Study: Putting A Price Tag On Reputation

(MENAFN- PRovoke) NEW YORK - Burson has put a dollar value on corporate reputation, saying new research shows it drives an average 4.78% in additional shareholder returns and adds up to a $7 trillion“reputation economy.”

In a study of 66 publicly traded companies, Burson found that reputation contributes shareholder gains that cannot be explained by traditional financial performance alone.

“For decades, leaders have known intuitively that reputation matters, but they've never been able to quantify it as a financial asset. Now, we can,” said Corey duBrowa, global CEO of Burson.“The companies in our study with strong reputation returns realized as much as 4.78% in unexpected additional annual shareholder returns. These are returns that are above what would be expected strictly from standard financial performance metrics.”

The findings come from Burson's report, The Global Reputation Economy: A New Asset Class for a New Era, which applies the firm's Reputation Capital methodology to isolate the portion of market value driven specifically by reputation.

For duBrowa, the shift is practical.“This takes reputation from being a soft concept to a hard asset,” he said.“As important as any other item that you might see on the balance sheet."

That distinction matters in organizations where communications has often struggled to compete with marketing, finance and operations for investment. Reputation has long been seen as strategically important, but financially difficult to defend.

“What we hope this study does is elevate and improve the resources that are allocated to reputation building,” duBrowa said.“Boards and C-suite teams struggle because you have finite resources against very specific outcomes. Reputation always seemed like a somewhat ephemeral outcome. Now we've proven that it has real value.”

In practical terms, Burson is not just offering a new way to measure reputation. It is giving communicators validation in the language that resonates most with senior leadership, leaders say.

The study breaks reputation into eight drivers, from governance and innovation to leadership, product quality and workplace. It finds that companies with the strongest reputations outperform their peers across all of them. On average, reputation leaders score 11 to 15 points higher than laggards on each lever.

But the finding that stood out most to duBrowa had less to do with branding and more to do with people.

“Workplace really surprised me,” he said.“I actually started as an employee communications person, and I've always believed that internal communication is an undervalued part of stakeholder management. In our study, the difference between the highest and lowest performers on workplace was an 11.8-point gap. That actually makes a material difference.”

That gap, Burson says, is about to matter even more as companies navigate the reputational risks of artificial intelligence. While most organizations now have some form of AI strategy, far fewer have thought through what that strategy signals to employees and to the market about how they value their people.

“Businesses must go beyond having an AI strategy and create an AI people strategy,” said Matt Reid, global corporate and public affairs lead and US CEO of Burson Buchanan.“How they manage this transition will be a powerful statement about how they value their employees.”

For communications leaders, the implications are clear. If reputation can now be tied to shareholder value, it stops being an abstract strategic asset and becomes a financial one.

“CMOs have had martech stacks tied to revenue. CFOs have financial models tied to performance,” duBrowa said.“Very seldom were communications professionals tied to hard and fast KPIs. This gives CCOs a corner they can fight from. It is a way to advocate for resources in the same way other functions always have."

Once reputation carries a price tag, it stops being theoretical, he said.“When you talk about an asset class that yesterday didn't exist and today is worth $7 trillion,” duBrowa said,“that is worth paying attention to.”

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