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Reputation Management: Brands under social pressure

How reputation management helps companies to meet new customer expectations - and to create sustainable demand

Last week, Interbrand published their 2019 Best Global Brands Report1, the world's most prestigious ranking of big players' brand values. An analysis of the most interesting developments shows that the zeitgeist prevailing in society is reflected in a critical evaluation of the reputation of some brands and thus also in their brand value.

Customer expectations are developing faster and faster, big brands feel the pressure. At the top of the ranking of the most valuable brands in the world, there has not yet been any significant change, with Apple and Google leading the ranking for the seventh consecutive year. However, their gains are in single-digit percentages only. But here, there are several reasons besides the growing customer expectations for these findings.

Facebook loses USD 5.3 billion in brand value

The results become more interesting and concrete when taking a closer look at the former growth champion of recent years. Facebook has been in the Best Global Brands ranking since 2012, recording constant growth rates of up to 54 percent (in 2015) over the first five years. This year, though, Facebook slipped from 9th to 14th place after a twelve percent decline and is therefore no longer in the top ten.

“Apparently, more and more people are questioning the influence that Facebook as a platform has on current social developments,” says Simon Thun, CEO of Interbrand CEE, about the weak performance of the former shooting star - and hits the mark. The public debate about the socio-political role of major technology brands such as Google (with YouTube) and Facebook is becoming more critical, and the demand for regulation is becoming louder.

Empty promises of Facebook and Google

While Facebook in particular claims to meet these demands for stricter controls on content in the future, the reality is completely different. Facebook’s monitoring algorithm may find graphic elements such as swastikas and runes or linguistic terms such as “foreigner” and “home country” and can bring them into a socio-political context. However, the search algorithm cannot read between the lines. Even if questionable statements in critical posts are determined electronically and checked by human intelligence in a second step, the sheer mass of postings, comments, photo and video uploads worldwide remains so immense that control and regulation is in fact simply impossible.

Finding and, above all, classifying e.g. hate speech in social media content in all countries, languages, and cultures of the world would require an army of neutral experts. The involvement of the community which can report dubious content does not make a significant contribution either since neither expertise nor neutrality is given. In this respect, authorities and politicians worldwide reveal huge naivety that goes hand in hand with equally inadequate digital competence - leaving experts from the digital industry speechless for years.

Facebook and Google / YouTube will never be able to keep their promises. And that brings us to reputation management as we understand it - or to the diametrically opposed understanding of it. Reputation management starts at the very core of a company, not just where messages are conveyed to the outside world. The good reputation of a company and a brand is increasingly based on credibility and authenticity. As one of the world's leading brand consultancies with more than 40 years of experience, our industry colleagues from Interbrand have no difficulty in drawing the right conclusion: “In a world where customer expectations will continue to move faster than businesses, brands can no longer be considered separate to businesses,” says Charles Trevail, Global CEO of Interbrand. “Today, more than ever, brands will be judged on what they do, not just what they say.”

Has the German automotive industry really understood the warning signs?

The contradiction of “being” and “appearing” applies to the troubled German automotive industry, too. While Mercedes-Benz, BMW, VW, Audi, Porsche and MINI recorded growth rates of up to 18 percent in previous years, the brand values of the six German car brands currently grow by an average of only five percent (between Porsche’s nine percent and BMW’s one percent). Volkswagen, for example, assures that the proportion of electric cars in their fleet will increase to at least 40 percent by 20302, but this promise comes - if I may say so - at least ten years too late. During the last decade, the German automotive industry has lost its credibility through Diesel-gate and fraud on the consumer and, hence, lost accordingly in the growth of brand value.

So far, the promises of the automobile brands are still only promises. Relevant deeds are still to be delivered. However, it is not yet too late for a “reputational turnaround”. To achieve this, these so-called “best global brands” must now actually invest tens of billions in the (their!) future, - in the development of alternative forms of drive, but also in infrastructure. Mind you, per year, and without an investment quotas brake. The planned investments of the automotive industry are only peanuts in relation to their possibilities - and in view of the investment gap, they have created for at least ten years. They now need to act quickly and decisively. If the industry only fixes what was missed in the last ten years and continues like this for another ten years, the big investment in development will be accompanied by steadily increasing costs for the “reputational turnaround” - and the longer the more difficult it becomes. Because even if the first steps are done, the industry will continue to be criticized by the public for a long time, as it has badly lost the consumers’ trust.

In the situation of Facebook and YouTube on the other hand, a “reputational turnaround” is even more difficult to achieve, as control mechanisms for critical content as shown would devour enormous sums. Here it is probably easier and much cheaper for the company to keep a social media platform “somehow alive and running” for as long as possible and at the same time to look for an alternative platform with a (still in the medium term!) intact reputation (a rogue, who thinks of Instagram now - and the consequent question, what’s next?).

So, what can good reputation management do?

Let’s go back to the damage that actually can be repaired. Even the best reputation management in the world cannot turn a desert into a blooming landscape. However, in prioritizing communication measures, it may highlight the positive content that corresponds to customer expectations - thus helping companies in twofold respect.

First, communication shows that the signals from society and customers’ expectations are being understood (in this context, the claim of another car manufacturer also very widespread in Germany, "We have understood", from 1994 (!) suits perfectly - and unintentionally takes on self-ironic traits). Here too, however, the messages and claims must, of course, be followed by verifiable, tangible actions.

Second, communication with the aim of promoting “quick wins” in reputation management can make its contribution in order to actually generate a genuine, sustainable reputation management in the long term. Targeted communication for the above-mentioned measures, such as those promoted relatively offensively by Volkswagen, can have a positive impact on consumers and society in general, even if these are only peanut investments for the company. By demonstrating the relevance of these peanuts, these contents, by evaluating the success of the communication measures, a rethinking within the company can be driven forward. Positive customer feedback will point the management in the right direction, away from greenwashing, hesitation and empty promises, towards change - ultimately convincing companies to turn peanut investments into relevant investments.

After all, the motivation for this development could be purely economic. Demand will grow with growing confidence in the company and in technology, just as the number of e-cars sold will grow with the number of charging stations. Here, the trench must be overcome, the chicken or egg dilemma has to be solved - if not by politicians, then by the manufacturers themselves. Good reputation management does not aim at trends to satisfy hipsters and appear in a good light at short-term goals but to turn trends into sustainable developments and ensure a positive reputation for the company over time. Once a company's damaged reputation has been credibly restored through real performance and investment, sustainable demand and long-term profit will result.

By: Mats Wappmann, Berlin

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Sources

1 https://www.interbrand.com/best-brands/best-global-brands/2019/ranking/

2 https://www.volkswagen-newsroom.com/de/pressemitteilungen/volkswagen-plant-22-millionen-e-autos-in-zehn-jahren-4750

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