Tuesday, February 26, 2008

Corporate Advertising

This blog posting deals with the issue of corporate advertising. Because corporate advertising is an easy and fast method of communicating a company’s identity, many companies use it. In order to communicate successfully, companies should consider that any corporate advertising campaign should be strategic (should look toward the future of a company) and consistent (advertising should fit with company vision).

What is Corporate Advertising?
According to our textbook’s author Paul A. Argenti, corporate advertising can be defined as “paid use of media that seeks to benefit the image of the corporation as a whole rather than its products or services alone,” (2007), p. 87. It is important that companies choose corporate advertising campaigns that are consistent with product advertising campaigns because all forms of a company’s advertising contribute to its image.
There are three different categories of corporate advertising: image advertising, financial advertising, and issue advocacy.
Image advertising serves the purpose to reinforce a company’s identity or enhance its reputation. Often image advertising is used by companies that have experienced structural changes because these companies need to explain their new vision and strategy.
Financial advertising is used to attract investments and to enhance a company’s image in the financial community. Companies using a financial advertising hope to raise their stock prices. And indeed, Professors at Northwestern University’s Kellogg School of Business conducted an econometric analysis and determined that corporate advertising has a statistically significant positive effect on stock prices.
The goal of issue advocacy advertising is to influence opinions. It used when a company’s environment challenges the status quo and, by doing this, threatens the company’s business. Since issue advertising usually deals with controversial subjects and almost always offends particular groups, companies should be very cautious when they decide to use this kind of communication.

The History of Corporate Advertising in America
At the beginning of the 20th century, corporate advertising campaigns started to become popular. AT&T published an issue-oriented campaign that had the objective to defend its monopoly status and create public faith in the company’s good intentions. This was one of the earliest corporate advertising campaigns in the USA. Because corporate advertising seemed to be successful, during the 1910’s, many companies used this form of identity communication. After World War II corporate advertising lost its significance until its revival in the 1970’s, when oil companies needed to influence the public opinion to fight accusation of exorbitant profits during the oil crisis. Today, corporate advertising is intensively used by companies.

Who Uses Corporate Advertising and Why?
Corporate Advertising is often used by large, diversified companies that need to build a coherent reputation out of a variety of activities and by companies within “controversial” industries, such as tobacco, oil, and pharmaceuticals.
There are several reasons why companies invest in corporate advertising campaigns. The most important ones refer to the points that corporate advertising creates a stronger reputation (see the posting “Identity, Image, and Reputation”), helps to recruit and retain employees (see the posting “Internal Communications”), and (indirectly) increases sales. Although the relationship between corporate advertising and increased sales might not be as clear as the relationship between product advertising and increased sales, many companies regard corporate advertising as a strategic investment that indirectly raises sales.

Class Discussion (02/07/08)
In class, we discussed the difference between corporate and product advertising. While product advertising serves the sole purpose of selling a product, corporate advertising is a much broader concept. Corporate advertising refers to a company’s image, identity, and reputation.

Personal Experiences/Examples
An example for good corporate advertising is the oil company BP. I like the television ads of BP, which I saw in Germany as well as in the USA. The ads deal with the issue of environmental responsibility in the energy industry. Originally, BP stood for British petrol, but today, the company’s advertising campaign translates BP as “Beyond Petroleum”. These words show that BP cares about more than just the oil business. The message of BP’s corporate advertising is that the company strives to find sustainable and environment-friendly solutions for the controversial energy industry. The fact that I know the campaign shows that I paid attention to it. I know the message of the campaign and appreciate the environment policy of BP. This all demonstrates BP’s corporate advertising campaign was a success, in Germany as well as in the USA.
Another positive example for corporate advertising is the German company Bayer. Bayer is a global producer of pharmaceuticals and chemicals. Sometimes, Bayer is subject to controversies because of drug testing. Furthermore, Bayer’s chemical business (now called Lanxess) has the image of being harmful to the environment. In its corporate advertising campaign Bayer tries to enhance its image by illustrating how the benefits of its products improve the lives of people worldwide. The TV ads show how science can contribute to the health of people. Additionally, Bayer shows the modern technology it uses that avoids polluting the environment.

Links:
http://money.cnn.com/2007/01/25/magazines/fortune/pluggedin_gunther_exxonmobil.fortune/

http://www.blackwell-synergy.com/doi/pdf/10.1111/j.1467-8608.2006.00460.x?cookieSet=1

http://www.reputationinstitute.com/members/nyc06/Rubin.pdf

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