Potential Threats to Brand Reputation: A Changing Professional Landscape
A Dynamic Media Landscape
The days have long gone when a company’s product was the single most powerful factor driving its bottom line. Today’s companies not only sell their products, but must also communicate with countless audiences through a variety of messages and narratives. As such, brand reputation management has become a top priority of the C-Suite.
Industry professionals are feeling this change: more than half of the respondents (52 percent) in a recent Brand Health Survey, conducted by Zignal in partnership with PRWeek, feel that at least half of a company’s market value is linked to reputation. 92 percent said at least a quarter of a company’s value was attributable to this asset.
A point worth noting is that consumers are not the only primary stakeholders in this equation. Employees, investors, media, other companies and policymakers are all parties in the game of corporate reputation management, creating an unpredictable digital media landscape. When asked to pick which group’s opinions are the most important to how an organization should evaluate its brand health, about 68 percent placed consumers in their top two. Employees were close behind at 52 percent and influencers came in at 25 percent.
Today’s fast-paced environment has also created countless sources of potential digital risks. While 64 percent of respondents placed a product recall or service issue on their top two biggest communications nightmare scenarios, 54 percent placed missteps by top executives in the same category. Other perceived risks included financial crises and fake news associated with the brand, with nearly three-quarters of respondents (73 percent) admitting they are not as ready as they could be to react to such unexpected crises at a moment’s notice.
Rising Stakes: Brands Must Take A Stand
Corporate and executive reputations are under close scrutiny across the board, and companies are paying attention. Ford, which has remained a Fortune 500 company for 115 years, is one company that recognizes the role of PR in protecting brand reputation. The automaker’s VP of communications, Mark Truby, says reputation extends well beyond the quality of products and services.
“It also encompasses how you treat your employees, the communities in which you work and live, and the environment, as well as the honesty you demonstrate in your business practices,” he notes.
Corporate Responsibility and Sustainability (CSR), in particular, is a common agenda in strategic communication. More than five out of six survey respondents (84%) believe corporate social responsibility to some degree has a tangible impact on a brand’s value. Nearly half of respondents (48%) said “very much so.”
Russell Dyer, VP of global comms for Mondelēz International (covering snack brands such as Cadbury, Oreo, and Ritz), says the company’s audience for its reputation story has become much bigger.
“The socially responsible investor is now every investor,” he says. “We also partner closely with HR in socializing our reputation story because employees want to work for a company that is admired and cares about more than just profits.”
The impact of corporate activism on company value is a double-edged sword. As more people begin to care about brand reputation, a strategic approach to manage brand reputation seems necessary. We need look no further than the relationship between Nike’s stock prices and mentions of its recent advertising campaign with Colin Kaepernick to see how a carefully-managed controversy can significantly boost company value.
Timely and Authentic is the Gold Standard
While the potential stakeholder reactions to public corporate involvement in social and political discussions are harder to foresee, more people expect companies to stand up and speak out for their values regardless of controversy. The key to brand reputation management lies in the ability to deliver a compelling narrative behind a company’s position. Even silence and inaction can be interpreted as a statement — as corporations are no longer considered strictly business entities and instead are seen as agents for social change, both their actions and lack thereof are subject to evaluation.
When it comes to entering the fray of discussion on an issue, timing is crucial. The President’s Manufacturing Council’s reactions to the violence that arose in Charlottesville, VA, in the summer of 2017 shows a correlation between response time and brand reputation: Merck, whose CEO was first to take action by resigning from the business council, was rewarded with a better brand reputation. The companies that followed suit saw diminishing returns, until those that said and did nothing suffered a loss in the asset.
The key takeaway from this case is that not only should companies act swiftly and decisively, but they also need to get it right. This is a case for careful, strategic approaches to corporate communications, so that companies can be prepared to jump into dialogues in a timely, authentic and purposeful manner.
Brand reputation is becoming a key element in the dialogue surrounding a company that extends beyond just the scope of communications professionals’ responsibilities. Corporate executives, consumers and employees all should, and do, care about a company’s brand image. To learn more about what we found in our survey of over 170 communications professionals, join our webinar on October 25 as we examine the results from our 2018 Brand Reputation Survey.