There's a correlation between how a company talks about its business and how it runs its business. In other words, it is not possible to generate the necessary levels of support from members of the investing community, and other stakeholders, unless a company has a clear disclosure policy, the aim of which is to persuade the target audiences that the company is well run and will achieve its objectives. The stronger the role played by brands in generating a company's revenues the more important it is for there to be appropriate disclosure on the role of brands in developing and delivering the value proposition.”

For more information at http://www.ipa.co.uk>


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