What do accountants and washing powders have in common? The need to maintain a whiter than white reputation? Perhaps. The desire to build brand loyalty? Definitely. The question of how to develop a global brand is currently taxing the creative juices of the Big Five firms. But how likely are they to create the image and client loyalty they seek?
Ernst & Young is creating a global brand at a cost of $100m (#66m). Pricewater- houseCoopers is communicating its new branding approach to staff internally, with plans to go public with an advertising campaign in the new year.
Earlier this month, KPMG launched its ‘clarity’ brand image with a $60m international ad campaign. Deloitte & Touche has been running client-focused ads in the UK since June, featuring companies such as BAA, Microsoft and General Motors. Arthur Andersen has been keeping a lower profile, understandably given its Consulting complications, but a spokeswoman still notes that branding is ‘increasingly important’ and that ‘investing in our brand is something we do constantly’.
As she notes: ‘Investing in your brand doesn’t necessarily mean advertising.
It’s also about making sure the message you put out is consistent – that there is consistency of image and reputation.’
So why are the firms so conscious of the need to brand themselves? The answer, as with washing powders, is good old market forces. Branding consultancy Wolff Olins questioned executives in Fortune 500 companies across Europe, the Americas and Asia about their experience with professional service firms.
The results showed that most companies found it hard to distinguish between professional firms; they also wanted three key service qualities: value, global service and differentiation. ‘What the marketplace is asking for is a brand, in the true sense of the word,’ says Robert Jones, a director of Wolff Olins, and a specialist in professional firms branding. ‘People want to know what makes one firm better than another. Nobody believes that everybody is equally good at everything.’
Wolff Olins defines a brand thus: ‘A brand is a promise that clients believe about the kind of experience they will get, both functional and emotional, each time they work with the firm.’ Wolff Olins interchanges the word ‘idea’ for brand, stressing that a brand is more than a logo, and more than a name, which doesn’t convey any promise. ‘We are sceptical about so-called branding programmes which are really just about the logo and maybe some advertising. They are a waste of money in the end,’ says Jones.
Developing a brand in the true sense can give a firm a powerful tool.
For example, KPMG could build on its chosen theme of ‘clarity’. Jones explains: ‘If a professional services firm makes a promise about clarity, it should seize on that idea and produce a report on clarity in the business world; it should have an award for clarity. That’s why brand in the true sense becomes powerful – because you can talk about all sorts of things around your own sphere. A mere logo can never do that.’
Jones doesn’t believe any accountancy firm currently has a true brand.
In fact, few professional services have one, perhaps only McKinsey and Andersen Consulting.
So how do you create a brand? ‘You have to find a small difference in reality and turn it into a big difference in perception,’ says Jones. A brand embodies a promise to clients and requires three key elements: it must matter to clients, it must be true and it must be different from what the competition is saying.
Finding such an idea to turn into a brand requires a mix of internal analysis and external research.
KPMG, for example, picked its ‘clarity’ focus based on research among business leaders in 1,000 top global companies.
‘It was a position distinctively different from that anyone else was taking and so would start to differentiate us from what is seen as a largely undifferentiated marketplace,’ says David Thorley, director of international marketing.
Deloitte & Touche picked its client-focused advertising stance as a way to capitalise on what it sees as the merger distractions that have affected four of the former Big Six competition. ‘We are big, global, we serve major multinational corporations and we are concentrating on serving them,’ says a spokesman.
‘We like to think that our focusing on clients is what differentiates us from the other Big Four.’
Problems with crowd control
The real problem for accountancy firms is that it is far harder to achieve a brand for professional services than for, say, a washing powder, since consistency in quality of delivery is an essential requirement. Unilever can install quality control mechanisms, but how do you impose quality control on all staff and partners all the time?
‘It’s extremely difficult to manage partners, full stop,’ says Wolff Olins’ Jones. ‘But to manage partners so that they are providing recognisably the same kind of experience to people is a big deal.’
Andrew Shaylor, director of strategic marketing at PwC, admits that it is a challenge: ‘We are trying to brand people; we are trying to brand behaviour.’ One way to help this process is to make sure that the brand, and promise, are grounded in reality. ‘It’s important to start on the inside and get real commitment from the partners. A brand is a promise, and you have got to keep it before you make it,’ says Jones.
PwC is currently instilling its branding approach internally in its people, before sending them out to deliver it to clients. KPMG, too, is building up the force of its clarity brand internally – introducing the approach in induction and management development courses.
Another challenge is that a strong brand needs emotional content. Accountancy firms have traditionally displayed a certain ‘wariness of emotion’, Jones believes – perhaps as a result of professional training that encourages rational analysis. Thorley doesn’t seem to suffer from this weakness, however: ‘We feel passionately that we want our clients’ business, and that we add value to our clients. Underneath the grey suits there is a passionate heart beating.’
Difficulties aside, PwC may have an advantage over its rivals in creating a strong brand, since Jones believes it is harder to create a brand image for a product or service that already exists.
PwC’s Shaylor senses the potential: ‘This is the opportunity to create a brand rather than just a name. All the research tells us clients find it difficult to tell the Big Five apart on the basis of service.
‘Competition is becoming more intense and people are exploring other ways to differentiate. Branding is the new competitive arena.’
Sarah Perrin is a freelance journalist
The ‘KPMG. It’s time for clarity’ advertising campaign forms part of its most recent attempt to establish a brand. ‘It’s clearly the beginnings of a brand promise about operating without jargon, which I think would be of value to the market,’ says Robert Jones of Wolff Olins. His company’s research found companies confused about the services on offer, partly due to the jargon used. ‘There is demand for clarity, and if it can genuinely be the firm that is jargon-free, then that is a good thing. However, I am not sure it’s quite a big enough promise.’
ERNST & YOUNG
E&Y recently announced the appointment of advertising firm D’Arcy Masius Benton & Bowles in a bid to create a global brand, at a cost of $100m.
Previous advertising campaigns have used slogans that convey a potential brand promise. The new brand campaign style is, as yet, unknown. ‘What matters is not the slogan – it’s whether the slogan is borne out by reality,’ advises Jones.
Its branding stance is yet to be unveiled. Indication of mood for more radical thinking was given by the choice of ‘PricewaterhouseCoopers’ for the merged firm’s new name. Jones is unexcited by the representation of the name and monogram, but likes the name itself and appreciates the thinking behind the move away from a traditional form to a made-up word. ‘That’s quite a brave step and I think it’s a good thing to do.’
DELOITTE & TOUCHE
The firm has used sporadic advertising campaigns, with separate adverts run by accounting and consulting arms. The accounting practice has recently started using the names of clients in its adverts, with the message: ‘Who is focusing only on clients? The answer is Deloitte & Touche.’ In contrast, the consulting arm’s adverts appeal to people’s mistrust of the professional firms. ‘There is a message that they are the anti-quick-fix people,’ says Jones.
The firm is keeping a low profile in comparison to Big Five rivals. Jones comments: ‘They have always been in a slightly special position in that in the UK they have always been seen as the most American and the most aggressive of the firms. They are well-placed to build a brand in the real sense because they have a cohesive culture.’
BRAND VALUATION: THE 20% SOLUTION
Brand valuation remains one of the thorniest challenges facing the accountancy profession.
As the economy becomes more global and electronic, international organisations need to differentiate themselves and their products with identifiable and recognisable brands.
Brands are key to the knowledge economy, and accountancy’s difficulties in recognising and valuing them is a major concern to investment bankers, financial regulators and standard-setters.
For example, Microsoft’s market valuation recently passed its nearest rival, General Electric. Yet GE, IBM and a number of other companies have more tangible assets on their balance sheets. Microsoft’s brand encompasses the company’s technical expertise and near-monopoly hold on PC operating software. The company’s massive price-to-earnings ratio reflects these assets, but not the balance sheet.
Companies like Heinz, Coca-Cola and McDonald’s, meanwhile, would not spend millions of pounds in legal fees to protect their brands if they did not have a real financial value.
Yet accounting standard-setters appear to remain deaf to appeals to recognise internally generated brand value. Accounting Standards Board chairman Sir David Tweedie views brands as a source of abuse in the 1980s and dismisses them as a form of ‘wotsit accounting’.
FRS 10, which covers intanglible assets, gives accountants a tool to value brands, but only where there is an active market for them. Such brand transactions tend to happen in consumer goods such as foodstuffs.
But this treatment infuriates Raymond Perrier, worldwide director of brand valuation at Interbrand Newell and Sorrell, a ‘branding and identity consultancy’. In his view, the absence of brand value from financial accounts means shareholders miss out on vital information. Because there is a shortfall between the reported value of the business and its actual value, he argues that shareholders may not realise that while profits and economic value are being maximised, shareholder value is eroded.
Perrier says the lack of any uniform treatment of brands means directors miss out on an opportunity to put the best possible case to shareholders.
‘Unfortunately, the new FRS11 will only provide information for brands which have been badly managed, not those well or averagely managed,’ he says. Any increase in potential worth will not be registered in the firm’s valuation.
The question for accountants is whether their service brands can be valued in the same way as whisky or biscuits. According to David Murrell, who served as KPMG’s international marketing partner until last year, they can.
Basing his model on other industries’ valuation techniques, Murrell calculated that the global brand is worth 20% of the firm’s total revenue. The budgets of rival firms suggest that they are in agreement.
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