What? Media’s Net Impact on Reputation is Zero?

by PR Coach on May 5, 2011

WTH? Media has no net impact on reputation?

“Media’s Net Impact on Reputation is Zero.” That’s just one of the key findings from the “2011 Forbes |Reputation Institute US RepTrak™ Pulse Study.”

Let me repeat. “Media’s Net Impact on Reputation is Zero.” Zero! What the hell?

That’s the sound of several hundred thousand PR people around the globe screaming and booking appointments with their therapists. We’ll look at that PR conundrum after we review the Institute’s study of the top 150 US companies and their reputations.

Welcome to the “Reputation Economy” where a company’s value is driven not just by its products and services but by the strength of its connections with its stakeholders.

The Institute studies global corporate reputations. Since 2006, it has carried out its RepTrak™ Pulse Study interviewing more than 85,000 consumers in 41 countries to rate the reputation of 2500 of the world’s largest companies.

7 Dimensions of Reputation

Visual: Reputation Institute

According to the Institute, reputation is driven by seven primary dimensions. It measured respondents’ trust, admiration, esteem and good feeling to form a single score or Reptrak™ Pulse for the companies in the US study.

The rankings for the seven categories included (top three rated companies follow in each category):

  • Products & Services (17.7%) (3M, Amazon, Caterpillar)
  • Governance (15.8%) (Amazon, UPS, Google)
  • Citizenship (14.3%) (Kellogg’s, UPS, 3M)
  • Innovation (13.5%) (Apple, Amazon, 3M)
  • Leadership (13.1%) (Berkshire Hathaway, Google, Disney)
  • Workplace (12.9%) (Google, Berkshire Hathaway, FedEx)
  • Performance (12.7%) (Berkshire Hathaway, FedEx, Amazon).

The most influential three categories make up 47.8% of the reputation equation. But the Institute says companies must score well in all seven in order to earn a strong reputation.

Strongest Reputations

Not surprisingly, the “strongest” industries were consumer and industrial products, goods manufacturing, computer and retail. In other words, companies where there was lots of personal interaction with consumers and the potential to build both brand loyalty and reputation.

The “average” industries were automotive, retail food, pharmaceutical, airlines & aerospace, services, utilities, information & media, insurance and banking. The “weakest” were telecommunications, energy and diversified financial companies.

RI noted three interesting points in these industry reputations. One is the “halo effect” Those are consumer products companies that consistently have the strongest reputation because of their strong connection with consumers. Two, “diversified financial” is consistently weak. Three, consumers also are beginning to “forgive and forget” evident in the rebound in the reputations of automotive (+5.75) and banking (+2.03) vs. 2010.

The Institute also found that companies that improve their reputation scores by five points or more get a corresponding increase in recommendation from consumers and influencers by 6.8%. Here’s where marketing and PR can make a difference to the bottom line.

Chart: Top 25 Reputation Scores - Reputation Institute

Let’s look at the 2011 US study and the reputations of those150 companies. The top ten included (in order): Amazon, Kraft, Johnson & Johnson, Kellogg’s, UPS, FedEx, Sara Lee, Google and Disney.

Amazon, 3M, UPS and FedEx showed year over year gains in reputation scores. The other six companies in the top ten had decreases compared to 2010.

Reputation “Gap” Is Critical

Direct experience with the company has the highest impact on reputation. This includes products, service, investments or employment. Experience with a company, the “reputation gap” score can be as large as 11.15.

Memo to PR. Let senior management know social media is another way to interact directly with consumers.

Next in importance is what the company says and does through branding, PR, marketing and social responsibility. If you’ve heard from the company in one of these ways, you’re likely to see a reputation score that is 4.61 higher. Score one for marketers and PR pros.

Here’s where we come back to that finding that really blew me away. Did I mention “Media’s Net Impact on Reputation is Zero?”

We need to look at this a little more carefully before we crack open a beer, put our feet up on the coffee table and revel in the possibility that we may not need to pitch stories to media any more.

The category is “What others say” about the company. This includes traditional and social media, experts, leaders, friends and family. The so-called “reputation gap” between hearing what others say or not hearing what others say is a net zero. In terms of your reputation score, it has no impact.

This one still has me mystified. Does it mean that we shouldn’t bother with media relations? Because, after all, it doesn’t matter what the media say? And it doesn’t matter what experts, leaders, friends and family say either? Word of mouth marketers will be quaking in their Berluti loafers and Manolo Blahniks.

I’ve seen the impact of a TV story on website registrations for pre-sales of a condo project for example. As the TV story was running and within the next hour, website registrations went crazy! We finished up with nearly 5000 registrants. The media mattered big-time.

I asked Reputation Institute CEO Anthony Johndrow for an explanation of this finding. “We were also intrigued with this finding, but not surprised,” he said.

“Think of it this way.  Pick up a newspaper, go to an online news source, or ask your friends to talk about companies.  Now take a step back and think about the tonality of those conversations – is the vibe positive/negative or mixed?  On balance, it’s probably mixed, which produces a neutral effect on overall reputation,” he explained.

Johndrow added, “Isolate a sector (i.e. banks) or a specific company, and you’ll see major swings in aggregate tonality, which logically would produce corresponding (and possibly strong) effects on stakeholder perceptions.”

That explains the “zero net impact.”

His final comment was encouraging. “Another way to think about this might be to acknowledge that companies have been favorite targets of negative commentary from lots of sources – so if the net effect of 12 months of third party influence across 150 companies is neutral, then the PR profession should take some credit for ensuring some balance to the collective conversation.”

Whew. Cancel the therapy session.  But I still think Johndrow will be taking calls and emails from PR people, publishers and paparazzi for months on this conundrum.

Reputation Implications for PR?

We’re left with some interesting reputation implications for PR to ponder. Clearly what a company says and does can have a huge impact on its reputation according to the research. Public relations needs to pay attention to the seven dimensions of reputation.

PR has an important role to play in influencing and communicating five of those seven dimensions: governance, citizenship, leadership, workplace and performance. Arguably, we have a critical role in communicating about products/services and innovation as well.

Despite the implications of “net zero impact”, I don’t think we should consider letting up on our work with media, experts, leaders, friends and family any time soon.

While what they say may not affect net reputation scores according to the Reputation Institute, they most certainly will impact sales, investment and the bottom line.

Yes PR pros, you just hit some speed bumps. But don’t take your foot off the media relations and influencer gas pedal just yet.

What do you think? Does your experience tell you otherwise when it comes to reputation? Shout out in the comments below. If you’re looking for more strategic PR and corporate communications resources, the PR Library is open 24 x 7.

Photo Credits: Lori Greig (first) Marco Bellucci (last) via Flickr

Author:  Jeff Domansky is Editor, The PR Coach

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