Media Literacy and Auditing Corporate Reputation

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The Reputation Institute111 Fifth Avenue, 8th floorNew York, NY 10001Telephone 212-998-0211Fax 212-443-1006

Craig E CarrollThe University of Texas at Austin

Media Literacy and Auditing Media Literacy and Auditing Corporate Reputation Corporate Reputation

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What is corporate reputation?What is corporate reputation?

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A Workable DefinitionA Workable Definition

Corporate reputation refers to what the Corporate reputation refers to what the public perceives is salient about the firm public perceives is salient about the firm or its characteristics (Fombrun, 1996). or its characteristics (Fombrun, 1996).

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Multi-Dimensional Nature of ReputationMulti-Dimensional Nature of Reputation

Products& Services

FinancialPerformance

SocialResponsibility

Vision & Leadership

WorkplaceEnvironment

EmotionalAppeal

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Why is Corporate Reputation Why is Corporate Reputation important?important?

People invest companies based upon People invest companies based upon reputation.reputation.

People want to work for a company with a People want to work for a company with a good reputation. good reputation.

People buy products or services from People buy products or services from companies based on their reputation.companies based on their reputation.

People give “pause” and weigh incoming People give “pause” and weigh incoming information against companies with good information against companies with good reputations.reputations.

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The relationship between RQ The relationship between RQ and change in market value is and change in market value is

not symmetrical: not symmetrical: AverageRQ PointChange

Average Change inMarket Value of

Company

Average % Change inMarket Value of

Company

RQ Decrease(2000 v. 1999)

-5.34 - $28 Billion -36%

RQ Increase(2000 v. 1999)

+5.85 + $.86 Billion +16%

Note: Stock prices and share volumes were examined on September 1, 1999 and October 1, 2000.

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-$100

$0

$100

$200

$300

$400

$500

$600

.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00

Billions

Absolute Value of Change in RQ (1999-2000)

Abs

olut

e V

alue

of

Cha

nge

in M

arke

t V

alue

(199

9-20

00)

Absolute Value Market Value Change

Linear (Absolute Value Market Value Change)

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How are ‘corporate reputations’ How are ‘corporate reputations’ formed?formed?

Direct ExperienceDirect Experience The Mass MediaThe Mass Media

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You cannot manage what You cannot manage what you cannot measure….you cannot measure….

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1. Gathering Stories —Companies monitor their media coverage via news aggregators such as Lexis-Nexis. Topical index terms include both company names and subject headings.

2. Building a Database of News —Each story in which the company is mentioned is streamed into a database; its position within the paper/magazine, publication name, date (plus time for broadcast), and the corresponding circulation or audience figure of the particular media are identified.

3. Developing Dictionaries and Rules —The rules through which stories are coded involve much more than a simple list of search words. Coders “train” the computer to recognize the complex ideas being tracked through a series of transparent tests and retests on random samples of stories.

4. Coding Stories — Once the dictionaries and rules are built and tested, each story is then scored for content that is relevant to any of the reputational attributes. These ideas are then summarized as they relate to each company mentioned in each story to identify the “tone” of writing about the company in each story.

Auditing Corporate Reputation vis-à-vis Auditing Corporate Reputation vis-à-vis Media MonitoringMedia Monitoring

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Measuring Media CoverageMeasuring Media Coverage

ProminenceProminence SalienceSalience

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The The prominenceprominence of media coverage devoted to of media coverage devoted to particular companies affects the salience of particular companies affects the salience of these companies and their attributes in the these companies and their attributes in the minds of the public. minds of the public.

Salience would occur in a number of ways: Salience would occur in a number of ways: which companies are thought about in the first which companies are thought about in the first

place, how they are thought about (favorably or place, how they are thought about (favorably or unfavorably), unfavorably),

which issues described in connection with the firm’s which issues described in connection with the firm’s name best describe the firm’s reputation, name best describe the firm’s reputation,

and whether the firm falls favorably or unfavorably and whether the firm falls favorably or unfavorably in terms of these issues. in terms of these issues.

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Xerox

FedEx

Loomis

DHLHP

Purolator

UPS

Canada Post

Bombardier

-3

-2

-1

0

1

2

3

-3 -2 -1 0 1 2 3

Frequency

Tone

Well Above Average

Well Above Average

Well Below Average

Average

Average

Comparative Media Performance Comparative Media Performance

Frequency

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Example:

Emotional Appeal

Subject Feel GoodAbout

Admire &Respect

Trust

Number of timesaddressed

5 10 0

AveragePercentage

7.5/40=19%Always round to thenearest percentage

point.

Company: SR GroupEstimated Number of Articles: 65Number of Articles Reviewed: 40

Sources:Magazines, Journalsand Newspapers

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Example: Summary Chart

Em

otio

nal A

ppea

l

Low

High

CompanyCompetitor 1 Competitor 3 Competitor 4Competitor 2

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Em

otio

nal A

ppea

l

High

Low

Low High

Media Exposure

Example Competitive Map

CompanyCompetitor 1 Competitor 3 Competitor 4Competitor 2

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Media exposure as a proxy for corporate Media exposure as a proxy for corporate reputation may not be as clear cut as a reputation may not be as clear cut as a first glance may indicate.first glance may indicate.

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5 views of the media5 views of the media

1: Reflects no distortion.1: Reflects no distortion. 2: Influenced by media workers’ 2: Influenced by media workers’

socialization.socialization. 3: Influenced by media routines.3: Influenced by media routines. 4: Influenced by social institutions (“the 4: Influenced by social institutions (“the

market” or “social responsibility”.market” or “social responsibility”. 5: Influenced by dominant ideologies.5: Influenced by dominant ideologies.

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Media LiteracyMedia Literacy

Since the media influence:Since the media influence: The images & opinions the public holds The images & opinions the public holds

about major corporationsabout major corporations The measurements organizations use for The measurements organizations use for

gauging how the public currently respond,gauging how the public currently respond, it is important to understand the political it is important to understand the political

and organizational forces that shape which and organizational forces that shape which stories get told.stories get told.

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Goals of Media LiteracyGoals of Media Literacy

Media Literacy is concerned with Media Literacy is concerned with individuals developingindividuals developing informed and critical understanding of the informed and critical understanding of the

nature of mass media, nature of mass media, the techniques used by them, the techniques used by them, and the impact of these techniques. and the impact of these techniques.

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Agenda-Setting TheoryAgenda-Setting Theory

““While the media may not be successful While the media may not be successful in telling us what to think, they are very in telling us what to think, they are very successful in telling us what to think successful in telling us what to think about.”about.”

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Mass media content is a socially created Mass media content is a socially created product, product, notnot a reflection of an objective a reflection of an objective reality.reality. Media content ≠ real world indicators.Media content ≠ real world indicators.

Not everything Not everything “eligible”“eligible” to be mass to be mass media content actually gets into the media content actually gets into the media.media.

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ButBut

Who sets the media’s agenda?Who sets the media’s agenda?

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News Room NormsNews Room Norms

The longer a journalist works for a news The longer a journalist works for a news organization, the more socialized they are to the organization, the more socialized they are to the policies (stated & unstated) of the organization.policies (stated & unstated) of the organization.

The more journalist follows the routines of their The more journalist follows the routines of their organization, the more likely their content is to organization, the more likely their content is to be used.be used.

On stories without established routines (in the On stories without established routines (in the early stages of an issue) individual journalistic early stages of an issue) individual journalistic discretion will be more influential than routines.discretion will be more influential than routines.

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Routine & Public EventsRoutine & Public Events

Events that are congruent with media Events that are congruent with media routines are more likely to be covered routines are more likely to be covered than events that are not.than events that are not. News off the beaten path may go unreported.News off the beaten path may go unreported. Issues without good film/video footage may Issues without good film/video footage may

not be included in TV newscasts.not be included in TV newscasts. A press conference held just before a A press conference held just before a

newspaper’s deadline is more likely to be newspaper’s deadline is more likely to be included than one just after.included than one just after.

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News valuesNews values

Prominence/importanceProminence/importance Human interestHuman interest Conflict/controversyConflict/controversy The unusualThe unusual TimelinessTimeliness ProximityProximity

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““Information subsidies”Information subsidies”

The growing dependence of mass media The growing dependence of mass media on press releases (and other PR efforts) on press releases (and other PR efforts) by various organizations.by various organizations.

The “insider” syndrome where The “insider” syndrome where journalists face pressures to cooperate journalists face pressures to cooperate with official views, formula writing and with official views, formula writing and standardization.standardization.

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Journalistic “Balance”Journalistic “Balance”

Example:Example: A large, well-organized antiwar rally in A large, well-organized antiwar rally in

Texas was given equal treatment with a Texas was given equal treatment with a much smaller, more disorganized pro-war much smaller, more disorganized pro-war demonstration.demonstration.

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Influences on the Media AgendaInfluences on the Media Agenda

Advertising & Media Advertising & Media CirculationCirculation

Capitalist Values: Capitalist Values: The Media The Media subscribes to dominant capitalist values subscribes to dominant capitalist values which supports the Corporate Agenda which supports the Corporate Agenda (e.g., business, in general, is a good (e.g., business, in general, is a good thing)thing)

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Corporate Ownership:Corporate Ownership: Independent newspapers are both more Independent newspapers are both more favorable and more disfavorable (e.g.., favorable and more disfavorable (e.g.., more extreme) in their news coveragemore extreme) in their news coverage

Media Conglomerates:Media Conglomerates: Companies Companies with located within the media industry with located within the media industry (e.g., General Electric, AOL-Time Warner, (e.g., General Electric, AOL-Time Warner, Disney) will receive more favorable Disney) will receive more favorable treatment than non-media conglomerates.treatment than non-media conglomerates.

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Size:Size: All other things being equal, All other things being equal, larger (national) companies receive larger (national) companies receive more media coverage than smaller more media coverage than smaller (regional) companies.(regional) companies.

Age:Age: Older companies receive more Older companies receive more media coverage than younger media coverage than younger companies.companies.

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Regional Economies:Regional Economies: The media The media write more favorably about write more favorably about companies/industries within the reach of companies/industries within the reach of their local economy than other similar their local economy than other similar companies outside the sphere of companies outside the sphere of influence of the local economy.influence of the local economy.

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West Coast/East Coast bias: West Coast/East Coast bias: Companies headquartered in on East or West Companies headquartered in on East or West Coast receive more (favorable?) news Coast receive more (favorable?) news coverage than those HQ’ed elsewhere.coverage than those HQ’ed elsewhere.

Diversity: Diversity: All industries were to receive All industries were to receive equal coverage, companies operating in equal coverage, companies operating in multiple industries would receive more multiple industries would receive more coverage than companies operating in singular coverage than companies operating in singular industries. companies receive more media industries. companies receive more media coverage than smaller (regional) companies.coverage than smaller (regional) companies.

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Previous Reputation: Previous Reputation: Companies Companies with better public reputations will with better public reputations will receive more non-negative news receive more non-negative news coverage than companies with less coverage than companies with less favorable reputations.favorable reputations.

Celebrity CEOs: Celebrity CEOs: The media are The media are drawn to the Jack Welch’s of the drawn to the Jack Welch’s of the corporate world.corporate world.

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ConclusionsConclusions

Before “decoding” what impact media Before “decoding” what impact media coverage has on corporate reputation, coverage has on corporate reputation, consumers need to be aware of:consumers need to be aware of: What goes into the production of news.What goes into the production of news. The “interaction” between media and The “interaction” between media and

“organizational” forces“organizational” forces

Media Literacy and Auditing Corporate Reputation

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