Feature

Politics: Along party lines

In an increasingly transparent political climate, brands are avoiding the pitfalls of aligning themselves with a single party By Alexandra Jardine.

We may be only a few weeks into the new year, but the country is already gearing up for a spring general election. Ministers are preparing to mount their soapboxes, agencies are plotting political ad campaigns, and everyone seems certain - although it has yet to be confirmed - that we will be going to the ballot boxes in May.

In a climate of increasing apathy and disillusionment among the electorate, strengthening voters' convictions is uppermost in parties' minds. In recent years, they have been able to tap into the implicit support of commercial brands, which can offer them not only funding, but also cachet by association.

Lord Kalms of Edgware, former chairman and now president of the Dixons Group, is a one-time treasurer of the Conservative Party and remains a Tory donor, for example, and his company has become known for its Conservative allegiance.

However, in a political and media environment that has enforced a clampdown on sleaze, companies are more wary of tying their brands to party flags. In fact, businesses are becoming just as reticent as their consumers when it comes to backing a political party.

Laws introduced in 2001 have made the UK political donation process far more transparent, which means that, today, parties must declare all company donations of more than £5000 a year to their head office. The results are published quarterly by the Electoral Commission on its website.

With donations open to public scrutiny, it is glaringly obvious if companies align their brands with one party. While a handful of big names still make contributions - Tesco, the Co-operative Group and Fidelity Investment Management, for example - many have withdrawn.

In 2002, BP - previously a major political donor - announced it would stop making donations, following the scandal that ensued over the collapse of US energy firm Enron.

Price of donations

'The days of corporations throwing large wads of cash at political parties are over, thanks to electoral reform and the post-sleaze political environment,' says Kevin Craig, who has worked as a lobbyist during the terms of office of both John Major and Tony Blair, and is managing director of public affairs consultancy Positiv Communications. 'If there is any risk whatsoever to the brand or corporate reputation in making a donation, I would advise the client against it.'

Indeed, making a political donation today probably has more negative consequences than positive, according to Colin Byrne, UK chief executive of PR consultancy Weber Shandwick and a former adviser to Peter Mandelson and Blair. 'Companies have to weigh up whether donations are in the interest of their shareholders and business, balanced with the negative publicity they may get in the media,' he says.

Consumers are a further consideration, as it is now far easier for them to find out whether a brand they buy or use has a political allegiance. Steve Hilton, founding partner of corporate responsibility consultancy Good Business, believes that most brands do not align themselves closely with political parties because of the danger of alienating consumers.

'Companies increasingly avoid being partisan in their consumer-facing images,' he says. 'Even those companies that do support parties don't tend to translate that into their brand strategy.'

Although no official figures relating to the period prior to the 2001 rule changes are available, it is generally agreed that many brand-name firms have shied away from donations since. For UK political parties, which receive little state funding, it is a big problem to which there appears to be no clear solution.

An Electoral Commission report on political party funding, issued in December, found that while British citizens are reluctant for the state to fund parties, they are also unhappy about big private donations. The scandal that surrounded the Formula One circuit in 1997, for example, could be taken as a warning to any company that donating to a political party can be harmful to their brand reputation. The Labour Party was eventually forced to return a £1m donation to the sport's commercial chief, Bernie Ecclestone, after accusations that it had recommended to the EU that tobacco brands should be allowed to continue to sponsor the competition.

It is little surprise, then, that companies including Fidelity Investment Management and Travelex, which support the Conservatives, and Labour donor Bloomberg, decline to comment on their political involvement.

Despite such pitfalls, companies are still able to get involved in political activity without risking a media-induced public frenzy. At 2004's Labour Party conference, companies including Vodafone, Npower and Standard Life, sponsored debates, drinks receptions and parties, while BT, Nestle and NTL all had exhibition stands.

Such activity is not necessarily seen as a sign of a political 'allegiance', as brands may be present at several different party conferences.

Tesco's Labour Party contributions appear on the Electoral Commission website, but it actually gives money to several parties through event sponsorships at party conferences. In its 2004 annual report, the retailer lists contributions of more than £44,000 to political parties and unions, which included £14,368 to Labour, £6340 to the Liberal Democrats and £5502 to the Conservatives.

Tesco spokesman John Church emphasises that these contributions were made as sponsorships of events such as fringe meetings, rather than 'donations', and denies it has any political allegiance. 'The reason we sponsor events is that it allows us to communicate to all the parties on issues that are important to our customers and our business,' he says. 'For example, we have done a lot recently on regeneration, education and skills.'

Companies can also fund research, and frequently send representatives to business forums held by political parties, with many paying for the privilege. Weber Shandwick's Byrne believes that such activity is far more effective for companies. 'What tends to influence government policy is content rather than cash,' he says. 'If a company funds research, it is likely to be far more powerful than writing out a cheque.'

Individual agendas

If they feel strongly about an issue, company directors can, of course, make personal donations. Donors to the Conservatives over the past two years have included Dixons' Kalms and Lord Saatchi (M&C Saatchi), while Sir Frank Lowe, formerly of Lowe & Partners, is a frequent donor to Labour.

In such cases, however, their altruism is still under suspicion, and Matthew Bayfield, co-founder of market research group Tree London, who has been involved with fundraising for both the Conservative and Liberal Democrat parties, adds that company donations are often made on the whim of directors seeking to get personally involved in politics. In other cases, it is about family allegiances. For example, Weetabix, which until 2004 was owned by the George family, made Conservative donations at a local level for several years.

Good Business' Hilton advises companies to align themselves with issues and causes that are not overtly party political, but can inspire and engage employees and consumers. 'The criteria should be that the issue is not politically contentious,' he says. 'Aligning your brand with a position on hunting would be ruled out, whereas backing moves toward healthier lifestyles would be fine, because most people agree that is a good thing.'

Hilton adds that brands can differentiate themselves by becoming more 'edgy' in terms of the political issues in which they get involved. National Grid Transco Foundation has run a project training young offenders to become engineers, for example, and other companies have set up schemes which appeal to a 'politically homogeneous' group of consumers.

Even when corporations are overt in their donations to parties, however, the links are not necessarily obvious to the public.

The Co-operative Group has strong ties with the Labour Party, dating back to the days when the Co-operative Movement was a wing of the Labour Movement.

Co-op Group spokesman Martin Henderson says it continues to donate to the party because of this heritage. 'Our values are more closely aligned with it than other parties, and we share many of the same views on social issues,' he says.

However, when the Co-op conducted research through TNS Omnimas about its political associations in 2002, it found that although 25% of people associated the brand with Labour, 70% did not associate it with any political party, with 2% even linking it to the Conservative Party.

As part of the survey of 2000 consumers, the Co-op also asked TNS Omnimas to look at competitors Sainsbury's and Virgin. The figures were strikingly similar, with 70% not associating Sainsbury's with any political party and 69% not linking Virgin with any.

According to the Co-op, those who associated it with Labour were mainly older customers, more aware of its past. Although the Co-op shares Labour values, Henderson says it is quite happy if consumers don't realise it has a political affiliation. 'Our members own the business, but we are competing in the mass market and there are different customer profiles for different parts of the business,' he points out.

Clearly, there is a fine line to be drawn as to how politically vocal a company can be. The perils of modern-day politics mean that an alliance that initially seemed lacking in danger could easily turn on its head, bringing the brand's image into disrepute alongside that of the latest scandal-hit parliamentarian.

While companies and their brands can be political animals - and will continue to be so - they cannot afford to be too party-political. As the general election looms, they must find other ways of making their political points - and the parties, other ways of raising much-needed funds.

LABOUR

Donors

The Co-operative Group: £50,500

Bloomberg (UK): £14,100

Novartis Pharmaceuticals: £11,750

Tesco: £10,869

Powergen: £8000

CONSERVATIVE

Donors

Fidelity Investment Management: £50,000

Holiday Autos Group: £10,000

The Telegraph Group: £10,000

Travelex: £10,000

LIBERAL DEMOCRATS

Donors

Bloomberg (UK): £16,156

Ministry of Sound Holdings: £10,000

McDonald's: £8150

La Senza: £5000

Donation figures source: Electoral Commission, listed under 'cash

donations to head office' figures for 2003-04

ESSENTIALS - AGENCY POLITICS

There are brands within the marketing industry that make no secret of aligning themselves politically. These are the agencies that work for political parties. But can these allegiances affect business?

'There is no evidence that agencies are affected by working for one party,' says Julian Ingram, chief executive and managing partner of marketing consultancy The Brewery, which works with the Liberal Democrats. He makes the point that while political advertising is badly paid, and mostly done on a pro bono basis, it is high profile and can boost an agency's reputation, as Saatchi & Saatchi's campaigns for the Conservatives did in the Thatcher era.

Agencies should not be too reliant on the glory one party brings, however.

Yellow M, the agency that worked for the Tories at the last election, enjoyed a boost to its profile as a result. However, it lost the account after Labour's landslide win, later going into receivership.

Ingram points out that it is more important to ensure employees who don't support the party's views, don't work on the account; traditionally, work has been done out of hours by a small group. Weber Shandwick's UK chief executive, Colin Byrne, says he takes time off to work for Labour in a personal capacity, and if his employees want to work on political campaigns, they take unpaid leave.

Chris Powell, who ran the Labour Party account at BMP DDB during the 1992 and 1997 general election campaigns, says that working on a political account is far less of an issue today than in the days of Thatcher, when the parties were more polarised, and a number of big clients had strong anti-Labour views.

Powell also argues that it is difficult to say that an agency has a political allegiance. 'I don't think a corporation can have a political point of view; only individuals can,' he says.

ESSENTIALS - BRAND POLITICS IN THE US

Linking a brand with politics may be a risky business in the UK, but in the US it is a different story. Traditionally, US politics has had close links with big business, and while some corporations heavily favour the Republicans (Wal-Mart) or the Democrats (Time Warner), many give to both parties.

However, in November 2002, sweeping reforms were passed banning the donation of so-called 'soft money' - unlimited campaign contributions - to political parties. The laws were passed after $500m of such donations during the 2000 election.

During the 2004 US elections, companies including IBM, General Motors and DaimlerChrysler sidestepped this legislation by sponsoring events at party conventions. With the race between Bush and Kerry expected to be close, many backed both sides. The American Gas Association, for example, budgeted to spend $700,000 on both parties at their conventions.

Much funding in the US goes to the candidates themselves, rather than the party. Bush and Kerry raised almost $500m in private contributions during the presidential primary season.

US companies that are big political players face a potential backlash from consumers on this side of the Atlantic. Last year, Ethical Consumer magazine urged Britons to boycott UK brands with parent companies that had made contributions to the Republicans in the past few years. Its website, www.boycottbush.net, listed the brands, which include Wal-Mart-owned Asda, PepsiCo's Walkers and Kraft-owned Maxwell House coffee.

TOP 10 REPUBLICAN PARTY DONORS WITH GLOBAL BRANDS (99-03)

Company Donation

(dollars m)

1 Altria (formerly

Philip Morris) 6.5

2 AT&T 5.4

3 Microsoft 5.1

4 UPS 4.5

5 MBNA 4.4

6 Citigroup 3.9

7 Pfizer 3.9

8 FedEx 3.4

9 Bristol-Myers Squibb 3.4

10 GlaxoSmithKline 3.0

Source: Ethical Consumer magazine (www.boycottbush.net)

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