212+DESIGN

Bank on the brand

2009-04-21T11:51:00.000-07:00

Tags: Bank , Brand , Branding , Marketing

For the leading practitioners who are already there, we foresee that the next stage will be for them to integrate brand values into their balanced business scorecards or other performance measurement systems. They will set targets for managers and staff related to the delivery of brand values in their daily work and their reward/bonus systems will recognize achievement in upholding brand values. The top-level brand practitioners in our survey are already tracking brand performance closely but none have yet tied these measures into their scorecards or bonus schemes. Having implemented all that, these leading edge companies will then start to report externally on the performance of their brand, demonstrating publicly how they have increased shareholder value. As long as shareholder value continues to be the yardstick by which equity markets evaluate company performance, and as long as intangible assets constitute over 80% of many companies’ market value, there will be unceasing pressure on company directors in financial services, as in other industries, to show effective management of their most important intangible asset, their brand.

The death of Gucci capitalism

2009-04-21T11:50:00.000-07:00

"The public recognises it has the moral right and authority to condemn the ideology that resulted in this. It is a fundamental change."

We are witnessing the death of a paradigm. As is usual at moments of mourning, the new reality is being met by denial, resistance and anger from the initiators and defenders of the old faith.

It would be parochial to think recent events expose only flaws in the banking sector - micro-flaws - and the outcome will be a mere tinkering with the financial system. The dominant economic theory of the past 20 years - a theory that put liberty before equality, gave markets more power than states, and saw risk as a public good that shouldn't be restrained - is now defunct. The laissez-faire capitalism embraced by the US and the UK some 20 years ago and foisted on the poorest countries of the world by the World Bank and IMF has had its day.

This does not mean all versions of capitalism are now redundant. But that the Anglo-American version, which actively decoupled the economy from social justice, must be buried; and the public will not tolerate its resuscitation.

Now that the cracks are so evident, jobs are in peril and household wealth is collapsing, the public is angry - and not just at bankers. We are beginning to see a fundamental outrage at the whole interconnected mess of a system: at energy companies who record massive profits, yet allow pensioners to struggle to stay warm in winter; at CEOs who can earn up to a 1,000 times the salary of their average worker; and soon, any day now, at those politicians who allowed this to happen.

The public recognises it has the moral right and authority to condemn the ideology that resulted in this. It is a fundamental change.

Smart politicians will recognise that this is a tectonic shift - a change in the balance of power from high finance and big corporations to the people - and will seek to build political capital from it. We are all socialists now, it seems. John McCain, David Cameron and Gordon Brown attack bankers' irresponsible behaviour and salaries, and call for state intervention in the financial markets.

But these calls will not get them elected or re-elected if they are addressed only to the banking sector. The financial crisis was a manifestation of a fundamentally flawed way of thinking that will hurt real people as the world enters a global recession. It will hurt not only those in the countries that preached the paradigm, but also those in countries that did not. The poorest nations will experience the double whammy of having had to deregulate, privatise and open up their markets to be eligible for aid money, and now see the pledges not met. This is the first full crisis of globalisation, a recognition that in a tightly interconnected world, one country's troubles become each and every one's. It is the first collective "lose lose".

The smartest politicians at President Bush's economic summit will be those who are not only willing to differentiate themselves from the laissez-faire past, but willing to hijack the meeting and turn it into a transparent exchange of ideas about what kind of world we want. They will be those who are not looking for a quick fix, but are capable of dismantling their prior assumptions about which ideas and theories to embrace and which to reject.

The smartest politicians will be those who understand that when the facts stop fitting the world-view, they must remake the world-view, not recreate the facts. In that process, they must draw lessons from the past 20 years. No more "one size fits all" economic prescriptions. Countries have to have the freedom to determine their economic policies to meet their own needs. And the myth that "a rising tide lifts all boats" must be jettisoned. It was never true. Social mobility in the UK has barely improved in 40 years. In the US, a quarter of the wealth is in the hands of just 14,000 families.

The next phase of capitalism will combine policies of localisation with an understanding that there are problems we share - such as carbon-dioxide emissions - that cannot be tackled alone. And it will actively seek to redefine what is valuable, so children growing up today do not make the mistakes of this generation in confusing success with the ability to purchase another pair of Nikes or a Gucci bag.

Noreena Hertz is an academic and author of "The Silent Takeover" (Arrow, £9.99)

Is it too late for Britain's banks to make an honest living?

2009-04-21T11:41:00.000-07:00

As calls grow for nationalisations in a financial industry brought low by bad debt, it's clear that the sector can't afford to take big risks in future. What's not so clear is how many banks still have a future, writes Heather Connon

What will the United Kingdom's banking sector look like in a year's time? "Post offices," quips one banking executive. "They will be all that is left."

It is not such an absurd prediction. Despite the government announcing a second rescue package, designed to insulate the leading banks from losses on their bad lending - which some estimate could cost as much as £500bn - and a further cash injection into Royal Bank of Scotland, bank shares continued to plunge. In just a week, more than £20bn was wiped off the value of RBS, Barclays and Lloyds Banking Group, leaving the trio valued at just £17bn put together - or less than the £20.5bn the three raised between them last summer.

For a while, calls to go the whole hog and nationalise the banks intensified - a point of view summed up by John Greenwood, chief economist at fund manager Invesco Perpetual: "By not removing all the toxic assets of the banks in one fell swoop, for example by injecting them into a 'bad bank', the government is leaving itself open to the risk that the economy and the banks' operating results will deteriorate further, requiring open-ended intervention in the future.

"This means that if the other components of the government's plan for economic recovery - such as its fiscal spending plans, or any quantitative easing by the Bank of England - do not work, then the authorities will gradually be drawn into larger and larger commitments to the banking system. Full-scale nationalisation of several large banks would probably be the ultimate outcome. If this is the case, why not do it immediately?"

For the moment, the government seems set against such a move, insisting that banks are better run by commercial, private-sector managers - although anyone looking at the scale of losses incurred so far, never mind what is still to come, might question that confidence.

The trouble is that, nationalised or not, investors across the globe are uncertain of Britain's ability to rescue its banks - a worry that is sending sterling falling almost as rapidly as bank shares. The government is refusing to estimate how much its insurance package - under which it will underwrite future credit losses in exchange for a premium, probably paid in bank shares - will cost, but the numbers could be frightening.

Simon Ward, chief economist at New Star, points out that in October, the Bank of England estimated that British banks could lose £130bn over the next five years, and that was before the economy really started to turn nasty.

Last week's trading update from RBS warned that the worsening economic climate meant bad debts of between £6.5bn and £7bn, with another £8bn in write-offs against the value of toxic assets - far worse than the City had been expecting. And, in a bleak statement, chief executive Stephen Hester warned: "More asset deterioration and significant credit losses seem certain."

Barclays chief executive John Varley insists it is not in such a parlous position - indeed, it says it made a profit of £5.3bn last year. Yet no one is willing to bet that it will be one of the survivors. Its shares more than halved last week alone, and now change hands at less than a tenth of their value last month.

That is despite the fact the bank has been stressing the differences between RBS's investment banking business and its own, Barclays Capital. RBS's capital-markets loan book, at £600bn, is twice as big as that of BarCap's, while its commercial property loan book is also much larger.

The panic selling of Barclays shares also overlooks the fact that the temporary relaxation of capital requirements by the Financial Services Authority, announced at the start of last week in a bid to help the banks weather the financial storm, is equivalent to an extra £25bn of retained profits, or £20bn in new capital - and possibly as much as £100bn across the banking sector as a whole.

Lord Turner, in his first significant speech since he took over as chairman of the FSA, gave a clear indication that, when this mess is finally cleared up, the banking industry that emerges from the rubble will look very different.

"Not all innovation is equally useful," he said. "If by some terrible accident the world lost the knowledge required to manufacture one of our major drugs or vaccines, human welfare would be seriously harmed. If the instructions for creating a 'CDO-squared' [a credit derivative manufactured out of other derivatives] have now been mislaid, we will, I think, get along quite well without.

"And in the years running up to 2007, too much of the developed world's intellectual talent was devoted to ever more complex financial innovations, whose maximum possible benefit was at best marginal, and which in their complexity and opacity created large financial stability risks."

That is a pretty damning obituary for a securitisation market which, according to the Bank of England, was worth more than $600 trillion at the end of 2007.

The FSA will produce its blueprint for the future of regulation in April, but Turner's speech gave plenty of hints about what it might contain. Regulators were too focused on the risks of individual banks and not enough on how their inter-relationships were increasing financial instability. In future, they will need to make more judgments about the risks inherent in banks' business models. Far more capital needs to be held in support of banks' activities - and they need to put aside larger amounts in the boom years to cushion against the bad.

The banks themselves are already working as fast as economic conditions will permit to shape themselves for the future. Hester will give an outline of his bank's strategic review when it announces its 2008 results on 26 February. But already it is clear that riskier activities - such as lending £1.5bn to Russian oligarchs, trading in complex financial instruments and bankrolling large property projects - will be ditched in favour of increasing mortgage lending, offering pricing pledges to small businesses and - most likely - retaining the Direct Line and Churchill insurance businesses that Hester's predecessor Sir Fred Goodwin was planning to sell.

RBS points out that it has a comparatively small share of the mortgage market and has been able to increase that, even during the downturn.

It is unlikely to be alone in its intentions: virtually every other international bank is pulling back to old-fashioned core lending and savings business - assuming, of course, that they have managed to survive the costs of pursuing the alternative, high-risk and highly toxic, securitised lending.

HSBC is aggressively expanding its mortgage loan book in the UK while working out how to rid itself of Household, its sub-prime lending business in the United States.

Lloyds Banking Group's chief executive Eric Daniels has made it clear that he plans to ditch the high-risk property and private equity lending book acquired with his acquisition of the HBOS banking group as quickly as is possible in such a dismal climate, in favour of back-to-basics banking.

Only Barclays continues to insist that its investment banking arm can grow and prosper, although it, too, is scaling back on the higher-risk areas.

In the US, Citigroup has all but ended its quest to be a global universal bank, while Goldman Sachs - the purest of investment banks - has opted for deposit-taking status. And Bank of America is growing increasingly agitated by the losses and bonus culture it is uncovering at Merrill Lynch, the investment bank it rescued earlier this year.

The retail banking sector became even more crowded last week when the mutually-owned Co-operative bank merged with the Britannia building society to create what it describes as "a unique ethical alternative to shareholder- and government-owned banks". While it will still be a relatively small player, it should find it easier to attract depositors who have been horrified by the excesses of the publicly quoted institutions.

Hester thinks there should still be enough banking business to go round, even when lending volumes get back to normal. Foreign banks - such as those from Iceland and Ireland - and non-banking groups like America's GE Capital, were responsible for as much as 40% of British lending; and, bank bosses insist, it is their departure, rather than British banks' shutting up shop, that has caused the slump in the availability of loan finance here.

"I think there should still be good business growth," he says. "Obviously, the world is huge and complex and will still have the need for complex financial products, albeit less than there were before, and there will be greater capital scarcity. So even if volumes are lower, the number of players will be fewer and smaller in size, so banks should be able to make a good living. Not as racy a living as for the last decade, but that is no bad thing."

Simply getting to a position where banks can make a living is presenting a big challenge to regulators, bosses and the government.

Gavin Oldham, chief executive of the Share Centre, thinks one solution would be to temporarily suspend the shares of the leading banks to allow them to work through their problems. He has written to financial services minister Paul Myners to point out that, as the FSA acknowledges, "a very substantial part of bank over-indebtedness lies in the complex web of claims between financial institutions: in other words, not in lending to business or for mortgages. If these claims could be netted off, there would be a massive reduction in the scale of bank losses."

He believes that suspending trading would give them breathing space to unravel these problems. At their current levels, he adds, bank shares are "little more than an option against nationalisation, and do not provide the basis for any further injection of private sector capital to resolve future needs".

The Share Centre's own customers, however, continue to snap up bank shares as they tumble, betting that even a small improvement in sentiment could lead to a big profit should the prices rise sharply.

The stock market is taking a very gloomy stance: Bruno Paulson, banking analyst at Bernstein Research, calculates that, based on their capital position, the market price of RBS shares suggests investors consider it has just a 19% chance of survival: at Barclays and Lloyds, the probabilities are 43% and 38% respectively, he says; but that was before the most savage falls of last week.

Six months ago, few investors would have bet that Royal Bank of Scotland would be announcing a loss of close to £30bn - stealing the record for biggest loss by a British company from Vodafone - or that it would end up being 70% owned by the government. That just shows that anything is possible.

Greed—and fear

2009-04-21T11:39:00.000-07:00

http://www.economist.com/specialreports/displayStory.cfm?story_id=12957709

THE monument to Soviet central planning was supposed to have been a heap of surplus left boots without any right ones to match them. The great bull market of the past quarter century is commemorated by millions of empty houses without anyone to buy them. Gosplan drafted workers into grim factories even if their talents would have been better suited elsewhere. Finance beguiled the bright and ambitious and put them to work in the trading rooms of Wall Street and the City of London. Much of their effort was wasted. You can only guess at what else they might have achieved.

When the financial system fails, everyone suffers. Over the past 22 months the shock has spread from American housing, sector by sector, economy by economy. Some markets have seized up; others are being pounded by volatility. Everywhere good businesses are going bankrupt and jobs are being destroyed. For the first time since 1991 global average income per head is falling. Even as growth in emerging markets has come to a halt, the rich economies look set to shrink. Alan Greenspan, who as chairman of America’s Federal Reserve oversaw the boom, calls the collapse “a once-in-a-half-century, probably once-in-a-century type of event”. Financial markets promised prosperity; instead they have brought hardship.

Financial services are in ruins. Perhaps half of all hedge funds will go out of business. Without government aid, so would many banks. Britain has suffered its first bank-run since Disraeli was prime minister in the 1870s. America has stumbled from one rescue to the next. The Wall Street grandees have been humbled. Hundreds of thousands of people in financial services will lose their jobs; many millions of their clients have lost their savings.

For a quarter of a century finance basked in a golden age. Financial globalisation spread capital more widely, markets evolved, businesses were able to finance new ventures and ordinary people had unprecedented access to borrowing and foreign exchange. Modern finance improved countless lives.

But more recently something went awry. Through insurance and saving, financial services are supposed to offer shelter from life’s reverses. Instead, financiers grew rich even as their industry put everyone’s prosperity in danger. Financial services are supposed to bring together borrowers and savers. But as lending markets have retreated, borrowers have been stranded without credit and savers have seen their pensions and investments melt away. Financial markets are supposed to be a machine for amassing capital and determining who gets to use it and for what. How could they have been so wrong?

Finance is increasingly fragile. Barry Eichengreen of the University of California at Berkeley and Michael Bordo of Rutgers University identify 139 financial crises between 1973 and 1997 (of which 44 took place in high-income countries), compared with a total of only 38 between 1945 and 1971. Crises are twice as common as they were before 1914, the authors conclude.

The paradox is that financial markets can function again only if this lesson is partly forgotten. Financial transactions are a series of promises. You hand your money to a bank, which promises to pay it back when you ask; you invest in a company, which promises you a share of its future profits. Money itself is just a collective agreement that a piece of paper can always be exchanged for goods or services.

Imagine, for a second, how finance began, with small loans within families and between trusted friends. As the circle of lenders and borrowers grew, financial transactions were able to muster larger sums and to spread risk, even as promises became harder to enforce. Paul Seabright, an economist at the University of Toulouse in France, observes that trust in a modern economy has evolved to the miraculous point where people give complete strangers sums of money they would not dream of entrusting to their next-door neighbours. From that a further miracle follows, for trust is what raises the billions of dollars that fund modern industry.

Trust’s slow accumulation pushes financial markets forward; its shattering betrayal batters them back. Sometimes this is through bad faith, as when Bernie Madoff, a grand fund manager, allegedly made his investors $50 billion poorer, or mortgage-sellers tempted naive borrowers. But promises made in good faith can be broken too. Indeed, honest failure is even more corrosive of trust than outright criminality. Everyone understands that now.

New order

The failure of finance will affect ideology, too. Many people find capitalism’s central planner hard to put up with at the best of times. Free markets shun seemingly worthy causes, whereas the frivolous or apparently undeserving are rewarded. Look at the financial-services industry itself. In America middle-class pay has stalled in recent years but financiers have figured prominently among the tiny number of people who have captured much of the extra income. For as long as the world economy was growing fast, financial markets commanded grudging allegiance. Yet the same financiers who preached the necessity of free markets on the way up have since depended on taxpayers to save their industry at a cost of trillions of dollars.

Financiers will find the arguments for free markets harder to make now that they have lost the benefit of the doubt. Charles Kindleberger’s classic study, “Manias, Panics and Crashes: A History of Financial Crises”, updated by Robert Aliber in 2005, suggests that financial instability feeds on itself. Japanese savings fled their own bust and sloshed first into the Nordic countries and then into Asia, which suffered contagion in 1997.

Some see today’s disaster as a result of that Asian crash. Asian nations—especially China—have been determined to be part of global capital markets but not to run current-account deficits which would leave them vulnerable to sudden currency outflows. So they have been happy to see their money go abroad. In the phrase of Martin Wolf, an economic columnist at the Financial Times, they “smoke but do not inhale”.

In 2006 America’s current-account deficit peaked at 6% of its GDP (see chart 1). Between 2000 and 2008 the country received over $5.7 trillion from abroad to invest, equivalent to over 40% of its 2007 GDP. Over the same period Britain and Ireland absorbed around a fifth of their 2007 GDPs and Spain a vast 50%. The financial system had the job of recycling the money to borrowers. Inevitably, credit became cheaper and savings declined. In America savings fell from around 10% of disposable income in the 1970s to 1% after 2005.

Not everyone agrees about the cause of this torrent of foreign capital. Although some blame Asian saving, others point to Western extravagance. But there is little doubt about the consequences. All four of the debtor countries in the chart enjoyed housing booms. Jeffry Frieden, a political economist at Harvard University, says about three-quarters of credit booms financed from abroad end up in crashes.

And yet financial services were not so much a victim of the inflows of foreign capital as an eager accomplice. The question is why financial systems are so liable to turn foreign credit into ruinous busts. In particular, why did America, home to the world’s most advanced financial system, turn foreign credit into the world’s most serious post-war bust?

The suspicion is that American know-how and talent made the disaster worse. Of all the financial instruments to have failed, newfangled collateralised-debt obligations (CDOs) have turned out to be among the most devastating. One way of thinking about CDOs, says Raghuram Rajan, a professor at the University of Chicago, is as a mechanism for converting mortgage securities and corporate bonds from huge, illiquid assets owned by local investors into liquid financial instruments that could be flogged across the world. Philip Lane, of Trinity College Dublin, thinks that sophisticated American financial services combined dangerously with relatively unsophisticated financial services elsewhere.

Never again, etc

If the price of sophistication is instability, something is wrong. You might conclude that the thing to do is to shackle finance as it was shackled in the 1950s and 60s. If ever there were a moment for this, it would be now. It takes a big upheaval to open the way for radical reform. The structure of financial regulation in America still bears the mark of ideas forged in the Depression.

Reform is certainly needed, yet, for all the excesses and instability of finance, a complete clampdown would be a mistake. For one thing, remember the remarkable prosperity of the past 25 years. Finance deserves some of the credit for that. Note, too, that finance has always been plagued by crises, whether the system is open or closed, simple or sophisticated. Attempts to regulate finance to make it safe often lead to dangerous distortions as clever financiers work around the rules. If there were a simple way to prevent crises altogether, it would already be the foundation stone of financial regulation.

In fact, the aim should be neither to banish finance nor to punish it, but to create a system that supports economic growth through the best mix of state-imposed stability and private initiative. Modern finance is flawed, unstable and prone to excess. But think of those boots and those wasted lives: planned markets are flawed, unstable and excessive too.

Achieving Accountable Marketing: Six Critical Value Levers Must Be Pulled

2009-04-21T11:36:00.000-07:00

by Michael Dunn
April 13, 2009 issue

Senior management continues to push marketers to demonstrate a strong return on investment, demanding more accountability and evidence that marketing investment is driving business growth.

It requires marketers to demonstrate disciplined planning, rigorous tracking and evaluation and, above all, continuous improvement in performance. They must also show cause and effect, quickly diagnose the root causes of any spending performance issues and make timely, fact-driven decisions to improve returns.

Call it accountable marketing performance, a goal that requires six “value levers” to be pulled effectively.

Value Lever #1 – Strategy
This critical lever sets up a series of choices that inform most of the subsequent activities across the other levers. It encompasses a series of decisions about strategic marketing choices:

With which set or sets of customers does your company have the best business opportunities?
What are the most achievable behavioral responses from these target groups?
What unique benefits, attributes and ideas are most likely to elicit the desired behavioral response?
What specific brand or business challenges are standing in the way?

Getting smart and shared answers to these questions requires a fact-based foundation involving customer segmentation and targeting, customer-driven analysis, pathway modeling, brand equity modeling and purchase funnel analysis. When combined with equally valid qualitative insights and intuitive thinking, you create a strategic value proposition that is worth its weight in gold.

Value Lever #2 – Content
The strategic foundation must be translated into compelling, engaging and medium-appropriate messaging ideas. The best content platforms originate from a magical combination of strategic insight and creative expression and connect in authentic yet emotionally compelling ways.

Most companies rely heavily on external agency partners at this lever. But it’s the best collaborative partnerships that inspire great work, and great content ideas can come from anywhere—agencies, similarly briefed internal teams pursuing independent and somewhat competitive paths, or single contributors who find inspiration on a walk or in the shower. Whatever the source, smart companies validate multiple messaging ideas with robust testing before deploying them across a full-scale creative campaign.

Value Lever #3 – Marketing Vehicles
Effective vehicle choices should enable your messages to reach and connect with audiences in a timely, relevant, cost-effective and multi-platform way. But you must understand where your audiences interact with media or media-enabled experiences as well as their openness to receiving messages in that setting. You must understand the optimal strategic applications of each vehicle, their trade-offs and the underlying economics.

The wrong choices can endanger accountable marketing. You risk failure by mismatching vehicles with marketing objectives or audiences, or by having inadequate coverage across the mix. It’s equally dangerous to fail to weigh the underlying economics and potential revenue response dynamics. Finally, balance between new and traditional media is a must.

Value Lever #4 – Investment Levels
This value lever should diagnose whether the overall marketing investment amount is too high or too low vis-à-vis the intrinsic financial return characteristics of the proposed marketing activities in relation to strategic marketing objectives. It also helps determine whether the amount invested in particular vehicles, programs or activities is too high, too low or just appropriate relative to intrinsic return characteristics and those of alternative investment options.

But it’s complicated. Marketing program returns are not static. Changes in brand maturity levels or competitive intensity can impact program-level returns. Changing media habits and changing cost dynamics of various vehicles can affect their returns. Nor are returns always linear. Despite such challenges, there’s considerable upside potential to this lever.

Value Lever #5 – In-Market Execution
Great content still needs a great delivery mechanism; execution diligence ensures that your marketing content and your delivery mechanisms work together harmoniously.

Many tactical decisions underpin a successful and cost-effective campaign. Planning requires choices about reach and frequency, geographic coverage, and scheduling in light of insights around seasonality, purchase frequency and key decision points in the purchase cycle across all types of programs. Buying necessitates hard choices in a fluid media landscape, encompassing financial parameters weighed against considerations like media reputation and specific audience demographics. The customer experience must be consistent and seamless. Be warned: if poor in-market execution prevails, your failures may well be amplified in an embarrassingly public way through Web-based channels.

Value Lever #6 – Fixed Cost Management
This lever aims for improved cost efficiency and effectiveness through both cost cutting and cost containment. Your fixed cost base depends on your mix of marketing programs and can account for 20 percent to 60 percent of the overall marketing budget. And savings can be redeployed into programs that may improve overall effectiveness.

This value lever requires applying a purchasing or procurement manager mindset. One way to start is by understanding the ratio of “working” to “non-working” spend on the fixed costs of marketing program production. If this ratio is off, try selectively applying strategic sourcing principles to pay a little less for what you buy, redefine some core programs so they can be executed more cost-effectively or re-engineer overall processes to reduce costs without compromising quality.

Accountable marketing performance is an achievable goal. By focusing on and unlocking the power of the six critical value levers, the marketing organization will prove its value to the business as a whole as the creative yet rational source of future growth.

Michael Dunn is Chairman and CEO of Prophet (www.prophet.com), a global consultancy that helps senior management more effectively use branding, marketing, design and innovation to drive profitable growth. This article is based his new book, The Marketing Accountability Imperative: Driving Superior Returns On Marketing Investments. He can be reached at mdunn@prophet.com.

Banking on it: the role of corporate branding in rebuilding trust

2009-04-21T11:35:00.001-07:00

AUTHORS: Stephanie Colton and Paula Oliveira

Once upon a time banks were synonymous with public trust and confidence. The practice of banking originated from one of the most basic of basic human needs: security. The earliest settled societies needed somewhere safe to store their grain and other commodities. In ancient Mesopotamia, for example, royal palaces and temples assumed this role before private institutions took over. Anthropologists testify that banks, and the money they deal in, always had a role and significance beyond simply the economic. Socially and culturally, banks fulfilled psychological needs for security, while also helping to reallocate capital and promote economic activity. Credit and loans were a natural extension of this, helping to redistribute wealth and create opportunities.

For many the current global meltdown in financial markets has led to a recalibration of their relationship with both their own money and with the banks that look after it. Instead of stuffing notes under the mattress, we have always been encouraged to entrust our cash to these seemingly impenetrable fortresses – the safe houses on high street where we could stash our cash in vaults – and in turn gain peace of mind. Of course banks have been taking risks with our money for a very long time, but for most of us the symbolic power of their individual brands outweighed our need to understand the murky reality of excessive risk taking that goes on behind the scenes.

Since the summer of 2007, things have been changing. Mighty institutions that before exhibited no signs of vulnerability have since cracked and crumbled into dust, or been nationalized in whole or part. The whys and the wherefores of the crisis have been much discussed. They are not the subjects of this article. Nor is the discussion around what regulators should do to avoid a new crisis in 10 or 20 years time.

Instead we ask: How can banks regain stakeholders’ trust and what, in particular, can the practice of corporate branding contribute to this effort?

A tale of two Citis
Citigroup – once the world’s biggest bank by assets – lost US$ 253 billion of its market value in two years. Towards the end of 2008 it was valued at US$ 20 billion at a share price of US$ 4 (from US$ 55 in 2006). After reducing its work force by 52,000, it is splitting the group in two. Citicorp will continue with the universal bank’s operations, and Citi Holdings will keep, among other things, the loss-making assets. Even so, the US government might take up to 40 percent stake in the bank. The fall of the empire has been attributed to several factors including: a high exposure to subprime mortgages, high costs, and unfocused growth through badly integrated M&A activities. (Bowler, 2009) Two years ago nobody would have dared say that Citi was not a sound and reputable business. But nowadays the sense is: if this happened to Citi, then no bank is safe.

The financial implications of Citi’s dramatic disintegration have made plenty of headlines, but the people issues less so. The CEO of Citigroup in the USA, Vikram Pandit, recently announced he would take a token pay of US$ 1 until the company returns to profitability. While this signals to shareholders that leaders are taking this seriously, much more needs to be done to rebuild trust internally and externally. That’s where corporate branding comes in.Brands create the tangible link between an organization and its people. This connection is not static. Rather, it is co-created and reinforced with each interaction. Consistent, positive interaction between a bank and its stakeholders makes good brands great. This is why those who want to regain trust must start by repairing these connections. Stakeholder management is an intrinsic part of the corporate branding process. From inception through to delivery and ongoing management, leading brands must know how to: • Identify their most influential stakeholders, i.e. those with the greatest power to build or undermine the brand internally or externally
• Understand and respond to what these people need and value, and the way they perceive the brand
• Engage them in ways designed to make the greatest impact on brand perceptions and advocacy: anything from innovative, targeted communications to branded environments (real and virtual), from people who enact the brand through their behavior, to top quality differentiated products and services.

Brands must also anticipate and manage risks against the relationship established with these stakeholders. The stronger this bond, the easier it is to defend against inevitable bumps on the road. Maybe this is where it all went wrong for banks. No matter what they deliver, there is almost always a negative undercurrent in stakeholders’ perceptions – this idea that banks exist to make massive (though sometimes artificial) profits. Stakeholders may have been forgiving, or at least turned a blind eye to this when it didn’t impact them personally, but now that they are paying the price it is quite a different story.

In the past months investors’ needs have taken center-stage. But there is a real need for more robust stakeholder management in other groups: customers, employees, and wider society.

Trust and consumers
While brands are made real to us through a company’s products, services, people, behavior, environments, and communication, they work on a level that is largely intangible. Speaking the language of hearts and minds gives us access to the fundamental needs driving consumers today. For most consumers, the relationship they have with their money is highly complex and individual. The very notion of money is a web of associations: muddled, highly charged, and replete with meaning and emotion. The choice of where to bank is a decision that heart and head make together. While consumers certainly expect competitive interest rates, top quality products and services, convenience and so on, they also need to feel confident that the bank of choice has their best interests at heart. Banking should always feel safe; underneath every deal is the tacit reassurance that their money is in a safe place and at their disposal when needed. So trust is the most important factor.

This is where the corporate brand comes in. Traditionally, branding has been the preserve of marketing and communications people. But in recent years the public has become much more demanding. The brands that share people’s values and deliver on their promises are rewarded with loyalty and advocacy. In the wake of the 2008 meltdown, the actions taken by those in charge of the world’s largest financial institutions have eroded trust and now consumers are lost. They don’t recognize their bank anymore among the avalanche of negative press about the financial services crisis. On the RBS Group’s website, for example, it says, “we run our business with integrity and openness to deliver sustainable value.” Yet, in January 2009 the group announced UK£ 28 billion losses and received additional UK£ 20 billion from the government, increasing the government stake in the group to 70 percent. Not exactly the sustainability promised to customers.

As in any relationship, trust is not a given – it must be earned in the context of an open, transparent relationship. Bankers could do more, for example, to educate consumers who are unfamiliar with the abstract nature of the banking system and industry or the real reasons behind the crisis. It is precisely this lack of a “human face” that has led to bankers being seen as villainous. We are deeply suspicious of things we do not understand. Left in the dark we rally around things we can understand, clinging to evidence of their irresponsibility and decrying the fact that some companies are still paying out bonuses or redecorating their offices. This is frivolous at best; immoral at worst. Cutting such expenses won’t solve the crisis, but somehow it just feels wrong and we mark their cards. What people really need is to hear from bankers directly and be reassured that they are taking action.

This is not about manufactured brand messages; it’s about honest dialogue. Some banks already do this, but the crisis necessitates a new level of candor. For consumers, open communication – especially face-to-face contact - will break down some of the distance that has been created over the past months and any negative perceptions of bankers overall. Lloyds TSB (now the Lloyds Group), for example, responded swiftly to the crisis by trumpeting its credentials as the UK’s most trusted bank (it ranked sixth in the World’s Safest Bank Awards by Global Finance Magazine 2008, was voted Britain’s most trusted bank for the eighth year running by Reader’s Digest 2008, and Bank of the Year for four years running by The FD’s Excellence Awards 2008). And yet, it also supported this by taking action in its branches and offering free money management advice to struggling customers. Both activities added to its image as the “trust bank,” while also reinforcing its new brand proposition “for the journey,” which positions Lloyds TSB as a helpful partner to customers wishing to keep themselves on track. The true test will be in how this brand is then extended to other stakeholders, especially employees.

Trust and employees
Through providing the service, the staff embodies the brand to consumers. They are the frontline: the first ambassadors and advocates whose behavior must be appropriate employee behavior to drive successful service interactions. (Bitner, 2003) No matter what the business, the same rule applies: building trust and advocacy will have a positive impact on customer behavior. But what about when this trust has broken down?

Employees of today’s financial institutions are divided. On one side sit the “masters of the universe,” the so-called “greedy investment bankers” capable of creating extremely sophisticated products and trading them at the best “high risk, high return” motto. On the other side sit the ordinary employees who focus more on keeping the business running smoothly, whether that’s delivering a good customer service, selling products and services, managing the bank’s accounts and risks, or even guaranteeing compliance with regulatory requirements. Unlike the first group, they are not afforded godlike status; they are foot soldiers that do not earn exorbitant bonuses. Their actions did very little to provoke the current financial crisis but when the snows fell in London in February 2009, the media reported tellers being heavily pelted with snowballs to cries of: “War on bankers!”

The mismatch of cultures can be even more evident in mergers and acquisitions, a hot topic among banks since the beginning of the crisis. Bank of America, for example, is struggling to incorporate the “losses and bonus” culture it is uncovering at Merrill Lynch, the investment bank it rescued in 2008. (Connon, 2009)

Bank employees need engaging more than ever during this crisis. Despite being pilloried by the media, bankers are people too and while some may be laughing this off, the crisis will no doubt be affecting morale and internal engagement. This in turn will impact productivity and retention rates. Top talent will always be in demand. It is dangerous to assume that employees will remain loyal during times of crisis. The most adept will get all the training they can until the market stabilizes, and then be off. Those in charge of big financial institutions should be building trust externally as well as internally. For example, despite all the financial turmoil, the risk-reward group is still worried about their bonuses, while ordinary workers are paying with their jobs.

If banks are as serious about retaining talented employees as they are about giving return to investors and retaining their customers, they need to rebuild relationships. Embracing reciprocity is the first step. To truly trust their employers, employees must feel there is a balance of give and take. They should be educated about the brand and understand the actions they can take to deliver the brand promise to customers and build trust. In return employees will benefit from a rewarding employment experience where their needs are met and they feel trusted and valued. In 2008 Lloyds TSB (now, Lloyds Group) ranked 608th in the Best Companies Index (BCI) and was pegged as “one to watch” owing to strong workplace culture (83 percent of staff surveyed said their teams were fun to work with) and leadership (79 percent agreed their managers spoke honestly and openly with them). Focusing on improving the connectionbetween their external brand promise and the internal employment experience is one way to accelerate their progress.

The route to sustaining profitable growth lies in taking an inside out, outside in approach: becoming both a leading brand that consumers stay loyal to and an employer of choice that talented people want to work for. They are two sides of the same coin. Attending to employee engagement will increase their resilience to the raft of internal challenges they are set to face over the coming months and years (e.g. nationalization, increasing regulation, and structural and cultural impact of mergers and acquisitions).

Trust and wider society
The final piece of the puzzle is the hardest to address. Most banks these days have a corporate social responsibility strategy in place, and while the more cynical would have said this was simply a green wash – good for the company reputation, but essentially a sop – demonstrating commitment to society has never been more critical. When in 2008 the European and American governmentsbegan debating bail-out plans, taxpayers woke up to the fact that their hard earned cash would be used to cover the losses, which continue to mount in 2009.

In the current context, rebuilding trust with wider society will be less about doing charitable works or saving polar bears and more about behaving responsibly towards consumers in general, for instance by refusing to charge a massive premium for loans requested by small businesses or first-time home buyers with a clean credit history. And of course ideally, it means doing everything within their power to limit the need for financial assistance from governments whose resources should be invested in public services such as education and health care.

In Asia, banks operate – and are regarded by consumers – as part of the fabric of society, not apart from it. Rather than faceless, singular corporations they are seen as key players in economic development. In the current global crisis, it could be argued that confidence in Asian financial services institutions has not been challenged to the extent that it has in Europe and the US.

Some British banks have already spotted this opportunity. For example, Lloyds Banking Group plans to “ditch the high-risk property and private equity lending book acquired with his acquisition of the HBOS banking group” in favor of “back-to-basics banking.” (Connon, 2009) The mutually owned Co-operative bank recently merged with the Britannia building society to create what it describes as “a unique ethical alternative to shareholder and government-owned banks.”

Conclusion: More than MoneyIn the midst of the current financial crisis the press, consumers and governments are calling for a more balanced approach. In conceptual terms, we want our financial institutions to care as much about behaving honorably as they do about making money for investors. In this sense branding is not just about reputation; it’s about using the brand as a central organizing principle, the focus that directs decision-making and positive action on both the individual and company level. In conclusion, here are five top tips for those planning to rebuild trust and strengthen their brands:

1. Align brand and business strategy

Consistency builds trust. The first step is to make sure that your brand strategy and business strategy (including vision, mission and values) are all pointing in the same direction. With this in place, systematic alignment of operational processes, internal culture and employee behavior with the brand will help you to consistently deliver on your promises.

2. Know the value of your brand

Get your brand valued, and make sure that you understand how you are perceived by the wider world, and in particular what is driving specific stakeholders (investors, customers and employees) to join or defect. Measuring brand equity on an ongoing basis will give you the ability to make informed decisions and investments to improve your brand experience and reputation.

3. Manage for the long-term

In times of crisis, people – and the governments and companies they work for – often make reactive decisions based on a short-term time horizon, fixing the symptom and not the cause. For example, when World Com and Enron went bust those companies recruited CFOs who were expert in accountancy (nobody wanted dead bodies in the balance sheets) but lacked experience in handling sophisticated financial products or complex relationships with banks. Today, most companies are run by executives with little idea of how to manage during a recession or undo the damage to their business caused by insecure financial products. And while the banks are busy dealing with these pressing issues, they risk neglecting the broader needs of their stakeholders in whose hands their long-term future ultimately rests.

4. Be human

The banking crisis has shown the complexity of the system and reinforced the distance between consumers and corporations. Lessons from emotional branding, such as Gobé’s “Ten Commandments” below, can help banks build trust through internal and external activities (Gobé, 2001):

- Shift from consumers to people

- From product to experience

- From honesty to trust

- From quality to preference

- From notoriety to aspiration

- From identity to personality

- From function to feel

- From ubiquity to presence

- From communication to dialogue

- From service to relationship

5. Lead the change

Big global brands can show leadership by getting out there – on TV, in the press, even into communities – educating people about how the banking system works, explaining why we’re in this mess, and offering solutions. Taking active control demonstrates that you are serious about real organizational changes and accountability if you fail to deliver your promises. The need for internal engagement and leadership is never greater than after a spate of redundancies. Leadership also means reminding a sense of purpose that created financial services institutions in the first place: capital allocation to promote social and economic development.

If we accept that unfettered growth is a fact of modern life, responsible financial institutions will need to show stakeholders that they are trustworthy. Trust is the basis of any brand. It is something that has to be built over time through engaging stakeholders and by adopting a responsible approach to commerce. Without trust there is no relationship, no loyalty, no pride, and no advocacy. It is essential to the long-term survival of any business. Achieving a balance of forces and needs will help financial services organizations achieve sustainable profitable growth in both financial and human terms. For society to prosper banks would do well to revisit their original purpose and start again to offer a safe place for people to store their precious assets, making a healthy profit, yet remaining connected to the needs of society as a whole. ■

References
1. Bitner, M.J. and V.A. Zeithami, Services Marketing. Boston: McGraw-Hill, 2003.

2. Brady, A. “Corporate Responsibility: The role of brand,” brandchannel. (March 13th 2006), http://www.brandchannel.com/brand_speak.asp?bs_id=1333.

3. Bowler, T. “The rise and fall of Citigroup.” BBC News Online. (January 16th 2009), http://newsvote.bbc.co.uk/1/hi/business/7746077.stm

4. Carr, E. “Greed and Fear: A Special Report on the Future of Finance.” The Economist, Jan 22nd 2009.

5. Clifton, R. & J. Simmons. “Brands and Branding.” The Economist, 2003.

6. Connon, H. “Is It Too Late for Britain’s Banks to Make an Honest Living?” The Observer, Jan 25th 2009. http://www.guardian.co.uk/business/2009/jan/25/barclay-lloydstsbgroup

7. Fombrun, C. “The Two Faces of Reputation Risk: Anticipating Downside Losses While Exploiting Upside Gains.” Organicom Magazine. São Paulo: Gestcorp/ECA-USP, #7

8. Gobé, M. and S. Zyman. Emotional Branding: The New Paradigm for Connecting Brands to People. New York: Allworth Press, 2001.

9. Hertz, N. “The Death of Gucci Capitalism.” New Statesman. October, 23rd 2008. http://www.newstatesman.com/business/2008/10/politicians-power-world-shift

10. Penrose, N. “Bank on the brand.” Interbrand, 2001.

11. Post, J.E., L.E. Preston, and S. Sachs. Redefining the Corporation: Stakeholder Management and Organizational Wealth. Stanford: Stanford Business Books, Stanford University Press, 2002.

12. Rieker, M. Banks, “Shunning ‘Villain’ Status, May Disclose More on TARP.” Market Watch. Feb 4th, 2009. http://www.marketwatch.com/news/story/banks-shunning-villain-status-may/story.aspx?guid={3D3B61BA-215B-43BF-93DE-E3FF1C215D62}&dist=msr_8

Stephanie Colton is a Senior Consultant on the Brand Engagement team at Interbrand in London. With her background in anthropology, knowledge management, and organizational change, she brings a diverse range of experiences to her assignments. She has worked in the public and private sectors, in the UK and overseas.

Paula Oliveira has managed brands and worked with clients across a wide range of geographies. As Interbrand’s Senior Consultant in London, Paula is a key component of the Brand Valuation team, and has helped many clients understand the value potential of their brands.

Outline 04/10/09

2009-04-10T11:16:00.001-07:00

REBRANDING FINANCE AND ENCOURAGING INVESTMENTS
Marketing International Investments Through Social Media Campaigns

a. Definition of a problem
b. Challenges
c. Hypothesis
d. Long-term goals
e. Research Methods
f. Definitions

I HISTORY

1.1 History of advertising as applicable to current moment and financial sector

1.2 History of Bank Advertising

1.3 History of bank marketing

1.4 Advertising after the Stock Market Crash of 1929

1.5 Historical precedents in advertising efforts to restore trust after the great public disappointment

1.6 Recent history: Web design and social networking websites

2. THE ROLE OF FINANCIAL INSTITUTIONS

2.1 Traditional role of banker

2.2 Recent changes in the role of banking and financial institutions

2.3 The future of banking

3. MEANING AND MANIFESTATIONS OF TRUST

3.1 What Constitutes Trust?

3.2 Concrete examples of trust-building and manifestations of trust

3.3 Social Responsibility Of Banks as an investment in “trust-mark”

4. ATTRACTION FACTOR

4.1 Analysis Of Target Audience (Managing Preferences)

4.2 Advertising Strategies

4.2.1 Make-believe Advertising or Reality branding?

4.2.2 Personality-Based Advertising

4.2.3 Information design and New New Objectivity

4.3 Advertising across financial products- Particularities related to international investments

5. INTERACTION FACTOR

5.1 Active Finance

5.2 Social Financial Networking

5.3 Internationalizing Investments

Thesis 04/10/09

2009-04-10T11:10:00.000-07:00

REBRANDING FINANCE AND ENCOURAGING INVESTMENTS
MARKETING INTERNATIONAL INVESTMENTS
THROUGH SOCIAL MEDIA CAMPAIGNS

“The super-boom got out of hand when new products became so complicated that authorities could no longer calculate the risks and started relying on the risk management methods of the banks themselves. Similarly, rating agencies relied on the information provided by the originators of synthetic products. It was a shocking abdication of responsibility. Everything that could go wrong did.”
– George Soros, writing in the Financial Times
Introduction
Stock market crash of 2008 is not the first of it kind. It is the most severe one after the Stock Market crash of 1929, but in the meantime stock market has seen ups and downs and this forms the integral part of the system.

Financial markets are a vital part of the overall economy. They provides necessary liquidity to economic activities, allowing the assets to go from those who are able to invest it to those who need them in order to start, further or just remain in business. That is how financial markets are crucial to the overall flow of the economic activity.

Stock market crash has caused austere losses for many of those who were able to dispose their extra income, that could than be injected into the industry. Loss of confidence of this crucial group of investors will have a negative impact for the economy as a whole. Restoring their confidence will be essential to recovering the economy.

Recent Nielson Study also finds that advertising will be crucial in next couple of years for banks to retrieve or save their reputation . 55% of the respondents who have seen advertisements for their bank or other financial institution reported that they have “complete confidence” in the “health and stability” of such, while only 18% responded negatively to this question. Later in this paper I will analyze the direction in which financial advertisements went after the crash and up until the moment of writing.

The heart of the problem is lack of trust, transparency and accountability of major financial institutions and their C.E.O.s. The new branding model will have to address these issues.

However the new branding model will have to work on an interdisciplinary platform in order to create a wholesome business change that will not be only cosmetic. It is stated times and again that the “new” customer is immune and even adverse to advertising and thus the branding will have to strive towards not only changing the looks, but more importantly changing the modus operandi of financial institutions. Nancy Bernard introduces the concept of reality branding; branding that addresses “the real concerns and real needs .” This involves communication that is “200% real”, that aims at finding and presenting the “real value” and a promise that must be delivered by C.E.O.s. It aims at finding out what the real needs are, what is really at stake and what can this company do to answers these issues.

Challenges with financial branding
Burton further contents that banks have faced the problem of intricate balancing between trust and reputation. Trust is built upon a feeling of reliance, while reputation in financial services is built upon the returns on investment. Namely credit unions might score high on trust, but brokerages and hedge-funds remain reputable as those that can increase the values of investors assets. Since all the investments are risky and especially those that involve different countries, cultures and unexamined business practices, brokerages and investment advisers need to build a strong feeling of trust and reliability among their customer base, present and potential.

Furthermore, many of the financial products have become so complicated that even their creators are unable to explain them. Presenting the information on potential investments is difficult because it is vested with uncertainties and risks. This difficulty is heightened when investments are international in nature.

Hypothesis:
This thesis presents the hypothesis that applying successful advertising; branding and marketing models previously used by most trusted companies or politicians to financial advertising could alleviate the current trust barrier and encourage short-term and long-term investments. Current financial advertising is prosaic, static and usually does not offer much emotional appeal. New form of advertising would aim at creating more connection between the brand, its customers and the world we live in. It would thus offer more reality, sincerity and connection.

This thesis also presents the hypothesis that applying successful social networking models could help connect people that wish to invest their money and people who need it to start or advance their business. Currently investment opportunities are not easily accessible, there is no comprehensive and user-friendly way for either entrepreneurs to find possible investors or investors to find investment opportunities. Using the social networking would enable people to create their own promotional materials online, give feedback and would enable investors to have more transparent presentation of opportunities and more control over their investments. This would also work to:
—Increase the overall productivity of the economy
—Increase the speed of circulation of money
—Engage investors more in the projects they invest
—Increase the transparency of investment projects

Research Methods
Throughout the course of this research I will try to answer the following three questions:
1.What are the solutions for restoring trust in financial institutions?
2.How can we make financial advertising visually exciting without undermining the seriousness of service?
3.How do we connect investors with good investment opportunities?
For the first question I will use comparative case studies, in order to find the common notes that made previous branding, advertising or marketing models successful. For the third question I will try to apply the advantages of social networking to the problems currently present at financial markets.
I will also use historical research methods in order to find out how did design solutions change with economic changes. I will in particular look at very turbulent times around the great depression in United States and how did designers responded. I doing that I will aim to gather as much relevant information about this topic as possible and also try to explain relationships between historical factors.

Long Term Goals
1. Awakening the interest in investing
2. Restoring and reinforcing the trust
3. Enhancing the clarity of information
4. Increasing the transparency
5. Extending the visibility of C.E.O.s and their accountability

Definitions
Brand is nothing else than everything everybody thinks of every time they see your logo or hear your name.
Branding has existed in different forms throughout history, just like advertising, sales and marketing. However, it is only in recent history that it has become a fundamental part of corporate vocabulary. It unifies marketing and advertising under a single umbrella of authenticity and differentiation. So whereas before marketing, advertising and corporate image were rather opportunistic and sometimes incidental, branding brings a vision that unifies them and thus makes them more dexterous and deliberate. Branding enriches the product or service with a story that makes it distinctive and unique on the crowded market.
Advertising is a communication activity designed to create public attention and persuade the viewer of the quality of the product, validity of the message or the value of the service. Advertising can also be informative and would thus inform the viewers of the characteristics of the product or services or just the availability of such.
Marketing is “the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. ”

Investment is the purchase of a financial product or other value with an expectation of favorable returns in future. Investment in general is the use of money in the hope of making more money in future.

I HISTORY
I.I History of advertising as applicable to current moment and financial sector
Advertising as the activity of attracting public interest is almost as old as humans themselves and we can only assume that primal advertising activities were political in nature and became more commercial with the advancement of trade. It could have in earlier stages been accomplished through word of mouth or simple drawing, later with more elaborate political gatherings and organized public games.

Heraldry, signs attached to the officers of arms became inevitable in middle ages. Coat of arms were carefully emblazoned on their uniform so that they could be identified by both friends and enemies in order to avoid identity confusion. The predecessor of contemporary public relations officers was a town crier, a person employed by the town council to make public announcements such as the results of battles etc. Around the mid 1700 printed advertisements started being used. By the middle of 1800 public advertising was being recognized as an opportunity to advance one's business and about at this time, financial advertisements started to appear in printed publications.

I.II History of Bank Advertising
Financial advertising in America was very conservative and records show that it was more to comply with government regulations than in order to attract business that financial institutions advertised at that time. The reason why financial advertisers were so adamant is that most of the advertising in its first print versions was very charlatan and braggart. Advertising went a long way from being a "fakir" activity into a reputable profession and now is the time to take it one step further in integrity and veracity.

Another reason why banks started advertising so late is because they were trained to think that banks should not appear to "want" business.
I. III History of bank marketing:
Already by 1930, American banks transformed themselves from passive money-keepers to aggressive business seekers. The marketing focus was on animating the population, increasing the speed of transactions and security of banking operations. Another important goal was to build more emotional intelligence among tellers and other bank staff in order to motivate the customers, strengthen customer loyalty and improve customer relations. Already at that time marketing teams were researching special target groups (women, students, minorities) to create specific target campaigns.

Financial firms spend the most money on advertising throughout 1980s (Burton, p. 26) but faced numerous strategic issues in the process. Not only was marketing of services heavily underdeveloped at that time, but bankers thought that selling chimerical images in order to make client acquire service they might not want or need is not in accordance with principles of good banking. In the second half of 80s banks started promoting a friendly image that has continued to be their marketing tone up until today. Banks promoted friendly, welcoming slogans such as "You are better off talking to us" from Barcleys, "We like to say Yes" from TSB or "The listening Bank" by Midland. These messages were not left uncriticized. It has been asserted that jovial and fun-filled marketing messages are in discordance with the financial planning and safe-keeping duties of banks.
I. IV Advertising after the Stock Market Crash of 1929
Once the advertising became entrenched i culture of consumption in 20s and 30s, advertisers were not only selling the product, but lifestyle fantasies. Conspicuous consumption is a term coined by American Norwegian sociologist Thorsten Veblen to indicate consumption that is not based on needs but desire to demonstrate wealth and status. Unlike Europe in 20s America saw the big economic expansion. Production outweighed the demand and designers played a big role in increasing the demand for goods and services by marketing desirable and often fantasy lifestyles related to the purchase of the product. Even after the stock market crash in 1929, graphic designers continued to portray desired opulence and abundance in their ads, despite the grim economic outlook. The fantasy of American Dream that might have seemed ironic during the depression was still present in advertising and form a powerful image, dare I say motivating? "The mass production of fantasy channeled consumption into market driven patterns." (Graphic Design History-A Critical Guide)
Depression economic plans and war preparation called graphic designers to public duties. Namely they created numerous public interest campaigns related to war recruitment of public cooperation in time of economic austerity. There campaigns utilized photography as a symbol of reality as well as crude information graphics to convey the authenticity and authority. among other things objectivity plays a strong role in gaining public trust and conveying authority.
2000 different posters created throughout the country supported the Works Project Administration. It’s also interesting to look at New Objectivity movement where the realistic photojournalism conveyed more sincerity and trustability so to speak than the embellished fantastic illustration or photomontages. Information graphics-in form of pie charts, tables and graphs, along with documentary photography was a new more subtle form of persuasion. With is plain and undecorated simplicity it rendered itself as self-evident.

I.V Historical precedents in advertising efforts to restore trust after the great public disappointment
Tylenol…

I.VI Recent history: Web design and social networking websites
Social lending is a phenomenon that has wedded web 2.0 with banking services . Websites such as Lending Club, Zopa or VirginMoney offer loans from people to people and by creating a community of lenders and borrowers they essentially create an online wealth management group. This presents a great challenge for banks. Competitors offer full transparency including open-rating, feedback and ability to compare deals instantly. Banks will have to frame their products to incorporate transparency criteria that has become a given for a new web 2.0 consumer.
Two leading social lending companies Lending Club and Virgin Money teamed up with other web 2.0 personal finance companies, including On Deck Capital, Credit Karma, Geezeo and ChangeWave to create an awareness campaign called UNCRUNCH AMERICA™ to provide credit solutions in midst of one of largest credit crunches in recent history. Its ultimate goal is to provide necessary loans for necessary expenses and critical investments and in doing so help relieve credit crunch and unclog the economy.
Tip’d is an online social platform for exchange of financial news, ideas, and tips. Users can vote on stories that they like and leave comments and they are the ones generating the content of the website. It is clean looking and well organized, allowing the reader to see the headline, number of votes and a small part of the story at first and than choose which stories they’d like to read further.
http://thepanelist.com/ is the blog for discussing socially responsible investments (so-called ethical investments). Their mission statement reads: “People managing their investments tend to be polarized into two camps: those that care about the world and those that care about maximizing returns for shareholders, retirement, college tuition or an endowment. But we know that the best way to profit is to do so responsibly and that the most effective way to make a difference is gainfully. This website is a forum for sharing knowledge with others that may or may not agree with you, where what you know will be challenged by what you learn. We encourage fearless discourse and comprehensive interpretation, as an effective panel is only effective insofar as it is inclusive, spirited and diverse.”

II THE ROLE OF FINANCIAL INSTITUTIONS
Finance = Maximizing wealth + Sound consumption + Long-term financial security
= Reaching life satisfaction

II.I Traditional role of banker
The bankers first and foremost duty is to store money diligently. However in today’s day and age even savers want to see increasing success that shows sustainable stability of the bank and stock holders demand increasing value of dividends. Thus a banker has to attract the money and also attract reasonable risks to attract profits.
Of course, banks and financial institutions today are offered more communication channels, more mechanisms and human resources to do more than just attract money. They are also regulators of the economy in a way that they can put money to good use and decide what the good use of the money is.
See post on progressive banker. New progressive banker keeps the qualities of an old conservative one-diligent, careful and responsible, but brings new values: awareness of the public affairs and the overall economy in which bank exists. Bankers are no longer obliged to regard public interests because of the laws and regulations, but also because the general public is more informed about financial affairs and more capable of constantly informing itself further.
II.II Recent changes in the role of banking and financial institutions
Traditionally depository institutions, banks are now an important factor of economic growth. They have presumed a more active role in economy by identifying and funding productive investments and in that way encouraging growth and productivity. Level of banking development (measured as the amount of bank lending to private enterprises relative to the size of GDP) also has significant positive correlation with economic growth and productivity. (Levine and Zervos, 1998) Bank affect economic growth mostly through th allocation of resources. They might act as intermediaries between investors and enterprenuers. They inform investors of the quality of the enterpreneur, project or the company whose equity they would like to acquire. In order to maintain their reputation, investment banks need to present facts properly and advise investors impartially.
II.III The future of banking
The future of banking is still very uncertain. Will new banks with clean slates replace existing ones? Will bank customers turn to Credit Unions? Both of these are probably true to some extend, but besides new banks and growth of credit unions existing banks will have to change. Chris Skinner of The Financial Services Club identifies 4 factors of change in banking sector:
1. Political-such as new regulatory regime
2. Economic-such as stagflation, deflation and increased protectionism
3. Social-such as trust erosion
4. Technological-such as the new transparency and social networking

III MEANING AND MANIFESTATIONS OF TRUST
a. Corporate culture, treatment of employees, company values etc.
b. Accountability-mechanism that will monitor and sanction the conduct of the trustee.
c. More subjective personal or social ground of trust. Sztompka calls it the "cultures of trust", namely our social and cultural learning upon which we make judgments as to whether something is trustworthy or not.

III.I What Constitutes Trust?

Biblical references: Money-lending as a sin

1. In time of web 2.0 and user generated media word of mouth (WOM) becomes more and more important factor of trustability. Allowing customers to leave comments might be a risky operation, but they will get the word out one way or the other and if they do it on banks website, bank has a better opportunity of controlling and managing its own reputation?

2. Corporate Social responsibility and Customer Satisfaction. One of the main perceived factor of financial sector malfunction is the offhand, arrogant and selfish behavior of C.E.O.s of major financial institutions. One of the ways of reclaiming the goodwill of disappointed customers would be to show the opposite-that C.E.O. are not only rectifying malpractices from past couple of years, but making a conscious effort to behave in tact with he accepted norms of corporate social responsibility.

3. The impact of emotional intelligence of bank's managers on building trust and increasing bank's performance. Research shows that trust is build upon: dependability, knowledge and expectations. Significant positive correlations were found between emotional intelligence and trust. Research shows that the contact person has a high significance on customer's loyalty and even more so when it comes to more complex financial products. "How financial advisors affect behavioral loyalty" find that rewards for financial advisers are important for delivering value to the customers. However inappropriately set up system of rewards might lead to exploitation of customers for the purposes of gaining commission against customer's best interest. In term of regaining trust and customer's loyalty, this practice might need some further insight and investigation.

5. Balancing traditional offline branding efforts with new online (direct response) marketing.
III.II Concrete examples of trust-building and manifestations of trust
Lessons from politicians
—Transcending honesty
—High level of intelligence
—Willing to deal with problems
that touch people’s life
—Sense of belonging to a group
—Prestige and authority
—Have goals and directions
—Offer a concrete plan

Lessons from civil society
—Habits of cooperation, solidarity and public spirit
—They are democratic and non-exclusionary
—Engagement in a larger cause

Lessons from American Heros
Harris Interactive had a recent poll on who Americans admire enough to call their heroes. You guessed it: Obama, Jesus and MLK top their list. Why?

—“Doing what’s right regardless of personal consequences” (89%);
—“Not giving up until the goal is accomplished” (83%)
—“Doing more than what other people expect of them” (82%)
—“Overcoming adversity” (81%)
—“Staying level-headed in a crisis” (81%).

III.III Social Responsibility Of Banks as an investment in “trust-mark”
Public Relations expert Al Golin in his book "Trust or consequences" warns that unless company's reputation is consciously upheld to a highest standard, consequences will arise. Pronominal C.E.O. policy of "Do not fix it unless its broken" will not suffice in time of immense information speed and unseen media transparency. Some of the examples of broken trust include Catholic Church, whose credibility has been broken by unsound behavior of its priests, but so much more so by the consequential lack of action by higher church official. Another example is Tylenol's scandal, that actually was mended, due to the fact that Johnson & Johnson is such a sound and healthy company that has always invested in its "trust-mark".
If banks would actually show that they are socially and economically responsible this would lead to an increase in trust See. Ethical and socially responsible investments
Offering so-called "ethical trusts", investments in companies with strong corporate principles such as denouncing animal testing or not using child labor has proven to be a more profitable and stable investment that the others (Burton, 1994)

IV ATTRACTION FACTOR
"In art truth is the means to the end. In science it is the only end."
Is advertising art or science?

Boyd and Mason (1999) and Aaker et al. (2004) identify attractiveness and self-connectedness as two crucial aspects of a successful brand. Financial services do not lend themselves easily for visually exciting design. As prudential services they can play to certain human emotions, plans and ambitions, but all of these are often confined in terms of how far can a fantasy go. Highly differentiated financial services are also somewhat of a luxury item for high-level investors and clients and might also be a status symbol. How can we make financial advertising visually exciting without undermining the seriousness of service?
Selling wealth and prosperity

IV.I Analysis Of Target Audience (Managing Preferences)
If we accept advertising is a science, good advertising should appeal to a particular group as opposed to everybody in general. That way we can have more information on lifestyle, preferences, income and management of the disposable income of a particular group.
It is pretty safe to say that all people are interested in making money. However, different figures carry different levels of credibility for different groups. It is also safe to say that people will go to the bank where most of their peers deposit money and will deposit or invest an approximation of what their peers do.

1. Large scale investors
2. Women
3. International Investors

IV.II Advertising Strategies
Make-believe Advertising or Reality branding?
The problem with nowadays branding and advertising is finding the right balance between reality and make-believe. Certain amount of make-believe is intrinsic to advertising, because people of all educational backgrounds respond better to emotional messages than strictly logical ones. The first step is to catch someone's attention visually. Although attractive visuals can get our attention, they need to have more ground in order to keep it. And once attractive visual is create and there is an interest, conviction is of utmost essence. Any advertisement, be if print or web needs to render itself veritable, reasonable and correct. The utmost goal of any advertisement is not instant satisfaction of the viewer or appreciation of its artistic or erudite qualities, but rather an action from the viewer. Thus good advertising needs to cover both emotional and rational ground, in other words, inspire "desire", reinforce it and make it materialize into action. The first comes as an instinctive and emotional response to the overall presentation, while the second comes as a logical rationalization that this desire is legitimate and that the advertised business can materialize it in trust-worthy manner.

Personality-Based Advertising
Aaker and Biel (1993) contend that personality increases brands' goodwill. Namely brands always pruport that certain kind of person would be their customer and target a certain type of desired persona that the product invests upon a customer. In its iconic ad, Malrboro promoted the idea that strong masculine provider is a kind of person that would smoke their tobacco, accenture chose Tiger Woods as their face to promote the idea that Type-A over achievers and winners used the their services. A personality of a brand is important as it transfers of to the consumer and differentiates the consumer from his/her peers.

Information design and New New Objectivity
Expressionism New Objectivity
ecstatic objects plain objects
many religious themes few religious themes
the stifled object the explanatory object
rhythmic representative
arousing engrossing
dynamic static
loud quiet
summary sustained
obvious obvious and enigmatic...
monumental miniature
warm cool to cold
thick coloration thin layer of color
roughened smooth, dislodged
like uncut stone like polished metal
work process preserved work process effaced
leaving traces pure objectification
expressive deformation of objects harmonic cleansing of objects
rich in diagonals rectangular in frame
often acute-angled parallel
working against the edges of image fixed within edges of image
primitive civilized

IV.III Advertising across financial products
Particularities related to international investments

V. INTERACTION FACTOR
"Instead of marketing at customers, our job in the digital age is to get customers working with us and for us. And you do that by working with them and for them. This is where the new marketing energy and breakthrough results are to be found.”
Mark Beeching, Chief Creative Officer Digitas

Advertising in post-advertising era:
1. Importance of transparency and clarity
2. Reality Branding
3. Lessons from politics: inspiring trust and maintaining it through accountability
4. Lessons from grass-root social movements
5. Increasing customer's control
It is safe to say that we live in time of visual pollution, information overload and increased accessibility, web-expansion and time shortage. It is very important to keep these in mind when developing a competitive strategy. Visually it has to clean, it has to be short to the point and easily accessible. Also it has been noted that dominant position in the market is no longer held by companies, but by consumers, who can organize quicker and in a more effective way to judge and criticize products, services and company practices in general.
V.I Active Finance
—How do you invest?
—Where do you invest?
—How are you informed about the value of your stocks?
—How are you informed about the progress of the investments you have made?
—How are you informed about the projects you can invest in?

V.II Social Financial Networking
—You can see what others are doing?
—Where they are investing?
—What are they saying about their experiences?
—System of rating projects and investment opportunities

V.III Internationalizing Investments
In his book The Post-American World, published before the Wall Street crash in 2008, Fareed Zakaria argues that another global power shift is approaching. He argues that American power will not decline as much as "the rest" will rise—countries like China, India, Brazil, Russia. Arguably, new world economy will be “defined and directed from many places and by many peoples.”

Emerging markets are a key factor in the future growth of the world economy and offer a great, if risky opportunity for US investors. (Xie and Boggs, 2006) An emerging markets comprise countries experiencing strong rapid economic development along with liberalizing their economic and political conditions. (Arnold and Quelch, 1998). Because of the slows growth in developed countries, investors are tempted to turn to emerging markets for business growth and expansion. (Xie and Boggs, 2006) Namely, the competition is sparse, the size of the market might lead to a significant demand and the overall level of communication design might be substandard which leads to improved returns in marketing efforts.Findings also show that better integrated international stock-market would increase hi-return investments and risk-sharing and thus overall productivity and growth.

Investment opportunities in emerging markets have been more laboriously investigated and explored by global investors in last 20 years. International Finance Corporation research shows that investments in emerging markets (including those that are "re-emerging") have high returns and low covariances. (1)

Foreign direct investment in Africa, despite its wide range of opportunities, has been really low as the investors are still perceiving the continent as troubled with civil unrest, conflicts, disease and disasters. Furthermore the continent is still perceived as one and no serious attempt has been made to differentiate between more than 50 countries that form it. Recent FDIs in Africa have been proven to provide consistently high returns. (Odenthal and Zimny, 1999)

• Enron, Cisco, and Nortel, among others, are recent examples of firms whose managers' corporate actions were (or are, as the case may be) designed to sustain overvalued stock shares by pursuing corporate strategies that reflect analysts' pressure for higher growth targets. These cases, among others, clearly suggest that when companies try too hard to meet analysts' unrealistic forecasts they often fail to undertake shareholder value maximizing corporate actions. (Do Analysts Influence Corporate Financing and Investment.)

As investment opportunities in developed countries become limited and R.O.I. becomes only moderate, international funds and private investors are shifting their focus towards developing countries where investment opportunities are larger, riskier and returns might be higher.

Factors of national competitiveness: (Kahle and Kim)
Material: Endowed resources, Demand, Infrastructure, Market size and Transportation and communication
Human resources:
Workers, Politicians, Social structure and social infrastructure
But besides there objective factors, there is psychological proximity to a given country that comprises many diverse factors such as education of people, culture, ethics, reliability, level of education etc. If the level of psychological proximity of a country is higher the investor will be more likely to invest in these countries. International exchange, international events, conferences etc, are for of "direct" exchange that most intensely shape the image of a given country and affect the level of psychological proximity.

PUBLIC DUTY OF BANKERS

2009-02-18T15:50:00.000-08:00

PROGRESSIVE BANKER

2009-02-18T15:38:00.000-08:00

Meatball Sundae: New Marketing and How It will Change your Business

2008-08-01T13:57:00.000-07:00

Meatball is the substance of what you are as a business. New marketing ( webe 2.0, social networking...) is a whipped cream and a cherry on the top. But its is not magical. The only magic it can provide is if it manages to make the organization change. Just as industrial revolution drove organizations to change , the digital revolution should do the same.
Google has broken the world into tiny little bits with, it being the doorman that chooses which way the visitor will go. You cannot know which way the customer will find you so it is important to make the entryways numerous. Thats why it is important to bundle with other organizations, related businesses, donations, charities, TV shows etc.
You are in direct communication with a customer. Make that an asset! This will change the business for everyone.
Customer review boards are accessible by almost everyone now. No need to fear the famous food critics anymore. You have to offer your best service to everyone.
No attention left so make it short, short, short...If your craigslist add does not sound perfect after 2 sentences its gone. There are millions to choose from.
Politicians used to be able to appeal to extreme and moderate voters by using different stories at different places. Now as you tell one story in West Virginia, viewers in California are watching it on youtube. So, get you story straight!
(Almost) everyone wants choice: The sales of 150,000 titles in a big book store account for perhaps the half of amazon.com total sales. If you aggregate the millions of poorly selling titles on Amazon they still add up to the total sales of top selling books in physical world. That means that there are no more kings and queens in any aisle. The amount of choices beats any particular-top seller.
Google traffic and how it work: The Kahn Law firm is paying to appear every time someone searches for Bextra-discontinued pain reliever. They are filing class action on behalf of people injured by Bextra and they figured this would be the best way to reach to reach to new clients. Adwords on google are paid by the click. The advertiser determines what is worth to get a visit from an interested , qualified and motivated consumer and pays exactly that. If someone else is willing to pay more they will get the traffic!

New York Times: Kirchner's Berlin Street Scenes at MoMA

2008-08-01T12:29:00.000-07:00

Berlin’s Street Scenes

"Vigorously realized in jagged brushstrokes, lurid pinks, greens and yellows and shades of charcoal black, they depict stylishly dressed streetwalkers and furtive men on the vertiginously tilted streets of an infernal city. As represented in Kirchner’s angular, semi-Cubist style, the prostitutes resemble praying mantises or queen wasps, and the men are like anonymous drones." (Ken Johnson of the NY Times_Ken Johnson)

"Kirchner was not a gifted painter, but his paintings have a bracing ugliness and a burning emotional intensity. Looking at his claustrophobic pictures is like seeing through the feverish eyes of a lost and tormented soul. Considered among the most important achievements of Kirchner’s career, the Berlin paintings are exhibited together for the first time here."

"The exhibition also includes about 60 drawings and prints, which tell much about Kirchner’s working methods. He did not base his paintings on careful preparatory drawings. Rather, he filled notebooks with scribbly, often indecipherable pencil sketches made while wandering the streets. In the studio he created more fully formed pictures on paper and canvas.
In 1905, Kirchner founded an artists’ group called Die Brücke, or the Bridge. Influenced by Van Gogh and Matisse, medieval printmakers and the arts of the South Pacific, the Brücke artists rejected academic conventions in favor of a direct and spontaneous freedom of expression.

In retrospect it is impossible not to read the anxious urban vision of Kirchner’s Berlin paintings in light of the approaching war. Our knowledge of what was to come gives them a giddy, edge-of-the-volcano excitement and a prophetic urgency.

There is an explosive tension in the works between male and female and between forces of disintegration and containment. Sadly, it is the opposite of the Brücke’s holistic vision of artistic, sexual and natural harmony.

But it is not too much of a stretch to see the Berlin street series as a desperate, last ditch effort to hold together, if only through the magic of metaphor, a world that was about to be blown to smithereens.

See the complete slideshow at NYTimes website.

Art or Artful self-promotion

2008-07-25T09:15:00.000-07:00

Chanel Mobile Art exhibit in Central Park promoting Chanel’s classic 2.55 quilted-style chain handbag is rising a bit of controversy over the blurry lines between art and advertising and feeble balance between business and environment.

Chanel wants us to believe that Zaha Hadid’s 7, 500 square feet pavilion showcasing artwork inspired by classic chanel bag is just a gracious art exhibit provided by our generous curators. The website explains that “poetic, cheeky and inspirational” artistic versions of its emblematic bag contained in the spacecraft like contained designed by Zaha Hadid will be flown out to lucky viewers in Asia, Europe and United States. The exhibit will feature artists like Sophie Calle, Loris Cecchini, Sylvie Fleury, Subodh Gupta and Yoko Ono.

One of the museum locations is Central Park, a non-commercial oasis in one of the most vibrant business centers. The fear is that this preserved natural landmark of New York might fall victim of a perilous commercial trend. The economics of Central Park management played into the new art vs. advertising scheme. The Central Park Conservancy provides 85% of the whole annual operating budget which is 27 million US dollars. In April 2006 the Conservancy reached the new contract with the City which erased all limits on the amount of commercial concessions it can make of the park. Building on this legal base, Chanel was generous enough to treat us to an exhibition of its own classic. What’s next? Toyota’s artistic spin on its own vehicles? Where do we draw the line between art and artful self-promotion?

Economics of Advertising

2008-07-25T09:09:00.000-07:00

Internet Ad spending will rise in spite of economic recession

“Clients are saying: ’We don’t want big ideas, big projects. It’s about messages that are effective and right to the point.”

(Accary, BBDO Paris)

When economic slump hit United States, advertising firms were affected by major cuts in marketing budgets majority of the companies had to undertake. European advertisers were still safe, but the global rise in energy and food prices is now affecting European marketing budgets as well. Valérie Accary, president of CLM/BBDO in Paris says: “Definitely, if our clients suffer from higher petrol costs, spending is going to be affected. So far we haven’t seen it, but the second half is a big concern.”

ZenithOptimedia, European media buying agency is downgrading its advertising budget and it will only grow by 3.7, which is slightly more than inflation rate. These numbers are not only revealing the general advertising slouch resulting from the economic recession, but also showing the more dramatic shift towards internet advertising that will take away from broadcasting and print allocations.

“If you’re in some of the traditional media in Western Europe, you’re not going to see much growth over the next year or so”

Jonathan Barnard, head of publications at ZenithOptimedia in London

Among the big European markets, Britain and Spain are predicted to be at highest risk, as their economies slow sharply in response to housing slumps. British newspaper publisher Trinity Mirror reports that advertising had fallen 12.6 percent in May and June.

Contrary to speculations that internet advertising will be cut first in face of economic recession because it is still deemed “experimental and nonessential”, ZenithOptimedia’s research shows that Internet ad spending will rise 32 percent this year. Clients feel that it is easier to see the value for their money through internet ads. It is simple and straighforward. “We don’t want big ideas and big projects, we want messages that are effective and right to the point” is the general message from clients, says Ms. Accary of Paris BBDO.

Retrieved from New York Times

Less, less, less

2008-07-25T09:05:00.000-07:00

~Welcome to our website (it's just one page)~

As our attention span is getting shorter and our visual tolerance lower, is minimalism the trend that will be the future of (non) design?

PUREMEDIA a graphic design and web development studio has decided to change their website from classical designed multi-page interface to the simple black and white image-free one page layout. One page. One image-the one of their older website they have discarded. If you want to find out more you can contact them by phone.

Gaining attention on World Wide Web is getting harder everyday. Puremedia aims at gaining visitors attention for just couple of minutes and they have decided to proclaim their values clearly, concisely and effectively.

Seth Godin gratifies web minimalism with his principles for creating a great web-design:

1. Three people are enough to conceptualize the website. Fire the committee.

2. Bring new interactions, but make them intuitive and easy to use.

3. “Fewer words, fewer pages, less fine print.”

4. “What works, works. Theory is irrelevant.”

5. “Insight is good, clever is bad. Many websites say, ‘look at me’ Your goal ought to be to say, ‘here’s what you were looking for.’”

The Designers Accord

2008-07-20T16:37:00.000-07:00

"I felt we were in a unique position to have a productive conversation with these companies about creating positive environmental and social impact through design, but I simply didn't have the right arguments or the knowledge required to engage in a meaningful conversation. ..I vowed that I would never to be in that position again."

In context of integrating larger socio-economic issues and design, The Designers Accord (the Kyoto Treaty of Designers) is a grassroots movement aiming to integrate sustainable thinking into design practice. Core77 interviews Valerie Casey, the founder of this Accord.

How did it all start?

Valerie: "I was zigzagging between pitching a packaging project for a major delivery service and talking about high-tech diaper designs for an enormous paper goods company. Great people on the client teams, but their companies didn't have sterling eco-friendly reputations. As design consultants, I felt we were in a unique position to have a productive conversation with these companies about creating positive environmental and social impact through design, but I simply didn't have the right arguments or the knowledge required to engage in a meaningful conversation. I was so frustrated...I vowed that I would never to be in that position again."

What is designers' Kyoto Treaty?

Valerie worked on creating a "Kyoto Treaty" of design enlisting 10 guidelines for design firms to adopt, among which a vow to talk to each client about environmental and social impact of their products, and sharing knowledge about methods and practices with each other. Designers Accord is basically a policy guideline for design firms and is based around the concept of information sharing and collaboration. Designers are in a position to be somewhat detached from numerous industries they cooperate with and are in position to bring attention to larger social environment in which we live.

"So much of this "green" conversation happens one-on-one--through IM or email, at a conference break or over a glass of wine. What we are trying to do with the Designers Accord is to enable this dialogue at a large scale so more opinions and voices can enter the conversation." says Casey.

The ultimate goal?
Valerie Casey hopes that ultimately sustainable thinking will become fully integrated in how we design. "In the same way that the creative industry has embraced new technologies, design research, and the business factors in our work, thinking about the ethical footprint of a product or service should become just another strategic decision-making vector."

Switching gears from designing for to designing with people

2008-07-20T10:57:00.000-07:00

"I don’t know what’s up with Starck. I suspect that with sustainability reaching the tipping point as the global culture—and with the global economy tipping into recession—the kind of design excess that Starck does is revolting even Starck."

Nussbaum believes that designers themselves are undermining the prominence of design by shouting left and right that design is dead because of the yet unseen design democracy and availability of design tools to everyone. Maybe exceptional design can only be done by exceptional designers, but design is becoming the part of everyday life of everyday people and it is the fact. So this is how he defines the challenge: "How do you switch gears from designing for to designing with?"

Design as process will move away from fashion, graphics, products and services into economy, transportation, education, much as an approach to life, philosophy of thinking, a method of problem solving. Designing sustainability will be one of the major trends as well.

"Over the past decade, design has evolved to become an articulated, formalized method of solving problems that can be widely used in business—and in civil society. Design’s focus on observing consumer/patient/student—human behavior, it’s emphasis on iteration and speed, its ability to construct, not destruct, its search for new options and opportunities, its ability to connect to powerful emotions, its optimism, made converts out of tough CEOs."

Business man and woman don't like to call it design. They call it innovation. And it is the same thing Starck called "The design of concepts". So there is still work for all. Good luck.

Is design dead?

2008-07-20T09:51:00.000-07:00

One of the most famous industrial designers of our time Phillipe Stark apologized for the waste he has caused with his design in his interview with German magazine Die Zeit in March.

“I was a producer of materiality and I am ashamed of this fact. Everything I designed was unnecessary. I will definitely give up in two years’ time. I want to do something else, but I don’t know what yet. I want to find a new way of expressing myself …design is a dreadful form of expression…. In future there will be no more designers. The designers of the future will be the personal coach, the gym trainer, the diet consultant.”

In this infamous interview famous designer declares that what people need is LOVE, INTELLIGENCE AND HUMOUR. "Love is the most wonderful invention of mankind. And then, one needs intelligence. Mankind, as opposed to animals, has managed to create a civilization based on intelligence. For this reason, no human can afford to not work on their intelligence. And humour, humour is important."

When the famed creator of so many (un)necessary objects ranging from toothbrush to vechiles decides to proclaim that you do not need material objects at all, except maybe a pillow and a mattress, it surely sounds just like an exposed life crisis and a very misconstrued evaluation of own work.

But it did provoke a lot of discussion in design circles. It is not a secret that the world is changing faster than anyone would like to admit, the design will be transformed as well and designers will need to adapt to it rather quickly.

Stark regretfully observes that design is absolutely void of usefulness. "I have tried to install my designs with a sense of meaning and energy, and even when I tried to give my best it was still in vain." He is relating this to a complete dematerialization of the way we will live and foresees the world in which the computer will be a chip installed in our bodies. Instead of designing things, he will move on to design concepts. And maybe we should too?

Excerpted highlights from How Designers Think

2008-07-18T08:28:00.000-07:00

There are no optimal design solutions

Design almost invariably involves compromise…. Rarely can the designer simply optimize one requirement without suffering losses elsewhere…. There are no established methods for deciding just how good or bad solutions are, and still the best test of most design is to wait and see how well it works in practice. Design solutions can never be perfect and are often more easily criticized than created, and designers must accept that they will almost invariably appear wrong in some ways to some people.

Design solutions are a contribution to knowledge

Once an idea has been formed and a design completed the world has in some way changed. Each design, whether built or made, or even if just left on the drawing-board, represents progress in some way…. Thus the completion of a design solution does not just serve the client, but enables the designer to develop his or her own ideas in a public and examinable way.

The process involves finding as well as solving problems

It is clear from our analysis of the nature of design problems that the designer must inevitably expend considerable energy in identifying the problems. It is central to modern thinking about design that problems and solutions are seen as emerging together, rather than one following logically upon the other…. [B]oth problem and solution become clearer as the process goes on.

Design is a prescriptive activity

[D]esign is essentially prescriptive whereas science is predominantly descriptive. Designers do not aim to deal with questions of what is, how and why, but, rather, with what might be, could be and should be. While scientists may help us to understand the present and predict the future, designers may be seen to prescribe and to create the future, and thus their process deserves not just ethical but also moral scrutiny.

Designers work in the context of a need for action

Unlike the artist, the designer is not free to concentrate exclusively on those issues which seem most interesting. Clearly one of the central skills in design is the ability rapidly to become fascinated by problems previously unheard of…. Not only must designers face up to all the problems which emerge they must also do so in a limited time. Design is often a matter of compromise decisions made on the basis of inadequate information…. Designers, unlike scientists, do not seem to have the right to be wrong. While we accept that a disproved theory may have helped science to advance, we rarely acknowledge the similar contribution made by mistaken designs.

retreived from http://www.cameronmoll.com/

Top 30 Web Design Mistakes

2008-07-17T12:59:00.001-07:00

The List of the Top 30 Web Design Mistakes

Rank "Votes" Top 30 Web Design Mistakes
1 630 Our site tries to tell you how wonderful we are as a company, but not how we're going to solve your problems.
2 617 We've designed our site to meet our organization's needs (more sales/contributions) rather than meeting the needs of our visitors.
3 289 We say "Welcome to..." on our home page.
4 275 It takes longer than four seconds for the "Man from Mars" to understand what our site is about.
5 244 The "Man from Mars" cannot quickly find the focal point of the home page.
6 222 Our site doesn't make us look like credible professionals.
7 177 Our home page — or any page — takes more than four seconds to load.
8 177 We never conduct user testing.
9 174 We don't analyze our log files.
10 171 We don't know which design items are not necessary.
11 162 Quickly scanning the page doesn't tell our visitors much about its purpose.
12 159 We have not eliminated unnecessary design items.
13 157 The "Man from Mars" cannot quickly find the focal point of the current page.
14 129 We don't know if our site looks the same in the major browsers.
15 128 Our pages have too much/too little white space.
Rank "Votes" Top 30 Web Design Mistakes
16 124 Our site mixes text colors on the page.
17 123 We don 't put design elements where our visitors expect them.
18 121 Logo is not on the top of every page and clicking it doesn't lead to the home page.
19 118 Visited links don't change color.
20 113 Our site doesn't make visitors feel they can trust us.
21 113 We don't identify PDF files with an icon.
22 110 Our site uses divider bars.
23 108 Our logo does not look like it was professionally made.
24 107 No one has spent the time figuring out if our color scheme alienates our international users.
25 103 Our site breaks when visited with the Javascript turned off.
26 101 Our site doesn't have a privacy or legal statement page.
27 100 Our site mixes and matches text sizes on the page.
28 97 We don't know what content is popular.
29 95 Our site's design was "borrowed" from another site.
30 93 The important content does not fit in the first screen.
30 93 We use justified text.

retreived from http://www.webpagesthatsuck.com/top-30-web-design-mistakes.html

How to Make Your Web Site Sing for You

2008-07-17T12:52:00.001-07:00

Make the content addictive: Vincent Flanders, a Web design consultant from Seattle says that the website must have some sort of addictive content. “People must be willing to crawl through a sewer for it.”
Make it crystal clear: Research shows that users spend 30 seconds reviewing a home page. Jakob Nielsen, a Web site consultant and author of the book “Prioritizing Web Usability,” urges web designers to get the message understood immediatelly, because viewers are a fickle bunch. Think about what the viewer want to see. For example for food stores and restaurants most viewers would like to know what are the working hours. Sometimes this important piece of information can only be found after 15 minutes of digging through various web pages. Baris Cetinok, Microsoft’s director of product management for Office Live claims that people must be able to immediate find out “who you are, what you do and how people can reach you”.
Make certain that the content will work with different viewing options: Neil Hettinger, co-owner of Lead Pencil Ad Design argues that designers usually located in Los Angeles or New York "think everyone has a large monitor and a fast D.S.L. connection". Of course it is not always so and Nielsen suggests making legibility a priority and using thumbnail photos that can be enlarged when clicked on.
Get rid of everything NOT necessary: Forget large, spinning graphics that take a long time to download. Besides, graphics do not help a site get discovered by Google or Yahoo. Theytroll the Internet for key words, as well as the frequency and quality of one site that links to another. Text that is embedded in graphics never gets discovered by google or yahoo.

Retreived from: "How to Make Your Web Site Sing for You" By ERIC A. TAUB in NY Times online edition (published: November 15, 2006)

Down with Helvetica

2008-07-04T16:48:00.000-07:00

"Fonts can shape reality in intangible ways, as Phil Renaud, a graphic designer from Phoenix, discovered when he studied the relationship between his grades and the fonts he used for his college papers. Papers set in Georgia, a less common font with serifs, generally received A’s while those rendered in Times Roman averaged B’s."

How important is it nowadays to set yourself apart with typefaces you use? Apparently even more so than handwriting was back in the age. Popular typefaces such as Arial, Futura and ever-so-popular Helvetica do a fine job with legibility and readability, but will not do much to set you apart.

Erik Spiekermann once said that designs with Helvetica are never going to be too bad, but are also never going to be too good. Its an easy solution fo almost everything. But as people are becoming more and more aware of different typographic possibilities, Helvetica is losing its appeal to more personzlized typefaces:

"Some people with degenerating handwriting are freezing their script in a font. Scrapbookers are casting their lettering into a font so they can have a personal look. Battle re-enactors are even printing out orders in historically accurate typefaces."

Fontstruct.com is a website that allows you to both create your own font and socialize and network with others that do. Now almost anybody can use this easy and fun tool to create a typeface for any occasion and opportunity. Other websites would also create a custom font out of anyone's handwriting for around 200$. FontForge (fontforge.sourceforge.net)is FREE open-source software that permits editing of font files.

retreived from NY Times online edition

Book review: "Decoding Design" by Maggie Macnab

2008-07-04T16:34:00.000-07:00

"Maggie Macnab's Decoding Design applies the science of mathematics to design elements of typography and graphics, so it should totally be up my alley. As an occasionally aesthetically-impaired former mathematician who happens to work in design, I love that the restrictive rules of the grid let me manufacture an appealing layout without exercising any artistic judgement. The grid, that end-all-be-all of layout, is modular arithmetic. Decoding Design addresses shape and form numerically, but it also does a lot more, and that's why, as someone who does know something about number theory (as opposed to numerology), Maggie Macnab's book is both wonderfully fascinating and endlessly frustrating."

Macnab examines circles, spirals, squares, triangles and numbers as the basis of all visual content. Besides analyzing strict mathematical rules that guide the nature as well as the design process, Macnab also explores the myths and symbols and how they translate into modern identity design. The article author concluded that this somewhat murky analytical process using the exactness of mathematics and elusiveness of Jungian archetypes does produce pleasing results as exemplified in work of Maggie Macnab. (http://www.macnabdesign.com/)

(from core77.com)

The cheaper your product, the less white space you want to use

2008-07-03T11:42:00.000-07:00

An article Whitespace by Mark Boulton discusses the application of principles of graphic design in general to web design. Boulton poses the question: Is white space really just an empty space when it comes to direct e-mail?

The author compares design challenges in newspaper design with design challenges in website design. Both have heavy content requirements, making it difficult to add white space.
Erik Spiekermann was tackling this challenge when he redesigned "The Economist". He added more whitespace to the individual characters, set the type slightly smaller and increased the leading. All these changes added micro whitespace to the design.

White space adds elegance and sophistication to design, but is that always desirable? If you are trying to convey the message that your product is easily available and cheap, than probably not. As much as designers would like to resist it, the lack of white space may send the right message to the consumers: we're down-market and we're cheap.

Retrieved from: http://www.alistapart.com/articles/whitespace

Screenagers

2008-06-30T13:07:00.000-07:00

Who are they?

They are simply "teenagers who are always looking at the screen." They are one of the most desired marketing targets. Not only is it impossible for their parents to denounce them something that is "sooo much fun" to them, but they are also just forming their tastes and preferences and if you get them hooked on something now, they might stick to it for a long while. 83% percent of them use email, 42% use chat rooms and 77% live in a home with a video game system.

Tips for marketing to screenagers (retreived from www.marketingprofs.com)

Let them be heard! Teen sites that give them a place to be heard, a place to belong, are more likely to be well received.
Be relevant to their lives: read their magazines, know which celebrities they love and hate (beware, this changes very rapidly), know what delights and infuriates them, and populate your site with it.
Get the language right
Tap into celebrities: Kids follow the lead of their favorite stars. According to Michael Landau, general merchandise manager at Yahoo! Shopping, "Celebrity fashion is a huge driver of consumer purchasing decisions.."

Charateristics:

They love games, music and socializing.
They love technology and hip designs, but they do not want to spend too much time figuring it out. They like things hip and simple.
They want to keep up with their peers, know what's going on and what's cool at the moment.

Websites that cater to screen-agers:

Display very flashy bright colors
Are allowing them to interact, socialize and express their opinions
Use friendly and grungy fonts, script fonts and comic fonts, and in case of many web 2.0 websites really clean sans serifs.
Use lots of grungy patterns, explosive backgrounds
Many networking websites also use bright glossy buttons
They are utilizing larger fonts for smaller portions of text, rather than cramping large chunks of text in one place
Even with many pop ups and buttons they are still easy to figure out and simple to use

Traditional website I chose is John McCain's:

www.johnmccain.com

Reference websites:

http://www.barackobama.com/index.php

http://www.cwtv.com/shows/gossip-girl

http://www.jonasbrothers.com