The Evolving Role of Social Media on Corporate Reputation in Canada

Pundits, analysts, and commentators worldwide often refer to the present age as the "information society." In essence, they are asserting that the collection, use and distribution of information are defining characteristics of current economic, social and political activity. The prevalence of smartphones and the rise of social media and social networking seemingly corroborate the assertion that information is increasingly important as a currency in our daily lives. Nowhere is this more important than in the corporate world - particularly the nexus between companies, products, and consumers.

Poor consumer reactions to a product or company action can quickly spread virally, often leading to a crisis of confidence, and damage to a company's reputation. There are many documented instances of corporate crises spurred by active social media campaigns. However, have we truly entered the age of the hyper-aware consumer who actively utilizes social media as a lance to joust at the windmill of bad corporate actors?

Information Seeking

Ipsos research indicates that, in the population as a whole, information seeking and sharing (particularly in reference to companies) is not as widespread as some would have us believe. While only one in ten (10%) indicate they never research or seek out information about companies, recent Ipsos data shows that fewer than half of Canadians (41%) are active information seekers, and a similar proportion (36%) are inactive seekers of information about companies (10% never/26% rarely).

Given the less than robust amount of research that consumers engage in vis-а-vis companies, the information they seek tends mostly to relate to personally relevant topics. While no topic dominates the search agenda of consumers, coupons (51%), information about new products (51%), and customer service (48%) top the list of information sought. After these concerns, there is a noticeable drop in search activities to the second tier of inquiries. This second tier includes product ingredient information (38%) and information about a company's reputation (35%).

While consumers are not hyper-active in looking for information about companies, and tend to gravitate towards information that meets immediate needs (such as customer service), this does not necessarily imply that consumers are active information avoiders.

We asked Canadians to tell us the kinds of information they look for about companies and their interest in receiving that type of information from companies (whether they are looking for it or not). This information is summarized in the chart below - if interest matched up with the level of information-seeking, all points would fall directly on the diagonal line. But, what we found in general was that interest in receiving information outpaces the level of active searching. This is particularly true for "product-oriented" attributes such as coupons, ingredients or ways to use products. But surprisingly, consumers are also much more receptive to receiving information about "softer" manifestations of corporate behaviour, such as health and wellbeing resources, company reputation, and community programs.

Since seven in ten (70%) of those surveyed indicated they trust the information that comes from companies, this suggests an opportunity for companies not only to proactively provide information to consumers that could help manage and improve their reputation, but also have that information perceived as credible by consumers.

In the coming weeks, we will be published a detailed paper with more insights from our study. In the meantime, the three lessons learned that business leaders should understand about the impact of social media on corporate reputation are:

1. Most consumers are not active information seekers, but are open to corporate communications on a variety of subjects of importance to a company's brands and reputation. As companies do not suffer from an acute lack of credibility with regard to communications, sharing information can help build corporate equity.
2. Reliance on social media and social networking has not yet reached a "tipping point." Active use of social media as a channel for seeking and sharing information about companies is still relatively limited and trusted less than traditional channels. This suggests that business leaders still need to focus communications on traditional channels while complementing these channels with greater levels of digital communication and interaction. This is, in large part, a generational shift.
3. Digital opinion leaders have the potential to shape corporate reputation, given their significantly higher levels of information seeking and sharing. Coupled with a greater degree of digital activity, business leaders should be cognizant of these developments and develop communications strategies that take their interests and concerns into account.