Reputation and your brand – the effect of bad publicity

Corporate slip-ups don’t go unnoticed nowadays. Scandals make headline news, employees go on strike, and consumers voice their outcry on social media. Of course, all of this bad publicity really knocks a brand’s reputation. But just how much of an effect does it have?

Various brand valuators all point to bad publicity as having serious consequences for a brand. Last year, Sports Direct saw their reputation drop to a weak rating by the Reputation Institute after their series of scandals. On YouGov’s BrandIndex which measures public perception, the brand fell 13 percentage points to -13.4, putting them last on a list of 44 British high street stores. Their reputation score fell to -34, again putting them bottom of the ranks. After Volkswagen’s emissions scandal, Brand Finance estimated the company lost $10 billion in brand value in the aftermath.

So bad publicity can really set a brand back. In some cases, all the hard work that went into building up the brand’s reputation suddenly seems pointless. The positive associations people once carried turn sour and consumers lose trust in the brand. Bad publicity can also mean brands are in for a rough time financially. Most consumers avoid buying products from companies they don’t like and share prices usually go into freefall.

Companies might also have to deal with the fallout of bad publicity affecting their employees. Morale will likely drop and employees who were once proud brand ambassadors would rather not tell people where they work. Having a bad reputation also makes it hard to attract top talent. Companies with a negative employer brand reputation can end up paying at least 10% more to persuade candidates to work for them

But bad publicity doesn’t necessarily spell the end for a company. People do forgive and forget. But regaining a good reputation takes time. Lots of it.

Brands can begin to rebuild their reputation by acknowledging and rectifying their mistakes. While some scandals may be small enough to quickly blow over by themselves, others definitely warrant apologies. After the Volkswagen emissions scandal, the company made apologies in newspaper ads, on video, and even directly to former US president Obama. That’s a lot of saying sorry, but the situation called for it.

Brands might even try to reinvent their brand to repair the damage. Changing aspects of the brand, whether it’s a logo, a slogan, or the values, can feel like a fresh start. However, this can’t just be a surface level makeover. The public will be sceptical so brands need to prove they’re working to make a real difference on the inside as well as the outside.

Brand reputation can take years to build but only moments to destroy. So steer clear of bad publicity and don’t start thinking about your reputation when you reach a crisis. Prevention is always better than a cure.

Annabelle MayorComment