Comment & analysis: Corporate consistency key in new era of increased public scrutiny

Date: 31/03/2008

Picture the scene: the EU-US conference on food advertising and obesity hosted by the European Commission, May 2006. Food manufacturers from both sides of the Atlantic file up to the podium to make compelling cases of how their companies are tackling the problem: product reformulations, salt reductions, workplace wellness schemes, better labeling, responsible advertising...

A single consumer group representative follows them up. Without a word, the first slide flashes up an "award winning" advertisement plucked from a multi-national's corporate website in one of the smaller European member states. The ad flouts every code of practice in the book, offends the collective sensibility of those present and, in an instant, undermines all industry's efforts to painstakingly present itself as a willing and valuable partner in this debate.

An image can speak a thousand words. And for those companies present, this moment spoke volumes about the world in which we do business today. Globalization and rapid technological change means multi-nationals are now truly accountable worldwide. Companies must ensure consistent approaches and policies across all the markets where they operate.

Consumers are discovering what it means to live in interconnected societies. The same technologies which offer so many opportunities for marketers to better dialogue with their consumers present the same means by which consumers can talk to each other about companies and brands.

Consumers see if companies behave inconsistently from market to market. Even when they themselves are not directly affected, any perception of double standards can have direct consequences for the overall brand image and corporate reputation. One rogue ad on an outdated webpage can come back to haunt you. And consumers - and Non-Governmental Organizations - are more inclined and better equipped than ever before to spot them.

NGOs are now genuine trans-national players. Rallying under the single-issue focus, they are better networked, better coordinated and better attuned to new technologies than ever before. Often self-styled arbiters of industry, they use their tight-knit networks to monitor for inconsistencies to expose flaws in corporate practice.

Supra-national institutions are also driving their agendas globally. UN bodies, such as the World Health Organization, are playing an increasingly important role in driving globally consistent policies which impact how companies do business in all markets in which they operate. The same regulatory pressure on food advertisers took just two years to spread from the US and the EU to Asia-Pacific, Latin America and South Africa.

Companies have equally understood the need for consistent approaches across corporate functions. It is no good for different parts of the business to take silo mentalities. A holistic and joined-up approach is required.

Corporate affairs cannot publicly articulate a company policy which is not reflected in its marketing communications. Marketers are paid to understand the consumer and build brands. Public affairs people represent the face of the company and help steer policy in light of changing societal sensitivities. But the two cannot operate in parallel. To truly understand your consumer, you must understand the consumer in society, taking into account the influence of societal fears, concerns and trends on the individual. This means better integrating public affairs insights into marketing communications strategies.

Equally, we, as an industry, need to make sure that our self-regulatory mechanisms are consistently effective and robust across all markets. In a truly global world, industry must apply the same rigor we apply in self-regulating developed markets to emerging markets. We must ensure the same levels of consumer protection we afford to North American or European Consumers are available to Asian and Latin American consumers.

And, I'm pleased to say, we are making real progress. Through our network of 55 national advertiser associations on five continents and fifty Fortune 100 companies, the World Federation of Advertisers (www.wfanet.org) is working to strengthen mechanisms of industry-wide self-regulation on the basis of a best practice model.

This blueprint was agreed by industry with regulators and NGOs in 2006 and identifies top line criteria critical to the effective running of advertising self-regulation. These elements- codes of practice, independence, copy advice, and so on- are well known to US marketers as key features of the NARC & CARU systems. But they may not be in place in Russia, China or Vietnam...the growth markets of tomorrow.

WFA has drawn up an ambitious action plan and has committed to reinforcing those national systems where self-regulation falls short of our best practice model. This will not be an easy task given that many countries have little history or tradition of self-regulation and often a poor understanding of the benefits it can provide to both industry and consumers.

Greater consumer mobility, internet shopping across borders, increased consumer discourse about our brands, user-generated content: globalization and new technologies have changed the rules of the game. In today's world where every corporate move can be scrutinized in any market and at any time, being a multi-national operator requires that the same level of responsibility, care and consumer protection is afforded to consumers worldwide.

It's the price of entry to the new global market. Our responsibility requires that multi-nationals adopt joined-up corporate policies across all markets and parts of the business. It also requires a coherent industry-wide application of effective advertising self-regulation worldwide.

Failure to do so will mean more blushes at the hands of the consumer groups. Even for those so-called "award winning" campaigns.

Stephan Loerke,
Managing Director,
World Federation of Advertisers



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