By Emelie Rutherford
Amid forecasts of tightening Pentagon weapon-systems budgets, some U.S. defense firms with foreign parent companies are beefing up their domestic advertising campaigns to increase brand awareness among military customers.
Nancy McLernon at the Organization for International Investment believes U.S. operations of overseas defense shops are wisely using advertising to counter any anti-foreign- government-contractor rhetoric during the current economic slump.
“U.S. subsidiaries of foreign companies…need to tell their story now more than ever before,” said McLernon, president and chief executive officer of the business association that represents of U.S. subsidiaries of companies headquartered abroad. “I think we’re in an economic environment which might tend to turn inward and turn isolationist. So, from my perspective certainly, I think it’s an excellent idea for these companies to talk about the work that they’re doing in the U.S., the jobs that they support in the U.S.”
U.S. operations of foreign companies–like EADS North America, the holding company for the North American activities of The Netherlands-based aerospace and defense firm European Aeronautic Defence and Space Co. (EADS)–are smart to launch highly visible advertising campaigns, McLernon maintained.
“Over time, they’ve learned that if they don’t tell their story somebody else will,” she said.
As EADS has fought with its partner Northrop Grumman [NOC] for the lucrative contract to build the Air Force’s next aerial-refueling tanker, it has faced claims, from supporters of rival tanker bidder Boeing [BA], that the EADS-Northrop Grumman aircraft would be a foreign product and the non-U.S. firm has operated improperly. EADS has worked to remind Washington, D.C., power players that if it and Northrop Grumman build the tanker they would create a significant number of U.S. jobs.
EADS North America launched last fall one of the more visible U.S. adverting efforts by a defense shop with foreign roots. And the campaign–which includes print ads in defense trade publications along with radio and television spots in the Washington, D.C., area–will continue, according to Guy Hicks, vice president for communications and public relations at EADS North America.
“We intend to continue to be active advertisers in the coming year,” Hicks said.
EADS North America has two complementary advertising campaigns, one of which highlights the company’s “economic partnership” with the United States and shows employees in U.S. facilities. The other track focuses on its platforms and products that the U.S. military customer uses, such as the Light Utility Helicopter, he said.
Previously, EADS North America did more purely product-related advertising.
“We decided to complement our product advertising with this larger theme of economic contribution and investment and partnership, both economically and from a national security perspective,” Hicks said. “That’s probably the most important piece of information about EADS that we would like customers and stakeholders to understand.”
Finmeccanica North America, Inc., the U.S. representative of the Italian conglomerate Finmeccanica, also launched a new U.S. advertising campaign last fall.
“For 2010, we are planning to do some more activities, I would say in line with what we have done in 2009,” said Simone Bemporad, the chief executive officer of Finmeccanica North America.
The new advertising campaign–which includes trade press, radio, and some television–is focused on relaying the company’s values of “serving the customer, serving the warriors, and providing cutting-edge technology,” he said.
The new advertisements include the Finmeccanica name along with some of the group companies that operate under it in the United States.
“For Finmeccanica, we don’t have the established roots that other U.S. companies have,” Bemporad said. “So advertisement and communication in general…(are) two of the means you use to get to the customer.”
Finmeccanica significantly enhanced its U.S. presence via its $5.2 billion acquisition of U.S. defense contractor DRS Technologies in 2008. DRS, like other entities under Finmeccanica North America, also runs its own product-specific advertisements, Bemporad said.
Not all U.S. defense firms with foreign parent companies approach advertising the same way.
BAE Systems Inc.–a firm competitors acknowledge fares well in terms of brand recognition in the United States–does not do much U.S. advertising, Director of Media Relations Scott Fazekas said.
BAE Systems Inc. is a U.S. company with its own board of directors that operates under a special agreement stipulating it is separate and distinct from the United Kingdom-based BAE Systems global corporation is part of.
The advertising BAE Systems Inc. does is primarily focused on product advertising via print spots in trade publications, Fazekas said.
“We believe that we can better engage on behalf of our customers and for the company through media relations and community relations; so that’s where we put our efforts,” Fazekas said. Such community relations, which other defense firms do as well, include partnering with groups like the USO (United Service Organizations) and Tragedy Assistance Program for Survivors.
Thales USA, Inc. has found that such strategic philanthropy “is the most effective use of very limited budgets” for paid media, said Francis Sheller, the vice president for communications and government relations at the U.S. entity that is part of France-based Thales Group. Such activity is subtle branding, usually involving support for groups like the USO and local Association of the United States Army chapters, he said.
Generally, a Thales USA investment in advertising is driven by a goal of building brand awareness, promoting a capability, or highlighting contributions to the U.S. economy and local communities, he said.
Advertising is a challenge, Sheller acknowledged. Thales USA essentially competes with Thales entities worldwide for a share of a finite advertising budget, he said.
“No communications professional ever says ‘I have sufficient budget to achieve my goals,'” he said. “It’s a never ending process of market research, developing a plan and convincing internal decision makers to fund an advertising effort.”