One Bad Story: The Effect of Negative Press on Corporate Reputation
Measuring corporate reputation is more than assessing favorability and ratings on key attributes. Ipsos Public Affairs has been developing a new approach that enables clients to understand their corporate equity and its resiliency; essentially, how easily their corporate equity can be depleted or enhanced by media coverage and communications.
There are five key business measures standard to the model: trust, loyalty, likelihood to recommend the company, workplace, and investing. Various categories of communications have been tested, including customer service, product quality, corporate citizenship, and financial reporting.
Research Highlights
- Our research indicates that a negative message or incident--such as a strike by workers--can have significant consequences on overall opinion, whereas a positive message--such as an award for environmental stewardship--can have very little effect without extended coverage and weight.
- Of the five business elements, likelihood of recommending the company to family and friends was the most significant driver of opinion, followed by trust in the company.
- Negative messages associated with financial reporting and those associated with the workplace appear to detract from the overall opinion of a company more than negative messages regarding customer service or product quality.
Our research also suggests that messages about financial reporting, followed by workplace issues and the environment, have a greater negative impact on overall opinion of a company than messages associated with customer service and product quality. This may suggest that corporate reputation is more strongly influenced by issues that extend beyond the customer experience.
About one in five respondents are significantly affected by negative messages; their opinion can shift by more than twenty points. Comparatively, less than ten percent are similarly affected by positive messages.
This research suggests that reputation is a sensitive measure, particularly in response to negative press. Companies benefit from consistently building their equity and credibility through positive stakeholder experiences, whether through community relations, environmental stewardship, or quality and service.
The corporate equity and resiliency model enables us to establish norms for overall opinion, the five business elements, and expected shifts in opinion for the standard message. Further, we can determine the messages that will be most effective in enhancing equity and the messages that would be most detrimental to equity. We can also segment the marketplace to determine the profile of consumers most affected by key messages. Standard penalty-reward analysis and competitive mapping can also be conducted.
