Corporate Advertising

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Corporate advertising, also known as institutional advertising, is advertising by a company or organization that attempts to create an image, address an issue or communicate with specific audiences, including a company's own employees, about matters important to the company. Unlike consumer advertising—which promotes specific brands, products or services—corporate advertising helps an organization operate more effectively in the context of its external environment. Today, total corporate ad expenditures have grown to more than $9 billion annually.

Corporate advertising can redefine an organization after a name change or after the company has weathered rough times. Corporate campaigns can also serve highly specific short-term purposes, such as boosting a company's stock price in anticipation of an initial public offering or a merger. Corporate advocacy ads try to influence public opinion on a political or social issue.

As a part of its launch in 1996, Lucent Technologies used corporate advertising to strategically position itself and increase awareness of the company. Created by a corporate restructuring of AT&T Corp., Lucent was challenged to create awareness for itself even though it had 125 years of history and more than 100,000 employees. The result was a global corporate campaign unveiling the new name, Lucent Technologies, and its distinctive logo. The successful campaign ran globally in 14 languages.

Corporate advertising also provides marketing support for brands, products and services. Nestlé, for example, uses its corporate name in advertising and on products to provide marketing support. The company has added the Nestlé name to some products, entirely renamed others as Nestlé and put a smaller Nestlé "seal of guarantee" on additional brands. The purpose is to achieve a "halo effect"—that is, a product acquires the good will of consumers from its association with a familiar corporate name.

Corporate advertising can inform and influence shareholders and the financial community, especially for companies preparing for an initial stock offering or engaged in a proxy fight. It can also be used to communicate with the general public and a company's own employees during a company crisis as well as to attract potential employees or to retain existing ones.

Historical background

Corporate advertising did not enter into common practice until the beginning of the 20th century. The Industrial Revolution in the 19th century led to the formation of new companies in many industries, including transportation, utilities, oil and steel. These large companies faced heavy scrutiny from government regulators and muckraking journalists. Corporate advertising emerged in this environment as a tool to help companies rehabilitate their images by pleading their cases directly to the public.

In 1906, muckraking journalist Thomas Lawson exposed the fraudulent dealings of several major life insurance companies, including Mutual Life. The negative revelations were reinforced by extensive coverage of the scandal in newspapers, along with investigations launched by the New York State Legislature and the state attorney general. As the companies began to reform, Mutual Life hired N.W. Ayer & Son to help improve the company's image. The agency produced a series of ads to run in the national media as well as half-page ads to be featured in metropolitan newspapers. The ads, with headlines such as, "The truth about Mutual Life" and "There is no good reason against good insurance," contributed to the rehabilitation of the company's reputation.

In 1908, American Telephone & Telegraph pioneered the field of corporate advertising. Faced with an unfavorable reputation, intense competition and threats of public ownership, AT&T had an ambitious goal: to win the public's acceptance as a desirable monopoly. With that in mind, the company turned to Ayer to launch the first long-term effort to improve a company's public image. The first of the monthly magazine ads explained that AT&T was working for the public and gave instructions on how to communicate with the telephone operator.

By the 1920s, more than half of AT&T's ad budget went toward corporate advertising. AT&T's coordinated campaign of advertising and public relations over 30 years has been credited with protecting the company's monopoly status when large corporations were again under scrutiny by antitrust regulators in the 1930s.

Radio and TV days

Radio entered millions of homes in the 1930s, and corporate advertising quickly followed. In one instance, Du Pont, a large manufacturer of chemicals and military explosives, had been accused of profiteering during World War I. To combat the public's negative perceptions, Du Pont undertook the sponsorship of a network radio program. The show, "Cavalcade of America," was produced by ad agency Batten, Barton, Durstine & Osborn and presented historical vignettes dramatizing people and events in U.S. history. Along with the program the company introduced a new slogan in 1935, "Better things for better living . . . through chemistry," which was used until 1999.

The campaign ran for 18 years and turned negative perceptions into favorable impressions of the company. In 1953, "Cavalcade of America" left radio for the new medium of TV and ran for four years. Du Pont's radio and TV success provided a template for other companies looking to communicate with the public.

Still, corporate advertising remained the exception rather than the rule until the 1970s, when the economic environment forced companies into a defensive position. Faced with the impending energy crisis and increased pressure from government regulators and consumer advocates, companies were forced to define and defend themselves before a demanding public.

In 1970, Mobil Corp. recognized that there were significant issues confronting the oil industry. So it entered the arena by launching an ad campaign aimed at the nation's opinion-makers and activists. Beginning with the debut of The New York Times op-ed page, Mobil ran a series of ads stating its position in view of a possible energy crisis. The first, a two-column, text-only ad, called for improved mass transit, a position seemingly at odds with its corporate and industry objectives. Despite criticism from some of Mobil's traditional business allies, the ads were considered a major success, and Mobil's adversaries hailed the company for offering an opposing view.

The success of the effort convinced the company to run ads every week speaking out on issues important to the public. The tradition has been carried on for nearly 30 years. Although working with agency Doyle Dane Bernbach, Mobil itself directly generated the content of the corporate campaign.

The rise in consumer advocacy and increased pressure from government regulators questioning advertising claims led to other important challenges for corporations. In 1971, the Federal Trade Commission enacted product-related regulations requiring advertisers to provide proof of accuracy of ad statements and to substantiate the claims made in their ad copy.

As the practice of corporate image advertising grew, critics charged that companies were telling only half-truths and that their ads were misleading. In response to demands for regulation, companies sought to create more responsible images for themselves. Instead of products, they advertised public interest programs, social responsibility, equal employment opportunity and minority assistance. Some companies spoke out on political issues and referenda.

In 1978, the Supreme Court increased First Amendment protection for corporate speech with its decision in First National Bank of Boston v. Bellotti. The court's ruling asserted that citizens have a right to receive political speech by corporations.

Campaign problems

Corporate ad campaigns have not always been successful. Beatrice Foods tried to establish itself as the premier marketer of consumer products with an ad campaign in 1984. The ads, created by Marsteller, Chicago, showed Beatrice's products and then introduced the company with the tagline, "Beatrice. You've known us all along."

The intention was for the lesser-known Beatrice name to borrow the prestige and good will associated with its established consumer brands such as Tropicana, Samsonite and Playtex. The strengthened Beatrice name would then be used to add value to its food division products.

However, the approach confused consumers, who questioned how a company that made orange juice could also make quality luggage and women's underwear. Ultimately, the company was bought out and its business units sold.

Some corporate campaigns have ignited controversy. The Italian clothing retailer Benetton has employed social and political messages in its ad campaigns, communicating values espoused by the company. In 1999, to foster debate on capital punishment, Benetton launched a series of ads featuring death-row inmates in U.S. prisons.

The campaign drew heavy criticism from families of the prisoners' victims. There were also claims that the images were acquired under suspicious circumstances. Distributors of Benetton products were forced to cancel their contracts with the company after receiving threatening protests from offended consumers.

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