In an era of unprecedented mergers and acquisitions, business start-ups, new product launches, technological innovations and information clutter, branding officially has been promoted from "king" to "executive king." Once a buzzword limited to marketing circles, the term now is used to signify every aspect of a corporation's identity, reputation and basic genetic makeup. PR NEWS spoke with Jim Gregory, CEO of the consulting firm Corporate Branding, LLC, about PR's role in the branding equation, and how PR can be measured as a force that influences brand equity.
PRN: We always hear the word "branding" mentioned in the context of the marketing equation. What is the relationship between PR and branding?
JG:
Every company has a brand whether they like it or not. Every company spends money on their brand whether they want to or not. They do it in stationery, letterhead, business cards, advertising, PR and a million other ways. Every press release, for example, is an opportunity to build the brand. We try to make [our clients] realize this is an ongoing investment.and that the benefit and ROI can be tremendous. This is exactly what a CEO wants to do. The problem is that in the past, communications departments have really struggled trying to explain the value [of PR] in terms the CEO can understand. The CEO gets frustrated and says, "That's not really doing anything so I'm not going to spend money on it." And yet, [investing in communications] is one of the most cost-effective and valuable things that a CEO can do. We're trying to change the dialogue.
PRN: If there's a communication barrier between PR execs and other members of senior management, what's the solution?
JG:
We try to talk to senior level executives about [the value of communications] in a way that they understand. The best way to do that is by showing the return on investment that communication can bring. One mistake that communicators make is saying, "Gee, [PR is important] so more people will know us." Well, is that really important? All CFOs respect ROI. That's their only language. Communications can impact a company in two ways: stock performance or revenue.
PRN: How do you measure this impact?
JG:
We've focused on 760 [Fortune 2000] companies in 33 industries and studied their reputations over time [10 years]. We do this by conducting phone surveys on an ongoing basis among business decision-makers in major corporations [VPs and up]. We log their responses into a database and track the relationship between the reputation of the corporate brand and financial performance.
We also do something called a "stock timeline." Being able to analyze the impact of an article on stock price is something we've been able to do. It's not so much looking at a single article, but how does it impact [the bottom line] over time? We can look at a specific company, for example and notice that when they put out a press release on their technology group it has a more positive impact than a press release about some other group in the company. It makes them think differently about the way they're treating the press.
PRN: Describe a situation in which you used PR to help a corporation shore up its brand reputation.
JG:
One company we worked with is Fortune Brands (formerly American Brands). They had a real problem because they were associated with American Tobacco [a brand they used to own]. Even after they had sold off that brand, they were still associated with the tobacco industry. For example, they were listed in Fortune magazine's "most admired" issue as a tobacco company. in fact, as one of the best tobacco companies around. So we said it was time to change the name and showed them how important it was to reposition their corporate brand, which they did very successfully.
PRN: What were the indicators that helped American Brands reach the decision to change its name?
JG:
We communicated with the media, with financial target audiences, with their employees and their senior level executives, so we had four to five audiences we felt were critical to their success. Each target audience had a different perception of the company. What we found interesting in the financial community was that Fortune magazine was mostly followed by the tobacco analysts. So here they are marketing products like Titleist golf balls and golf clubs, Footjoy, Masterlock, Swingline, Jim Beam.they had many, many wonderful consumer products, but they were being tracked primarily by tobacco analysts. Our goal was to change that. We wanted to bring other analysts into the mix.
PRN: Were you successful? Is their brand now viewed more consistently by the audiences you mentioned?
JG:
The valuation of the company is more aligned with where they need to be as a consumer products company. In our analysis we look to see if there's a consistency in relationships. We measure familiarity and favorability. And favorability is broken down into perceptions of the management, overall perceptions of the company's reputation, and perceptions of the company financially. There's a ratio between those relationships that you can track over time, so you can see whether a company is communicating more clearly over time as those factors move closer together. We call that communications clarity - or communications disparity if the ratios begin to spread out over time.
PRN: What is the biggest mistake companies make in setting measurement goals and objectives?
JG:
They see it as a short-term process.as a six-month program and not as a fundamental way of life. They'll do something for six months and say, either we've accomplished what we've set out to do, or it's not working. And they'll give up just about the time when it can start to show returns. It takes about three years to begin to fully impact a brand, and as many as five years before you fully maximize the return on investment. The companies that do it the best are the companies that really stick with a core brand idea over time. Communications works over time, not overnight.
Jim Gregory is the co-author of the book, Leveraging the Corporate Brand He will be a featured speaker at the PR NEWS Best Practices in Measurement Seminar on November 16. (203-327-6333, www.corporatebranding.com.)