The annual report to shareholders historically has been the single most important document companies have used to communicate with their constituents. You’ve seen them—with lots of elegant, glossy photos, striking designs, and filled with stories about a company’s achievements in the board room and in the community and, of course, financial results.
In the “olden days” (before the Internet), most publicly traded companies printed and actually mailed these fancy reports to hundreds of thousands of people, along with their Forms 10-K. And while some people devoured this information, others filed it in their recycling bin—and many trees were killed in vain.
Trends in Annual Reports
Recognizing their value as historical background on some of the country’s most well-known corporations, many of the top business schools, including Harvard and Stanford, assembled large collections of old corporate annual reports in their libraries. What they could not have realized at the time was that, in archiving these corporate annual reports for posterity, they were creating museums to preserve a communication form that some marketing pundits have predicted is on the verge of going the way of the dinosaur and the rotary phone.
Rumors of their demise started about 10 years ago, as many large corporations began cutting back on their annual report quantities. Reasons included a shift away from individual to institutional investors, along with changes in SEC regulations that made it possible to download versus mail reports. These changes led to smaller, less heavily designed reports that were less expensive to produce. In the last several years, in fact, many companies have cut printed reports out of their budgets altogether—spurred on by customers who want to be able to look at things on their smartphones and corporate “green” initiatives.
With the scaling back of the traditional annual reports, some companies simply fancied up their 10-Ks by combining a bit of designed information as a wrapper for their financials. Others cut back on the marketing-oriented annual report, ran smaller print runs, or left most of the financials to the Qs and Ks.
But, just as technology has moved the annual report away from large print runs, it has really opened up the online and interactive possibilities. These next-generation reports combine the best features of the printed versions—the photography and “storytelling” components—with the ability to use video, audio and interactive components to provide a unique, one-of-kind user experience.
One such company that’s embraced this approach is Pittsburgh-based Innovation Works. We designed their annual report and produced a print version for distribution at their annual shareholder meeting. But what we also did was create a flipping book, embedded with audio clips and videos that told their story in more detail. Instead of just static pictures and words, readers could hear and see firsthand from the people changing Southwestern Pennsylvania through new technologies. The addition of the interactive report has expanded the usage and viewership of the annual report, without increasing print costs.
A Dying Breed?
Although printed corporate annual reports may not be what they once were, the news of their demise seems to be greatly exaggerated—at least for the time being. According to a 2012 survey done by the National Investor Relations Institute, 88 percent of respondents still produced an annual report in some form and, after four years of declining budgets, those who did reported they had increased their budgets by 2 percent in 2012.
New and Improved Uses for Annual Reports
A number of our Pittsburgh-area clients continue to use the printed annual report as their annual communication outreach to donors, regional business leaders, governmental officials, board members and potential recruits. They still feel that having a printed record of the previous year’s activities is important.
In particular, one field that continues to value printed annual reports is the medical field. Although hospital systems are not required to report financial data the way a publicly traded company is, we have produced annual reports for a number of UPMC clients as a highly effective vehicle for communicating with their constituents, providing a snapshot of their accomplishments, and showcasing their reputation, national rankings and research prowess.
The Department of Medicine in the University of Pittsburgh School of Medicine has combined its printed report with other components to launch an annual national awareness campaign. Although printed every other year, the paper report provides an executive summary of the department’s activities, while an annual unabridged version is revised and reskinned on a complementary microsite. Direct mail is used to reach physicians in each of eight different specialties and influence the rankings in the U.S. News & World Report’s annual review of hospitals nationwide, combined with an e-blast campaign to drive viewers to the microsite.
We’ve also found that annual reports can be used as a strategic component of a larger marketing campaign, like the UPMC CancerCenter and University of Pittsburgh Cancer Institute did with its 2011 annual report. Together the reports helped launch a new name and branding campaign for UPMC’s cancer services. The same is true for the UPMC Heart and Vascular Institute (HVI)’s annual report, which marked the beginning of a new collaborative entity for the delivery of cardiology, cardiac surgery and vascular surgery. Both reports go to leaders in the medical field, as well as other stakeholders, such as community leaders and donors –serving as just one more way to showcase UPMC as a thought leader.
There are still companies that value an annual opportunity to market their companies beyond SEC regulations. It can be a way to communicate with and encourage additional investment in start-ups, or can serve to inform people about the wonderful things a foundation is doing for the community. Corporate sustainability reports are also an emerging trend, due to increasing expectations from a wide range of stakeholders for organizations to act in a transparent manner.
At the end of the day, the core need for companies to find effective ways to communicate with their important audiences will never go away, so annual reports—whether printed, electronic, or a combination of both—will not go away entirely anytime soon.
To see some of the ways Pipitone Group is rethinking annual reports, visit our website.