|Trends and opportunities in financial advertising|
It is important that Afrikaans is retained as a financial reporting language – not only because of the firm cultural foundation and the substantial part it plays in South Africa, but also because it is an appropriate way to ensure that Afrikaans-speaking shareholders can fully understand and assimilate company information.
This area of financial reporting which is largely hampered by traditional formal language use in South Africa, offers immense opportunities going forward.
“Financial reporting leaves much room for improvement when considering transparency and simplistic, understandable language that is accessible to all stakeholder groups. Other countries are ahead of South Africa in the use of comprehensible language.
“With an immensely diverse population and various language groups, clear and to-the-point communication is particularly important. Companies that succeed in communicating with their stakeholder groups in colloquial or plain, intelligible English or Afrikaans (making it as simple as possible) will see great breakthroughs,” comments De Roock.
Transparency remains a challenge as many companies are concerned that their plans will not come to fruition.
“For the sake of transparency and accountability, plans and strategies must be set out clearly for clients. If it does not come to fruition, explain why not – it ensures credibility.
“Many senior executives are slow to provide information as they are wary of competitors reading it. However, the fact is that it is not only competitors reading it, but also shareholders, analysts and other stakeholders that would like to know what management plans to do with the company,” said De Roock.
“Few people know where to draw the line between competitive information and good, transparent information that will convince one to invest money in a certain company. This is so precisely because the plans and strategies clearly indicate which direction the company will take – making it a worthwhile investment.
“An investment on the JSE is not aimed at short-term yields, but at medium to long-term returns. Therefore, investors must be all the more convinced to invest.
“As for transparency, integrated reporting will come into its own,” she said.
Ironically, transparency and simplistic communication is nothing new. Its importance has just not been fully accepted, she believes.
Companies can use annual reports more effectively by improving the structure. This means that annual reports should be divided into more ‘digestible’ segments that can be used separately.
“Few companies realise for instance that they can use their annual reports to ensure that employees – who are important stakeholders in the company – are informed. If it is written in simpler language and structured correctly, it need only be slightly adapted to be presented as an employee report. It will ensure immediate widespread exposure and will send out an important message with an effective domino effect at a relative low cost.”
She expects that financial reporting and advertisements, which has been scaled down in the last two years due to cost factors, will continue this trend and are not likely to recover to its former ‘glory’.
“Financial advertisements have always been a grudge expense due to compliance and regulatory requirements. Owing to the economic climate everyone had to cut costs. Therefore, financial advertisements, from a visual perspective, have become simplistic and ‘clean’ over the last few years – not necessarily a bad thing,” said De Roock.
In terms of content, the opposite is happening.
“Less space and more information have made it more intensive, yet more concise and relevant. With more information required from a compliance and regulatory perspective, companies are forced to make communication more succinct.
“However, smart companies that understand integrated reporting will realise that they can drive their message home with their stakeholders by spending relatively little extra money. These companies will also realise that they need to communicate with different stakeholders groups in different ways,” said De Roock.
Adapted from an article published in Media 24 on 22 November 2010 and originally written by Wilma de Bruin, Johannesburg