Global branding can bring many benefits to big multinationals, including client trust, cost savings and competitive advantage. But there are also dangers, including being seen as not having local relevance. Karina Robinson reports.
When Banco Santander Central Hispano bid for the UK’s Abbey National in 2004, it encountered ignorance about its size and competence, and prejudice about its origins – not only from the populist press in the UK, but also from the more respectable mainstream newspapers. That strongly reinforced the Spanish bank’s decision to have its global operations converge towards a single brand.
“With the Abbey experience, we realised we had a very efficient and profitable banking model – not only in emerging markets but also in developed markets – but we needed a strong brand worldwide to reflect this,” says Juan Manuel Cendoya, head of group communications and corporate marketing.
The bank, which describes itself as an international bank with a Spanish base, now uses the name Santander in many of the 40 countries where it is present. It is aiming for the name to be almost universal by the end of the year as it drops the names of the local banks it has taken over. This is allied to a major advertising and sports sponsorship campaign on which the bank will spend about €55m a year until 2010.
Among the images in its new advertising campaign is a black and white photo of King Kong on a skyscraper and a grainy image of cobblestone streets. Both images are supposed to elaborate the message of its new logo – “More branches than any other international bank” – although it is not clear that they do this.
“I think Santander understands branches, believes in them, and this is a genuine point of difference,” says Robert Jones, a consultant at brand agency Wolf-Ollins. “I don’t think the current ads present that.”
Big brand advantages
UK-headquartered HSBC took the global brand route a few years ago, while US behemoth Citi jumped on the bandwagon this year. The advantages are many. They include cost savings, tax advantages if the brand is held in a separate company (see The Banker, November 2006) and increased awareness for its customers of the bank’s global reach. Companies have had cross-border funding needs for a while, which is why investment banks have been at the forefront of the global brand movement. What has changed is that retail clients, particularly high net worth ones targeted by banks, now have banking needs in more than one country on the back of increased job mobility and travel, notes Mr Jones.
Also, says Santander, its global brand differentiates it from the local competition, with the implication that a global bank will be more innovative and efficient. The competition for talent also plays a role – banks say that an international brand helps them recruit the best people.
Share price hopes
Additional reasons for a global brand include the hope that increased recognition might lead to an increased share price. This is especially relevant now, with the surge in banking sector mergers and acquisitions activity. The larger a market capitalisation, the better the defence from a hostile bid and the more valuable are the shares as an acquisition currency.
“A global brand tends to increase the brand value of those organisations and it has an effect on the share price,” says Terry Tyrrell, worldwide chairman of Enterprise IG, a branding agency.
This is undoubtedly a reason for Citi’s new brand identity, announced in February. Accompanied by a major new ad campaign, the bank is hoping to boost its share price – although its new slogan “Let’s get it done” has been seen by some investors as ironic, given their view that the bank has underperformed in the past few years.
Brand specialists argue that the message from a multi-million dollar campaign needs to be incorporated throughout an organisation. For HSBC, whose slogan is “The world’s local bank”, the fact that many of its emerging market country and regional heads are white middle-aged men, might appear a contradiction. In one specific instance, Sandy Flockhart, the head of HSBC’s Mexican banking operations a few years ago, said he did not see his lack of Spanish as an impediment. Now head of all of HSBC’s regional operations in Latin America, he is at least now taking language lessons, says a bank source.
But consistency at the managerial level on its own is not enough. It is just as important at the client level, where customers’ word-of-mouth experience can backfire on a bank if it does not match the institution’s brand image or slogan – even more so in the era of blogs, say experts.
Local relevance
Another challenge to the global brand is for it to remain relevant locally. “There is a huge danger that in creating a global brand you try to please everyone and it ends up too thin,” says Mr Jones, who believes HSBC is teetering on the brink of having created “not a global brand but a global bland”.
On a global level, though, HSBC’s decision to place ads on the gangway leading to planes ensures the right audience gets its message. A recent ad showed an ankle-twisting black stiletto shoe and a tongue-burning chilli, with the words ‘pleasure’ and ‘pain’ superimposed on them alternatively, conveying how different views condition people’s responses.
There are dangers in the global brand approach, even for the major banks. “Our research confirmed that most retail banking customers around the world are largely unimpressed with grand advertising claims about global resources. It’s irrelevant to their personal banking needs and potentially even a negative, implying ‘too big to pay attention to me’,” says Hayes Roth, chief marketing officer at Landor Associates, a branding agency.
In recent years, Santander, the largest bank by market capitalisation in the eurozone, has gained some recognition. However, it maintains that there is ground to be gained in the US and Asian markets, especially at the company and investor level. This is especially important because of its US operations – including a 24.9% stake in Sovereign Bancorp – and the potential to play an extensive role in the increasing trade relations between Latin America and Asia.
Santander strategy
Still, it plans to stick with its current strategy on buying up banks: using the local bank’s name, then mixing it with the Santander name and finally dropping the local name. The aim is to avoid a loss of market share and any nationalist backlash against a perceived foreign invader.
“The biggest danger in a global brand is destroying value, forgetting that a cultural fit is a long-term affair, and getting the right transition,” notes Mr Tyrrell.
But where banks are concerned, the press can play some funny games, both on purpose and unwittingly. On February 22, for example, the Financial Times ran a front-page story on how the co-presidents of Goldman Sachs each pocketed about $53m in cash and stock following a record 2006 performance. A few pages on, the bank ran a large advertisement about how it was helping to develop capital market instruments to fund immunisation programmes in 70 of the world’s poorest countries.
