Stuart Elliott: Many Annual Reports Downplay Role Played by Ads in Business

Last year I took a look at the blizzard of paperwork from a bunch of corporations to see how much space they devoted to discussions of their advertising and marketing efforts amp160My rationale amp160If ads play such a vital role in the economy by stimulating consumer demand they ought to get a good deal of attention this time of the yearAlas it turned out that wasn39t so much the case as dry financial recaps from CFOs were more common than business insights from CMOs and after reading through documents from a dozen companies sent out for the 2017 annual report season I39m sorry to say it39s happened again amp160Too often advertising is relegated to a brief mention in a section devoted to quotselling general and administrative expensesquotIt39s a disappointment yes but it39s also a missed opportunity amp160Financial reports can be more than just required onceayear exercises in mandated disclosure amp160They also can take on marketing tasks providing another chance to communicate with existing and wouldbe customersFor instance consider the approach taken by Time Warner with its annual report amp160The cover spotlights something that39s out now instead of something the company released last year amp160There39s an eyecatching photo of the actress Gal Gadot as Wonder Woman in the movie of the same name which Warner Bros opened last weekend amp160Turn the page and there39s a double truck of a shot from the set showing Gadot in a conversation with the Wonder Woman director Patty JenkinsIt would be silly to attribute the movie39s strong reviews and huge box office receipts to how much play it got in the annual report amp160But as the old saying goes it couldn39t hurtquotThe way people experience our content is changing rapidlyquot Jeff Bewkes Chairman and CEO of Time Warner writes in an introduction to the annual report quotbut the global appetite for it is increasing and our collective dedication to telling the world39s best stories has never been greaterquotA handful of other firms took a similarly inviting tack amp160They include Yum Brands which splashes the words quotA World with More Yumquot on the front cover of its annual report and PepsiCo which asked the designers of a label for a new product Lifewtr to contribute a quirky colorful fullpage illustration that39s visible through a diecut page reading quot2016quotThe Yum report declares quotWe are committed to building the world39s most loved trusted and fastest growing restaurant brandsquot while bringing up quotbrand performancequot and quotthe potential of our brandsquot amp160The PepsiCo report tells of quotinvesting in the future of our companyquot by quotincreasing advertising and marketing as a percent of salesquot and there39s a page devoted to campaigns for brands such as Pepsi Lay39s Gatorade and SabraMore typical are the reports festooned with corporate and brand symbols among them Charter Communications which devotes the entire cover of its annual report to the logo of its new cable brand Spectrum Hershey which gives over the front cover of its proxy to two stylized versions of a Hershey39s Kiss and the New York Times Company which presents on both its annual report and its proxy giant Ts from quotTimesquot against backdrops of 2016 Electoral College maps a nod to the postelection pop in the firm39s financial resultsCocaCola trods a different path with its proxy statement amp160The front cover is decorated with a simple logo of Coke bottles on a red disc amp160On the back cover are the logos of quotour 21 billiondollar brandsquot and these heartfelt words quotThank you for being a shareholder and for the trust you have in the CocaCola CompanyquotBut too often the reports are spartan making little or no efforts at marketing looking as if they were produced by a communist bureaucrat amp160The cover of the Kellogg Company annual report is a sea of white with the word quotKellogg39squot in red amp160Not so grrreat if you ask me amp160The WalMart Stores annual report has a cover that39s as generic as can be The slogan quotMoving with speedquot appears under a picture bland enough to be sourced from a stockphoto website of a mom picking up a package of purchases from a Walmart storeThe banality is at odds with the stirring even urgent message inside quotWe39re clearly living in a time of transformative changequot writes Doug McMillon President and CEO amp160quotThe world is moving faster and the magnitude of the changes and their influence on business seem larger than I can rememberquotAt one point there39s a description of how a new acquisition Jetcom will be operated as a separate brand from Walmart because quotJet indexes strongly with Millennial customers and tends to serve a more urban and more affluent customer than Walmartquot amp160But it takes some digging to find any further mention of ad or marketing initiatives despite ad costs rising regularly from 24 billion in fiscal 2015 to 25 billion in fiscal 2016 and to a whopping 29 billion in fiscal 2017By contrast Michele G Buck President and CEO of Hershey brings up in the sixth paragraph of her letter to shareholders the results of marketing efforts amp160quotDuring 2016 we had innovation and advertising successesquot she writes even going so far as to touch on the quotmarketing mix for these programsquot which was she says quotbalanced between direct trade and TV and digital advertisingquotIt39s not surprising that the reports spending the most time on ad and marketing initiatives are those issued by communications and media companies such as Time Warner the New York Times Company Charter the Comcast Corporation and Time IncFor example Comcast notes that its coverage of the 2016 Summer Olympics quotgenerated 16 billion of revenuequot reported as part of its NBCUniversal operations amp160Charter recaps the deals that significantly grew the size of its cable holdings as it took over Time Warner Cable and Bright House Networks amp160The New York Times Company delves into what it calls its quotdigital transformationquot including digital ad revenue and attempts at quotstrengthening the New York Times brand through innovationquotEven ATampampT gets into the act as its planned acquisition of Time Warner inspires a line on the front cover of its annual report describing ATampampT as quota global leader in telecommunications media andamp160technologyquot amp160Inside there are mentions of quotgreat contentquot and a strategy quotfocused on becoming the premier integrated communications company in the worldquotAt Time Inc the new President and CEO Rich Battista writes earnestly about the work underway to restructure the company including gains in digital ad revenue and a doubling of quotnative advertising revenuequot from 2015 to 2016I found on page 52 of the Time Inc proxy what is perhaps my favorite financial folly of this annual reports season amp160It39s a note about Battista39s predecessor Joseph A Ripp who became Executive Chairman when Battista succeeded him as CEO amp160Ripp subsequently decided to resign from the companyThe note labeled quotCEO CoPilot Reimbursementquot discusses how the Time Inc board of directors quotdue to safety concernsquot required Ripp quotto engage a professional copilot when piloting his own personal aircraftquot and agreed to reimburse him quotfor the related expenses on an aftertax basisquot including quotfuel costs and airport fees and a pro rata portion of the reserve for the periodic overhaul of the aircraft39s enginequotAfter Ripp became Executive Chairman quotthe CEO39s CoPilot Reimbursement policy ceased to applyquot the note concludes amp160That sound you may hear is the sigh of relief from Time Inc39s shareholdersNote Look for the next Stuart Elliott Report on Wednesday July 12Click the social buttons above or below to share this story with your friends and colleaguesThe opinions and points of view expressed in this content are exclusively the views of the author andor subjects and do not necessarily represent the views of MediaVillagecomMyersBizNet Inc management or associated writers

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Stuart Elliott: Many Annual Reports Downplay Role Played by Ads in Business

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