Given current economic conditions, it is understandable that business issues should feature so prominently in the news. As companies, particularly those in the technology sector, announce a scaling back of their growth plans, the role of business as a generator of wealth in modern society has been brought starkly under the spotlight.
In recession it becomes clear that wealth creation is no one way street. Each announcement is typically followed by an apparent loss of confidence among institutional and private investors with immediate, negative consequences for corporate wealth, as share prices fall sharply.
The way in which business works – through, on the one hand, increased demand for corporate accountability and, on the other, a greater spread of share ownership throughout society – has been brought to centre stage recently. This brings into view the essential role that communications has to play in presenting and managing perceptions, both internal and external, of the company. The discipline known as “investor relations”, therefore, is one that has grown in both scope and importance.
During more expansionary times, investor relations play a key role, for instance when bringing companies to market or when a merger or takeover deal is proposed. The dot-com boom brought with it explosive demand for the services of advertising agencies, press and public relations specialists, producers of corporate literature and so on, as nascent Internet companies sought to convince potential shareholders, analysts and fund managers of the merits of their issue. Vodafone’s takeover of Mannesmann gave rise to similar activity, particularly in Germany where Vodafone’s campaign is still regarded as the most spectacular corporate communications offensive yet.
Through such experiences it became clear to many just how crucial the “packaging” of such initiatives could be in determining their success. This issue is covered in a book published in June, written by Hartmut KnÃ¼ppel and Christian Linder, called “Die Aktie als Marke – Wie Unternehmen mit Investoren kommunizieren sollen” (The share as a brand – how companies should communicate with investors).
In the book, KnÃ¼ppel and Linder coin the term “sharebranding” to cover the range of activities necessary to support company shares. In a similarly titled study, the magazine Focus outlined six core responsibilities of the “sharebrander”. These are: the importance of portraying truths, rather than imaginary worlds; that responsibility should not imply that one can dispense with communicating on an emotional register, to differentiate oneself in the market; that one should emphasise the potential for development, rather than short-term gain; to recognise that the value of “sharebrands” is necessarily influenced by their stock market value; that trust derives from perceived power in the market; and that the management team behind the “sharebrand” constitutes an important element of its appeal.
If the importance of “sharebranding” in building reputation in times of expansion is clear, it is perhaps even more so in the current investment climate.