the economics of reputation

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A presentation on the Economics of Reputation by Oliver Rowe, YouGov Director of Reputational Research.

TRANSCRIPT

Page 1: The Economics of Reputation
Page 2: The Economics of Reputation

• 114 members of the PRCA’s database:

• 55 in-house professional, 52 agency side, 4 freelance, 3 other

• 52% male, 48% female

• Senior respondents: average age 44; average of 16 years in the industry

Head of de-partment/team;

45%

Director; 35%

Other; 20%

In-House (55)

Partner/owner; 61%

Director; 22%

Other; 17%

Agency (52)

Page 3: The Economics of Reputation

How much do you believe your/your clients’ Board of Directors thinks reputation is linked to the overall financial performance of your/their organisation?

Base: All respondents (114)

Very strong33%

Reasonably strong43%

Reasonably weak 17%

Veryweak

7%

Net: Strong link76%

Net: Weak/No link24%

Page 4: The Economics of Reputation

“In three years reputation has moved from vanity - pretty much just seeing ourselves in the papers - to one where reputation issues account for one third of our strategy and business plan.”

In-house, Head of Department, transport sector

Page 5: The Economics of Reputation

Base: All respondents (114)

“I agree that an enhanced reputation builds trust in your business/product. This leads to more prominence in the market place, increased sales and more influence.” In-house, Head of Department, 20+ years of experience

“If reputation is everything you say, everything you do and everything others say about you, I'd say it affects every aspect of your business.” Partner of multi-client agency

(open response)

Page 6: The Economics of Reputation

Which three of the following 16 do you think are most directly linked to an improvement in corporate reputation?

Top 3 shown

Greater likelihood of receiving benefit of the doubt from stakeholders if reputational

damage incurred

More positive media coverage

Ability to recruit and retain the best staff

34%

41%

61%

Base: All respondents (114)

Page 7: The Economics of Reputation

Which three of the following do you think are most directly linked to an improvement in corporate reputation?

Base: All respondents (114)

Don’t know

Greater celebrity endorsement

More effective/better priced acquisitions

Negotiation of more favourable terms with suppliers

Ability to raise capital or borrow money at better rates

Improved financial ratios such as return of capital employed, earnings per share

Ability to operate more easily outside the domestic market

Higher pricing of products

Higher share price (if a listed business)

Higher quality commercial partnerships

Higher sales levels

Higher profitability

Greater influence on Government

More effective marketing/sales activity

Greater likelihood of receiving benefit of the doubt from stakeholders if reputational damage incurred

More positive media coverage

Ability to recruit and retain the best staff

0%

0%

0%

1%

4%

4%

4%

9%

13%

15%

19%

24%

24%

24%

34%

41%

61%

Doing business

External affairs

Financial

Page 8: The Economics of Reputation

Base: All respondents (114)

Which three of the following do you think are most directly linked to an improvement in corporate reputation?

Higher sales levels

Higher profitability

Greater influence on Government

More effective marketing/sales activity

Greater likelihood of receiving benefit of the doubt from stakeholders if reputational damage incurred

More positive media coverage

Ability to recruit and retain the best staff

25%

29%

15%

22%

39%

37%

66%

13%

18%

33%

25%

29%

45%

56%

In-houseAgency

Doing businessExternal affairs

Financial

Page 9: The Economics of Reputation

Which of the following, if any, do you generally think of as direct benefits to a business that enjoys an enhanced reputation?

Which three of the following do you think are most directly linked to an improvement in corporate reputation?

Base: All respondents (114)

Greater celebrity endorsement

More effective/better priced acquisitions

Negotiation of more favourable terms with suppliers

Ability to raise capital or borrow money at better rates

Improved financial ratios such as return of capital employed, earnings per share

Ability to operate more easily outside the domestic market

Higher pricing of products

Higher share price (if a listed business)

Higher quality commercial partnerships

Higher sales levels

Higher profitability

Greater influence on Government

More effective marketing/sales activity

Greater likelihood of receiving benefit of the doubt from stakeholders if reputational damage incurred

More positive media coverage

Ability to recruit and retain the best staff

0%

0%

1%

4%

4%

4%

9%

13%

15%

19%

24%

24%

24%

34%

41%

61%

29%

22%

37%

33%

22%

26%

44%

50%

65%

64%

51%

65%

75%

75%

87%

92%

AnyTop 3

Doing business

External affairs

Financial

Page 10: The Economics of Reputation

Which of the following, if any, do you generally think of as direct benefits to a business that enjoys an enhanced reputation?

Base: All respondents (114)

Greater celebrity endorsement

More effective/better priced acquisitions

Negotiation of more favourable terms with suppliers

Ability to raise capital or borrow money at better rates

Improved financial ratios such as return of capital employed, earnings per share

Ability to operate more easily outside the domestic market

Higher pricing of products

Higher share price (if a listed business)

Higher quality commercial partnerships

Higher sales levels

Higher profitability

Greater influence on Government

More effective marketing/sales activity

Greater likelihood of receiving benefit of the doubt from stakeholders if reputational damage incurred

More positive media coverage

Ability to recruit and retain the best staff

31%

32%

34%

41%

29%

36%

56%

66%

73%

73%

59%

61%

76%

81%

83%

93%

27%

11%

40%

25%

15%

16%

31%

33%

56%

55%

42%

69%

75%

67%

91%

92%

In-houseAgency

Doing business

External affairs

Financial

Page 11: The Economics of Reputation

q12. Which of the following, if any, do you generally think of as direct damage to a business that suffers from a poor reputation?

Inability to raise capital or borrow money at better rates

Lower share price (if a listed business)

Poorer quality commercial partnerships

Lower profitability

Less influence on Government

Less effective marketing/sales activity

Greater likelihood to not receive benefit of the doubt from stakeholders if incur reputational damage

Lower sales levels

More negative media coverage

Inability to recruit and retain the best staff

29%

38%

43%

45%

55%

61%

61%

63%

76%

81%

Base: All respondents (114)

Page 12: The Economics of Reputation

Against which of these, if any, is the performance of your Communications team measured?

Base: All respondents (114)

Higher quality commercial partnerships

Greater likelihood of receiving benefit of the doubt from stakeholders if reputational damage incurred

Ability to recruit and retain the best staff

Higher sales levels

Greater influence on Government

More effective marketing/sales activity

More positive media coverage

15%

20%

31%

34%

25%

56%

80%

18%

27%

24%

20%

45%

53%

87%

In-houseAgency

Doing business

External affairs

Financial

All others below 10%

Page 13: The Economics of Reputation

How much do you think each of these groups believes day-to-day management of your/their corporate reputation affects the organisation’s bottom line?

General staff

Senior managers

Board

CMO

CFO

CEO

14%

31%

41%

56%

25%

68%

47%

47%

39%

23%

36%

24%

Not at all DK

Base: All respondents (114)

Page 14: The Economics of Reputation

Senior management care less about journalist criticism than they used to

Employees comms more important than external comms

We/my clients are relatively weak on social media compared to competitors

Crisis communications PR plan tested in last 12 months

CEO/ leader is big supporter of PR

3%

4%

9%

25%

49%

29%

21%

33%

15%

38%

37%

51%

39%

19%

10%

26%

20%

16%

35%

2%

5%

4%

3%

6%

2%

Strongly agree Slightly agree Slightly disagree Strongly disagree DK

q15 To what extent do you agree or disagree with each of the following statements?

Base: All respondents (114)

Page 15: The Economics of Reputation

YouGov research for the BDO/QCA Sentiment Index, July 2014:

• Of 119 listed small & mid-cap business, 44% have experienced internet allegations or rumours

• 71% were on bulletin boards or discussion forums, 49% on blogs and 41% on social media

• Effects of the allegations or rumours:

• 79% of those who have not yet experienced online allegations or rumours worry it will impact their share price at some point

Positive impact Negative impact

Share price 7% 28%

Employee morale 6% 32%

Investor confidence 3% 37%

Page 16: The Economics of Reputation

• Industry believes there is now a strong connection in senior management’s mind between reputation and financial performance, but still a bit of a struggle with the CFO

• Enhanced sales is the most spontaneously mentioned bottom line benefit of an enhanced reputation but ability to recruit and retain the best staff is the most chosen general business benefit

• In-house cite less direct benefits of an enhanced reputation than agency professionals

• Few businesses assess PR’s performance with key financial metrics, though ‘more effective marketing and sales activity’ cited by half and higher sales by a quarter, but positive media coverage is by far the leading measure

Page 17: The Economics of Reputation
Page 18: The Economics of Reputation

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