When the Internet exploded, experts predicted the demise of the printed annual report in favor of an online version. Though that did not happen, today design firms across the U.S. say the number of annual reports they design and print has decreased significantly—and those that remain are evolving considerably.

“We design only about two-thirds of the reports we did several years ago and many of these are low-key,” says Michael Weymouth, Weymouth Design. “The corporate scandals, plus the dot-com bubble burst, changed the landscape dramatically. Corporations have become much more knee-jerk reactionary, especially if they are on shaky financial ground...it is amazing how many corporate communicators just don’t get it.”

Whether because of market climate or by strategic design, this notable Boston-based firm, with clients such as Bose, Gillette and Harvard Business School, is not alone in its decreased AR revenue. Many other U.S. design firms are creating fewer ARs. The reports that are produced tend to be more simple and less glitzy. As budgets erode, production values are significantly downgraded. High gloss is gone (investors do not want slick) and stock photography has become the de facto standard (corporations do not want to pay for assigned shoots). Other substantive changes: “The operations sections have been scaled back and, in some cases, eliminated altogether,” says Weymouth. “Also the 10-K treatment that was so prevalent after the scandals (a treatment where companies would wrap the quarterly financial statement with a special cover) has remained for a lot of companies.”

That’s what one of San Francisco-based Howry Design Associates clients is doing. “Del Monte is still doing a 10-K wrap style, not a full blown report,” says principal Jill Howry. With clients such as Ross Stores, First Republic Bank, McKesson, Nuvelo and SciClone Pharmaceuticals Inc., Howry reports her firm also produces fewer annuals...this coming from a full-service design studio that started out creating annual reports nearly exclusively. Howry notes, “Today we are doing more strategic work: identity, branding, package design and across-the-board marketing.”

Since 2000, Chicago-based VSA Partners has focused on doing fewer annual reports for a concentrated group of clients. “Still, compared to ten years ago, we’re doing more work overall based on the growth of the office and our client base,” says principal Jamie Koval. In more than two decades of creating annual reports, VSA has worked in nearly 40 different industries. Their annual report partnerships include some of the most respected companies and recognized brands including BP, Coca-Cola, General Electric, Harley-Davidson and IBM. Koval thinks the annual report has evolved into multiple components.

A new form evolves
“What has actually happened is that the AR has proliferated from one printed form into a range of forms—the 10-K wrap, the summary report, the full AR and then a system of multiple corporate reports all online as well as offline,” Koval says. Over time, he has seen clients make choices about where they want to land on this continuum, whether they see the AR as an opportunity to cut costs or a vehicle to make a communications investment.

In VSA’s experience with Fortune 100 companies and their global counterparts, the purpose of the AR has evolved from a retrospective document to a communications catalyst. For many of VSA’s clients, the AR embodies the strategy that’s leading the company long-term. “It’s really an integral part of advancing the client’s business case,” says Koval. “Five to ten years ago, the corporate AR was seen as a polished, celebratory expression of a company’s past performance rather than as a strategic document. Business strategy was communicated, but the stakes then weren’t as high in terms of corporate reputation, disclosure and investor engagement. These books were rarely viewed as a justifiable business expense.”

So what is really happening out there? If there are fewer printed annual reports, what has replaced them? Over the last five years, vice president/creative director Laura Shore has evaluated hundreds of ARs as well as surveyed each of the corporate reports entered into the Mohawk Show, an international design competition by Mohawk Paper Mills. “The nature of the corporate report is evolving for sure. We still see the traditional AR, but now we are also seeing a whole new genre of printed brochures. In some cases, these are ‘families’ of brochures done by a single company, and often they fall under the broad umbrella of corporate social responsibility,” Shore says.