• Transform magazine
  • December 13, 2017

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Opinion: What is impact branding?

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Impact branding – a concept and approach developed by Capital Communications that applies the priorities and metrics of impact investing to branding and corporate or organisational identity – addresses worldwide problems for CSR activities, major multinational brands, and the branding and communications profession itself. Paul Mackintosh writes

Businesses face multiple challenges – not least, how to respond to and implement the UN Sustainable Development Goals (SDG). As a 2017 report from MSCI, the former Morgan Stanley indexing and research arm, declares, the UN SDGs “are becoming a de facto framework for bringing together investors, companies, governments and citizens with the aim of protecting the planet, ending poverty and promoting peace and prosperity.” Yet brands and businesses are struggling to fit that framework – or its predecessors. And their failure links directly to their performance woes.

At the Chartered Institute of Public Relations’ national conference in London this year, the audience heard from Matt Peacock, group director of corporate affairs at Vodafone, that “CSR is dead. Sustainability business models need to be wedded to the goals and purpose of the company.” According to the 2017 Edelman Earned Brand survey, 57% of global consumers now buy or boycott a brand “solely because of its position on a social or political issue.” Brands and branding agencies, however, are still playing catch-up to this new reality.

To see the problems of branding practices, you only need look at the financial performance of major global advertising and branding conglomerates. WPP and Omnicom have both seen their shares fall by around 25% during 2017, even with soaring equity markets and steady consumer spending. WPP head Sir Martin Sorrell blamed this on shrinking ad spend by key MNC clients, such as Procter & Gamble - trimming its marketing budget by $2 billion+ over the next five years. Pressure from short-termism of activist investors driven by the financial fad of zero-based budgeting, as Sorrell alleged, may be a factor. So too are concerns over digital marketing, especially when traditional ad agencies move into new digital media. But brands have issues with reach and relevance that are far more to do with their wider values and priorities.

“As the relevance of some big brands diminishes, those brands are becoming less responsive to marketing investment,” said an RBC Capital Markets analyst in a recent Financial Times article on the ad industry’s woes. If so, perhaps it’s unfair of MNCs to shoot the messenger.

These brands’ problems are surfacing just as national governments and international bodies put greater pressure on corporations to comply with the UN SDGs and other global environmental and social standards, and as financial markets and major institutional investors put sustainability at the heart of their investment choices. MSCI insists that “this year may usher in a fundamental rethink for investors” with “a strategic decision point – do we change the way we think about investing”? Yet, in a recent interview article on the global situation in CSR, Bob Langert, former VP of sustainability at McDonald's, said, “One of the biggest weaknesses of the whole corporate responsibility field is poor or nonexistent communications and marketing.” Michael Maslansky, CEO of comms firm maslansky + partners, responded, “In many companies, CSR is still considered outside the core business. So, when there is a conflict between the bottom line in the short term and a CSR program, the bottom line wins.”

To get past this short-termism and truly secure commitment to SDGs within organisations or companies, and build sustainable brands in every sense, we need to drill down beneath their surface branding efforts, and factor impact into their identity, strategy and values. With organisations, this is best done through the brand, explicit values, and shared culture. The traditional, cynical approach to CSR is not only clearly not working, but is also cutting off brands and MNCs from building a shared community with customers and society at large, driving down their brand value and performance. Companies need to change their approach. In the process, they can build the dialogue with, and relevance to, their wider audience. This is the goal of impact branding.

“Impact Branding is more than a combination of two words: it reflects a big shift from the traditional sales-driven communications campaign to a different business model, based on the corporation’s social purpose,” said Andras Sztaniszlav, international strategic communications consultant at PersonaR. “We see big brands like M&S, setting up its sustainability program Plan A, and Vodafone, with its reports on transparency, trafficking, and mining, and a separate report benchmarking its performance against the UN SDGs, rebranding and communicating their social and ethical goals. The impact branding concept perfectly amalgamates both purpose-driven business activities and the means (stories, channels, visual elements) by which these are communicated to stakeholders. This is what big brands are already looking for, and will be seeking even more in the near future.”

The UN SDG framework could also fix a longstanding problem with branding and marketing. Branding and comms professionals have long struggled to show demonstrable results. In-house marketing metrics like eyeballs or column inches are more convincing to colleagues within the profession, than to corporate boards who only really care about the end result. Sometimes the two align – as in sign-ups for one of Body Shop’s famous customer lobbying campaigns, for example – but often they don’t, especially in the more nebulous realms of brand value and brand equity.

The UN SDG framework, and impact investing metrics, at least give branded entities a structure, and clear results-based metrics, for evaluating actual social and environmental impact – and for proving that their brand value has values. As Maslansky says, “Companies that know what they stand for, and can build alignment with consumers and employees, have an opportunity to stand out in their markets.”  

Paul St John Mackintosh is a senior consultant at Capital Communications