The price of reputation

The consumer goods industry was off to a tumultuous start this year, with the recent takeover bid from Kraft Heinz for Unilever threatening to transform the sector. The question that has been lingering in everyone’s minds since is: did the stark contrast between reputations of the two companies act as the main deterrent from closing the deal?

On his very first day at Unilever in 2009, CEO Paul Polman informed shareholders that they should no longer expect to see quarterly profit updates because this encouraged short-term thinking. The next year, he launched ‘The Sustainable Living Plan (SLP)’, outlining Unilever’s vision to double their revenue and halve their environmental impact, whilst increasing positive social impact. Unilever has still some way to go, but we at Kantar Millward Brown strongly believe that the company has since proven to be among the most successful corporations in promotion of the new commercial model that takes both profits and corporate social responsibility into account in their strategy.

Kraft Heinz, on the other hand, has been described by some as cost-cutting, job-slashing purveyors, with a clear preference for profit over people. Would it ever have been possible for a company such as Unilever, with its unique heritage and ingrained sense of social purpose, to merge successfully with Kraft Heinz?

Research studies have shown that the key aspects of social responsibility that Unilever has embraced, such as enhancing livelihoods, reducing environmental impact, improving well-being of their customers and others, will play an ever-increasing role in consumer decision-making.¹ Indeed, consumer decisions to engage with any particular company are now more influenced by the extent to which that company is seen to share their values – rather than purely perceptions of its products. From our extensive research experience in corporate reputation, we have come to strongly believe that a solid reputation based on admired corporate values doesn’t just increase growth – it also aids and supports the development of stakeholder relationships, stimulates employee motivation and commitment, helps to engender work place pride, protects equity values and business revenues at times of crisis, as well as strengthens the investment proposition and generates increased investor confidence. Perhaps then it’s unsurprising that Unilever were unwilling to go ahead with the merger and decided to carry on with their social responsibility mission instead – as doing so may bode well for the future.

Kraft Heinz are said to have laid their eyes on other FMCG giants in the meantime and have not ruled out making a comeback with the Unilever bid later this year, but the question is, would Unilever ever be interested? ²

Kantar Millward Brown Corporate 

1. https://www.forbes.com/sites/jacquelynsmith/2013/10/02/the-companies-with-the-best-csr-reputations-2/#7e99aaa634ff
2. http://www.investors.com/news/kraft-heinz-shares-sink-after-nixing-unilever-bid/

Effectively managing your reputation

What does ‘managing your reputation’ mean to you?  Does your company view it as how they manage a crisis, or how they proactively gather perceptions of the organisation and seek to address any issues?

On many occasions we hear that organisations class it as the former and have no proactive way of managing their reputation.  However, our view at Millward Brown Corporate is that reputations should always be monitored so that companies can keep abreast of opinions and issues from stakeholders so to deal with them before they become reputational disasters.

Our view has recently been substantiated by Anthony Fitzsimmons and Derek Atkins in their book, ‘Rethinking Reputational Risk’[i].  They too state that reputational issues take many years to emerge and “typically a crisis has multiple root causes, often systemic, that remain unrecognised and unmanaged but gradually accumulated over the years to make the organisation vulnerable to crises generally”.

Additionally, they believe that “your reputation is the sum total of how your stakeholders perceive you”.  We have long held the view that stakeholder research into their opinions and perceptions is the best way to manage a reputation.  They have unparalleled insight, the ‘insider and outsider’ perspective, which is much needed to mitigate against the creation of the “risk glass ceiling”, as Fitzsimmons and Atkins state, where views from within the organisation do not reach senior management due to hierarchy.  Of course, stakeholder groups will have differing priorities and somewhat different views, however any commonalities cited between them can flag a potential reputational disaster if left unmanaged.

As many of us in this line of work know, a reputation is a company’s most valuable asset, so managing it effectively should be a company’s priority.

 

[i] https://www.ft.com/content/f9c5b83c-d1a5-11e6-b06b-680c49b4b4c0

Neo-kinship and other connections

2016 was undeniably a year of radical and unprecedented change. From the political to the personal, the established world order appears to have fundamentally altered. But beyond the evident dislocation and division caused by these ruptures, we are seeing new systems and mechanisms emerging which promise an alternative form of connection.

For the Future’s Laboratory, one such connection is Neo-kinship. The gradual breakdown of the nuclear family is old news; as is the fact that consumers’ core social units are changing. But the greater role which online networks and AI are already playing within our support networks is creating new patterns of behaviour and challenging established ideas around which relationships contribute to our social, emotional and economic wellbeing, and how they do so.

The effect of these shifting connections is perhaps most clearly apparent in our changing relationship with retailers. When Sam Walton opened the first Wal-Mart store in 1945 it was with the conviction that a retailer could help people save money and live better lives. Yes, Walton’s first store in Arkansas established the practices that define present day Wal-Mart: prices were kept as low as possible, a wide range of goods were stocked and they stayed open longer than anyone else, but it was also a local store, one which traded on its reputation in and its relationship with the community. When customers bought from Walton value for money was defined not simply in terms of cost, but by their assessment of the product they received. Initial sales may have been driven by price, but repeat business depended upon the store’s reputation and the customers’ ability to trust the products and the business they bought from. Walton knew his audience, but they also knew him.

For some, the removal of a physical presence reduces the strength of connection between customer and brand. We would argue, however, that even in an increasingly automated environment, human considerations outweigh all else. The growth of retailers such as Amazon demonstrates that customers do not need to buy from a ‘real’ person, but their connection with the brand is still based on the same principles that governed Walton’s customers. Repeat business is still ultimately founded on trust and accountability. Where traditional comms approaches have been defined by B2B or B2C, Business-to-Human marketing will come to the fore as companies seek to develop a narrative that’s about more than just a product and instead connects on a personal level. The difference is the connection which facilitates the individual’s wellbeing; to ‘live better lives’ is increasingly ‘artificial’.

Who owns your identity?

This post is based insights from the discussion of digital identities at Kantar Millward Brown’s Future Forecast. 

Traditionally your identity has been defined by the state. The authority of Governments to document, record and create their populations’ official identities has been viewed as a fundamental step in the exercise of control.[1] In post-Brexit Britain this monopoly shows no sign of waning as the right to work and live in the country falls under ever-greater scrutiny.

Identities are multifaceted, however, and as our lives become increasingly reliant on digital communications and services, private sector identities are becoming increasingly powerful. The virtual environments of Facebook, Tinder, Google and LinkedIn amongst allow us to create customised, dynamic and essentially flexible representations of our selves. Back in 2009 Mark Zuckerberg told us that people were “keeping up with their friends and family, but they’re also building an image and identity for themselves, which in a sense is their brand […] they’re connecting with the audience that they want to connect to”.[2] Seven years later this trend has only accelerated as we expand, edit and enhance not only our own digital ‘brand’ identities, but those of our friends and family.

Currently our social ‘brand’ and our government identity form two distinct categories, but a host of new identity start-ups are starting to change that. Firms such as ShoCard and Yoti are using smartphones to authenticate users’ identities by scanning physical credentials – passports and driving licenses – and matching these against self-portraits or selfies. The user is then provided with a digital version of their official credential which can be used both on and offline, e.g. accessing certain content or purchasing restricted items such as cigarettes or alcohol. For the panel at Future Forecast, these verified digital identities have the potential to revolutionise how businesses connect and interact with their customers. In financial services, for example, providers incur significant friction and costs undertaking due diligence on their customers, both of which could be reduced if verified digital identities are accepted as fulfilling regulatory requirements.

The convergence of public and private identities though is not without risk. Whilst verified digital identities may represent the future, last week’s backlash against insurance company Admiral’s plan to assess motorists risk-level based on their Facebook posts and likes, demonstrates that, ultimately, trust remains at the heart of our notions of identity. Although we may create and curate our own ‘brand’; unless there is a standardised way of codifying and interpreting the information we provide we do not yet rely private companies to interpret who we are. Once that framework has been established, however, both how we market ourselves and how we are marketed to is set to radically change.

[1] James C. Scott, Seeing like a State: How Certain Schemes to Improve the Human Condition Have Failed (Yale: Yale University Press, 1998).

[2] https://www.wired.com/2009/06/mark-zuckerberg-speaks/

Dealing with Data Breaches: The Impact on Corporate Reputation

Last month, Yahoo revealed that about 500 billion user accounts were compromised in one of the largest disclosed cyber breaches. In light of this news, US telecoms giant Verizon have suggested this will have a severe impact on their deal to purchase Yahoo for $4.8bn.

Yahoo is not the first to suffer with regards to a massive data breach: Target’s sales fell by 46% following the breach of 40 million credit card details, and paid out $236 million in breach-related costs, with other examples making the headlines such as Talk Talk and JP Morgan, but to name a few.

As well as costing businesses between $400 billion to $500 billion dollars per year, 46% of organisations have been also found to have suffered damage to their reputations and brand value, with data breaches recently being cited as having the greatest impact on brand reputation, up with environmental impact and customer service. UK-based fraud prevention company Semafone, for example, recently found that the overwhelming majority of people would not do business with a company that had been breached, less than 50% were found to be less satisfied with how corporations handle cyber breaches, and that most believe businesses are almost entirely to blame for corporate hacks.

In an increasingly digital era, with reports of cyber-attacks on the rise of at least 230% in the past three years, there is a clear need for companies to not only maximise their security systems, but to  “step up” with regards to their strategy for dealing with the aftermath, should such a breach occur.

But how should companies “step-up”?

While it is clear that breaches can result in significant damage to trust and brand reputation, businesses can always mitigate the damage inflicted. Publicising a clear and transparent response, one which acknowledges the situation and publically commits to the solution can often be crucial in preserving a firm’s corporate reputation. The key, however, is ensuring that you are targeting the right stakeholders with the right message.  Negative headlines don’t necessarily resonate with all stakeholder groups equally. And not all stakeholder groups will influence your company’s reputation.  Regardless of whether you are a start-up or large corporate managing a reputation crisis depends upon your ability to understand your stakeholders, know what issues matter to each group and establish what impact reputation in those areas will have on your business.  In short, how to effectively manage a breach can have as much of an impact on your reputation and your business as the breach itself.

 

Source
https://www.prsa.org/Intelligence/TheStrategist/Articles/view/11571/1129/Big_Hack_Attack_Protecting_Corporate_Reputation_an#.WAh6MfkrLIV

Advertisers, be bold, be brave in 2017

In January, Timothy Egan wrote an opinion piece in the New York Times based on the news that the average attention span had fallen to eight seconds – less than that of a goldfish.[i]

Nearly 10 months later this is old news. Shorter attention spans are accepted as part and parcel of the 2016 media landscape. Yet, at the same time, our expectations of the social, economic and moral accountability of businesses have never been higher. We want to be ‘wowed’ but not upset; astonished, but not challenged by our advertising. And in the era of social media we’re not afraid to name and shame those companies which fall short of our expectations.

The result is an apparent proliferation of B2B ads that are often dull, insipid and forgettable. Believing it is better to be safe than sorry, better to weaken an idea rather than risk being unable to convey the nuances of an offer, message or purpose in the given time, however, creates nothing more than indifference. Whether appealing to a goldfish or not, diluting a brand’s proposition rarely strengthens the audience’s engagement with a company.

To be clear, we are not advocating controversy for the sake of being controversial. Yes, being bold, being brave, can mean taking more risks, but it doesn’t necessarily equate with extremity. Ads, and the businesses they represent, are essentially successful because they are based on a meaningful point of difference. Our plea to brands in 2017 is therefore to have faith in those points of difference, to celebrate them. Being bold with your brand and in your advertising demonstrates a level of confidence and belief in your offering. Simply put; if you don’t believe in your proposition, why should your customers?

[i] http://www.nytimes.com/2016/01/22/opinion/the-eight-second-attention-span.html?_r=1

 

Future Forecast

At Millward Brown Corporate we work with clients to understand not only how they deal with current challenges, but how to prepare for those they will face in the future.

It is no surprise that increased acceleration and adoption of technology has fundamentally altered the way in which we interact with our environment and the way we do business. But beyond immediate horizons the challenges and opportunities for companies and brands over the next ten years are not always immediately obvious. We decided now was the right time to host our first Future Forecast to understand how we might prepare now, for the future.

Last Thursday we brought together a select panel of experts (James Sherrett, Slack; Shelley Kuipers, Better Ventures; Andrew Curry, Kantar Futures and Harriet Wright, Decoded)  and a room of marketing and insight professionals to get a better understanding of not only what is likely to change over the next decade but what that means for brands and how they stay relevant to a range of stakeholders. The findings made for interesting listening.

It was encouraging to hear how relationships will become even more instrumental to how such companies remain relevant to their customers, given the range of choice available to buyers it’s more about being super relevant at a personal level so there’s no reason for them to look elsewhere. What was interesting was to learn how technology will be developed to drive those changes.  Put simply, the more you can know about your customer (or for that case your employee) the better, current attitudes, decisions, preferences and what’s driving all of them; but don’t assume that’s enough, and don’t be a stalker either – there’s a fine line between knowing enough to provide real value and being seen as invasive, a line that many brands are currently struggling with.

So just how will tech change things? – we identified three specific ways

1. Disruption – This may not be new, but nor is it going away any time soon. As tech develops so do the uses and possibility for the status quo to be challenged, to the point that there will only ever be change and only those best set up and able to adapt to and apply the change will succeed.
2. Usage – “Tech choosers, not tech users” tech is no longer optional and expectations are so high that companies will have little choice but to enhance tech for the best possible customer experience, if you don’t they will go and choose someone who will
3. Creation – Augmented and virtual realties are moving on apace and will soon become mainstream in one form or another. With the immersive, experiential nature of what’s possible combined with the quality of what can be created, it’s not difficult to see where the future of branding and communications is heading

There was, however, a clear word of warning. Don’t even begin to consider how to apply the above without considering the significant impact and influence of social change. When you mix the above with a clear sense of what is expected of businesses, where Millennials begin to take on leadership roles in all walks of life who bring with them a different value set, the picture changes again.

We’re already starting to see businesses set up that have no employees, no desks and even no offices – all of which have been replaced by collaborative groups of talented individuals united by the sense of doing right by each other, their collective client and themselves, not to mention society at large.

Suddenly you have a very different way of working and living that will certainly shape how people work/live with and choose brands in the future.

So the panel’s advice to those businesses concerned about what the competition are doing (and that should be all of us by the way)? Simple. Who knows your business better than you? No one? In that case, what would you be doing to disrupt your business if you were the competition? Do that, because if you don’t you can be certain someone else will, if they’re not already – and that someone may not even be your traditional competitor set.

Take One Dollar Shaving Club for example. A totally different way to buy razor blades that wouldn’t have been considered just a few short years ago, but by enhancing tech and social change they have established themselves in a fiercely competitive marketplace where to have done the same in the traditional ‘in store’ route would have been just about impossible.

 

Top Gear and the innovation quandary

Last month, the BBC 2 motoring show, Top Gear, recorded its lowest overnight audience of any episode since the programme was re-launched by Jeremy Clarkson over a decade ago.

The show, which saw 4.3 million viewers tune in to watch Chris Evan’s presenting debut, attracted just over half that for fourth episode of the new series. Although the total audience figure is likely to be substantially higher once iPlayer views have been included, reception from critics and viewers ranged from ambivalent to outright hostile. Two weeks later Evans dually quit the show leaving producers and viewers alike to argue over what went wrong.

The format itself was surprisingly familiar. The ‘star in the reasonably priced car’ remained, there was still a rather divisive host and the presenters continued to undertake unusual and often comical car challenges in exotic locations.

All of which, was, perhaps part of the problem.

Regardless of the new presenting team’s chemistry, or lack thereof, the format of the show was already starting to lag under Clarkson’s lead. Following his dismissal, the BBC chose not to invent, but to innovate.  Changes made to the show were part of an iterative process in which the show was tweaked, but not overhauled. Inserting an off-road section into the test track, for example, is akin to cab drivers announcing they will accept payment by card when Uber is already linking payments to their customers’ phones – it represents change, but not the best possible solution.

To innovate is, by its very definition, to alter something established, usually by introducing new methods, ideas or products. Actions, and to an extent outcomes, are already defined by what has gone before – by the perimeters of existing products, services or programmes. Top Gear changed, but not enough. Its format simply recalled the ghosts of Clarkson, Hammond and May and in doing so appeared only as a pale imitation.

Embracing and investing in radical change when you have a tried and tested product is undoubtedly risky. Yet as Top Gear demise has shown perhaps the greater risk is of not doing so. In 2016, to be seen as ‘innovative’ continues to be the goal of many businesses. Perhaps what businesses actually need to be known for, however, is being inventive.

How the EU referendum result will impact brands

With the UK’s decision to Brexit, the perception of this country has changed, and as a result so has the reputation of those companies seen as ‘British’.  Companies/brands spend millions over decades to build and protect their reputation. Even when reputations are damaged it is often self-inflicted and the impact is obvious.  VW didn’t need anyone to tell them their reputation had been harmed thanks to ‘emissions’.  But what happens when your reputation takes such a potential big hit overnight due to issues totally out of your control?

What do your stakeholders think of you as a brand/company and what are the longer term impacts? We know trust, financial performance, strength of management, long term strategy are almost universal reputation drivers, but all are likely to have taken a hit since Brexit. So, what’s the business impact?

• Are investors going to want to invest in you? Impact = share price, jobs, innovation, growth
• Are people going to keep buying you if they don’t like the message you are associated with? Impact = sales/share price dip
• Are the best graduates going to want to work for you? Impact = talent and cost of recruitment

Of course the answer is nobody knows. Yes, it could be a storm in a teacup, or it could be an issue that’s going to have a lasting impact for years to come but either way businesses need to know to plan accordingly.

Best of British

The flipside is that brands and companies need to focus on what’s best about being British to remain relevant and engaged with an international audience but they need to do it based on what matters to that audience, not what matters to the brand! Brands need to own ‘Britishness’ as a positive both in the UK and overseas before it is seen as isolated and negative.  It needs to engage those who feel ‘on the outside’ of the outcome and give them a reason to be proud to be British, if not proud of the result…..all while playing to the strengths of why people voted Brexit, not an easy balance to strike.

The ‘Leave’ brand

Before the referendum, Kantar’s Added Value UK spent time looking at the EU referendum campaigns as brands. CEO Paul Cowper says it is clear that the Remain ‘brand’ under-performed: “Its spokespeople are now paying high prices for their lack of clarity and persuasion. They simply didn’t tap into a vein of cultural feeling sufficiently deeply to activate it as behaviour. Of course the notion of treating the campaigns as brands is a bit flawed.  Brands exist to persuade us of something and to gain our preference, that’s true, but the comparison pretty much ends there because brands are things you choose time and again, and should the product they offer fail to deliver as promised, the brand is also the vehicle through which we can demand compensation. In the case of the EU referendum, we have a singular choice, made in a specific moment that leads to an outcome we have no recourse over.  What will be interesting to watch is how people who chose Leave feel about the choice they’ve made as the “product” they’ve opted for slowly emerges.  Clearly today is far too early to judge that product, time alone will tell how good it is, so let’s hope that the Leave brand product lives up to the promise that 52% of the UK opted for.”

Sold! For $26 billion: Do two tech giants a nimble company make?

This week everyone is talking about LinkedIn. Or more specifically, Microsoft’s USD$26.2 billion acquisition of LinkedIn.

The deal, which represents the one of the largest digital technology acquisitions ever, is according to The Wall Street Journal,  Chief Executive Satya Nadella’s “latest effort to revitalize Microsoft, which was viewed not long ago as left behind by shifts in technology”.[i]

But will it actually work?

Previously the biggest software company in the world, Microsoft has arguably struggled to compete in the smartphone era.  “Younger rivals such as Google and Apple have outstripped it in terms of revenue growth and enterprise value”.[ii]  The market is seemingly saturated with Microsoft’s Office Suit, and previous acquisitions, namely the Nokia handset unit in 2013 and Skype in 2011, have met with mixed levels of success.  LinkedIn’s once stratospheric growth has also decelerated in the past 24 months and the latter saw its share price fall by 40% this year before the deal was announced. [iii]

So far, so less-than-good.

Yet as ever, the devil is in the detail, or rather in this case the data.

Purchasing LinkedIn allows Microsoft to link the professional network to its customer relationship management software and to Cortana, its intelligent digital assistant. According to Microsoft CEO, Satya Nadella, LinkedIn will become “the social fabric across all of Microsoft […]imagine your [news] feed now being informed by your work projects, calendar and all the people you’re meeting over the next month to make it more relevant”.[iv]  That ‘social fabric’, however, offers not only the opportunity to provide tailored content for users, but something more lucrative – the potential for ‘social selling’.  The wealth of use data from LinkedIn will enable Microsoft to offer highly targeted ad placements across platforms in the growing B2B advertising market.

Yes, Microsoft will still be selling to business decision makers. But just as Facebook’s Messenger platform was hailed as representing a return to `more personal interactions` a few weeks ago; LinkedIn’s data will enable Microsoft to promote adverts for products and services that are relevant not only to your business, but to your role within that business. Yes, you’re being sold to, but this time the ‘you’ really could mean you as an individual. Moreover, as ever greater numbers of people sway the decision to purchase goods or services for a business, LinkedIn’s organisational data will enable advertisers to target all the key employees who will influence the decision whether or not the company should invest.

It’s programmatic, but not as we know it.

[i] http://www.wsj.com/articles/microsoft-to-acquire-linkedin-in-deal-valued-at-26-2-billion-1465821523
[ii] http://www.ft.com/cms/s/0/931c2ade-3165-11e6-ad39-3fee5ffe5b5b.html#axzz4BZ7eZtyY
[iii] ibid
[iv] http://www.arnnet.com.au/article/601647/why-did-microsoft-buy-linkedin/