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Below-the-Line
Brand Building
By Michael Alan Hamlin
November 25, 2002
Owners of global brands are spending
hundreds of millions of dollars on what is somewhat euphemistically
called below-the-line strategic brand building initiatives. I spent
a portion of last week moderating a session involving two of those
major brands, and one of Asia's most respected marketing and advertising
practitioners. The occasion was Dow Jones "Asia's Management
Forum: Re-writing the Rules of Business." My role was to moderate
a session called "The Increasing Importance of Brand Management."
Sitting on the panel was HP's managing
director for Asia Pacific and senior vice president of the Enterprise
Group, Paul Chan. Now that HP has completed the merger and integration
of Compaq's operations, HP is embarking on a very strong, high-level
investment, corporate branding building program. In fact, the company
kicked off last week with a full-color special section in The Wall
Street Journal meant to communicate what the new HP is. But while
that investment was significant, the principal communication channels
its leveraging for its strategic branding campaign make that blastoff
look small by comparison.
HP ended the week in fine form, too,
by the way, announcing positive financial results following the
merger, and raising expectations for continued strong performance.
Those announcements sparked a rally in the U.S. markets last Thursday.
The second member of the panel was
Doug Gardner, who is regional managing director for Avaya's World
Cup Program 2002-2006. Avaya is a supplier of B2B-related business
equipment and tools, and in fact supplies the equipment for most
of the contact centers being built in the Philippines. The company
is a spin off from Lucent, itself a spin off from AT&T. Gardner's
sole reason for being until 2006 is to manage a major below-the-line
branding initiative for the company.
Joseph Wang, group managing director
of Ogilvy & Mather Hong Kong and chairman of O&M China completed
the panel. Wang began his career working for the world's most valuable
brand, Coke, which according to Interbrand's latest survey is worth
around US$70 billion dollars. Much of his career, however, has been
devoted to helping Asian companies as well as companies in Asia
develop powerful corporate brands.
Although Chan was excited about his
company's splashy Wall Street Journal announcement, his enthusiasm
went right off the Richter Scale for Corporate Branding when he
talked about his company's involvement in Formula One racing. Chan
was reluctant to discuss the investment the company is making in
the program, but Wang estimated that HP is spending hundreds of
millions of dollars supporting the BMW Formula One racing team.
"Every time the car circles
the track, we collect 16 megabytes of data," Chan enthused.
That data tells the driver and the crew the condition of the engine,
frame and suspension, tires and other key information that allows
them to maximize performance while minimizing the time the car spends
in the pits during a race. HP uses what it does in Formula One racing
to show customers the difference not just collection of data, but
fast analysis and decision-making based on that data can make in
the high-stakes sport of Formula One racing.
You might wonder what a technology
company is doing spending money on Formula One racing, though, to
build its corporate brand. There are a number of reasons, in fact,
why it is devoting substantial resources to the sport. Among the
top reasons is the initiative's success in setting HP apart from
its competitors. Second, Formula One racing is popular among many
high-level executives, which is not surprising considering the glamour
and cost associated with the sport. As technology investment decisions
have moved up the decision tree, HP and other technology companies
have looked for ways to build meaningful relationships with top
managers. And third, perhaps surprisingly, Chan says it is an amazingly
cost effective compared to traditional forms of advertising because
it is global in character, supplementing and replacing advertising
in literally thousands of publications around the world. Incidentally,
HP inherited both Formula One racing and Chan in its merger.
Gardner agrees that below-the-line
corporate brand building is cost effective. He estimates the Avaya
is spending about one fifth of the traditional advertising budget
it would require to build awareness and recall as fast as its sponsorship
of the World Cup is managing to do. "We're investing around
US$100 million over a six-year period," he said, "to sponsor
a series of global sporting events." The program kicked off
of course during the Japan-Korea tandem World Cup, will follow through
with the Women's World Cup next year, and conclude in 2006 with
the next men's championship.
Avaya's participation involved building
the entire information and communication system for the World Cup,
including on-field scoring and analysis and Internet presence. The
investment is leveraged in a number of ways. Like HP, Avaya brings
prospects to the championships to see their systems work up close
and personal. Second, the World Cup website is among the most popular
in the world, and about five percent of all visitors click a link
that takes them to Avaya.
What's the bottom line? Gardner says
that when the firm was spun off, sales executives suddenly found
themselves selling equipment for a company that had zero awareness.
"We needed a way to very quickly ramp up and increase awareness
and recall in a way that would lend credibility to the company.
The World Cup did that almost instantly."
These are not just big strategic
communications initiatives, they are very gutsy, according to Wang.
The reason they work, he suggested, is strong support from the top.
"The CEO must be the branding champion, and he must lead the
branding effort." Wang believes that business strategy and
branding strategy are two sides of the same coin. "You can't
have one without the other," he said.
There are many reasons why a strong
corporate branding strategy is an essential component of competitiveness.
Companies like HP and Avaya know this, and are reaping the benefits.
(Copyright © 2002 Michael Alan
Hamlin. All Rights Reserved.)
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