British consumers are increasingly turning to social media sites to 'hashtag' and 'bashtag' brands, rather than calling their customer service centres.

Brands also feel the change, and are starting to work out the best ways to engage and tackle the social media customer.

Echo Research and Fishburn Hedges identified six actionable insights that well-known brands, such as Barclaycard, BT and Sainsbury's often practice, such as 'choosing the right battle - but entering it fast' and 'not letting social media define you'.

But how did we reach this conclusion? To start with, Fishburn Hedges ran an online poll with 2,000 consumers nationwide, followed by in-depth interviews, conducted by Echo Research, with several blue-chip companies, including PepsiCo, HSBC and Oasis.

The social media savvy brands were more than happy to speak to us about topics including: their use of social media, who is responsible for their social media sites, whether they've ever experienced a customer backlash and how they dealt with it, and how they publicise their use of social media sites.

At Echo Research, we often conduct qualitative interviews to get to the heart of an issue, while probing and prompting our way through a series of questions and answers. We find that this traditional - analogue! - method is still one of the best for understanding a customer, stakeholder or opinion former, to ensure that an opportunity or threat is understood in depth, so that clear recommendations can be accurately passed to a client.

However, as our research shows, qualitative research works exceptionally well when hand-in-hand with quantitative research. The findings are more substantive and robust, yet also are rich with ideas and opinions. On this occasion, merging the insights from customers and brands offered a truly holistic picture of the current situation from both sides of the cash till to ensure that the findings are more insightful, powerful and genuinely actionable. We also have the technology to make sense of social media through our Echo Sonar platform, sorting the digital wheat from the chaff, enabling brands and companies to understand whether there is genuinely a storm brewing or whether it's just in a teacup.

Dan Soulas explains how what stakeholders think of your brand is responsible for an average of 31% of US share prices.

Few CEOs would question that corporate reputation ranks amongst their most important assets. However, hardly any would be able to say exactly how much it's worth.

More importantly perhaps, few would be able to say with any confidence that they knew exactly what they should be doing to manage and ultimately maximize the value it represents.

Our research, however, reveals that:

• Corporate reputation was adding close to $3.4bn of shareholder value to companies across the S&P500 as at August 2011.
• The proportion of a company's market capitalization attributable to reputation averages 31% across the S&P500.

In fact, a rise in the value of corporate reputation in the last four years has laid the foundations for the share price recovery that we see today. Although many corporate reputations suffered in the turmoil precipitated by the failure of Lehman Brothers in 2008, reputation has been an important driver of stock price growth since then.

Our analysis shows that in the immediate aftermath of the 2008 market collapse, the average contribution of reputation to company value in the S&P500 fell by 3 percentage points to 13%. Since then, it has grown steadily in absolute terms and now represents 31%.

Naturally as reputation has grown its share of company value, some companies have performed better than others. The average contribution of reputation of the largest 20% of companies (by market cap) tracked is 45%. The top performing organizations are Apple and Google with a 58% contribution.

By contrast the contribution of corporate reputation in the bottom 20% of companies analyzed is only 13% and, in many cases, poor reputation is destroying value and reducing market capitalization.

The bottom line is that corporate reputations are now underpinning investor confidence in companies' ability to deliver the economic returns expected.

On the whole, the larger, and arguably more "communications sophisticated" companies, are more successful at creating value through their corporate reputations.

Nevertheless reputational value can be a fickle friend and can, and sometimes does, change quickly. Although the reputation contribution of the companies common to both our 2011 and 2010 studies increased by an average of 11%, individual changes ranged significantly.

The 10 largest risers registered an average increase of 28 percentage points while at the other end of the spectrum the 10 largest fallers declined by 11 percentage points.

What chief executives really want to know, however, is how corporate reputation can grow shareholder value.
Our analysis shows that on average, a 5% improvement in the strength of a corporate reputation of an S&P500 company can be expected to deliver an increase in market capitalization of close to 3%.

Furthermore, a better reputation will also increase the investment community's confidence in a company's ability to deliver the returns it promises.

The bottom line is that investment in building corporate reputation pays dividends and investment in understanding which particular components of reputation offer the greatest returns will enable companies to maximize them.

Social media demands that companies link both their paid and unpaid communications and measurement. Andrew Challier asks what this means for brands.

In the age of the informed consumer, big brands are subject to an unprecedented level of scrutiny. That scrutiny extends way beyond the confines of their products and financial performance.

If brands are under the microscope, it is social media which has provided the means to dramatically increase the order of magnification. The bigger the brand, the bigger the target, and so the bigger the threat posed by what would historically be labelled a 'PR crisis' but which now should be seen just as much as a 'brand crisis'. BP, Toyota, almost any bank and, most recently, News International have all suffered from the attentions of the social media 'chatterati' as well as the mainstream media.

On the plus side, however, the opportunity to manage the crisis - via the same social media channels - is greater than it ever has been.

We all recognise that 'reputation management' seeks to mitigate the negative and accentuate the positive. In this new world, however, we also need to recognise that reputation management is no longer the preserve of the Corporate Affairs function, nor is 'brand management' the sole preserve of Marketing. The consequences of misaligned communication have never been more critical.

A greater variety of Influencers

Reputations and brands are impacted by a wide variety of stakeholders, internal (staff) and external (consumers, investors, lobbyists etc) and businesses need a way to measure, manage and influence these various constituencies. Paid media is an important part - but only a part - of the picture. Brands need to benchmark and analyse both paid and unpaid media, to help identify both the 'danger signs' and the opportunities.

To create effective tools, a brand needs to understand the context for how its key products (within key markets) - and those of its competitors - are being discussed in social (and editorial) media around the world. This helps start to build an understanding of the issues of most importance and how they might choose to engage with relevant groups/audiences in a relevant way.

At the same time, by benchmarking paid-for messaging versus their principal competitors, companies can analyse the extent to which they are able to 'own' important topics and the extent to which they or their competitors are achieving better alignment between what is seen as important and the messages transmitted. Benchmarking the price paid for that media and the quality of its placement completes this circle.

Choosing the right measures and tools

There is an increasing amount of message monitoring software available to brands - paid, unpaid and social media etc. Most of it adds little value: whilst it aggregates the data, it lacks the human intelligence to draw meaningful, business-relevant conclusions. Clients are demanding an integrated 'vital signs' marcomms monitoring service tailored to their individual needs. Such a system need not be complex (in fact, the less complex the better), but the benefit is magnified when the total picture is assembled from a single, impartial perspective. And it only works to its true potential when brands have identified the correct KPIs within the business that can be reasonably linked to the benchmarking.

While brands might wish for the holy grail of a 'one size fits all' brand optimisation tool - simply drop all the ingredients in the top, pull a lever (or push a button) and out drops an optimised plan at the bottom - the reality is that there are very good reasons to use a combination of methodologies and tools.

For example, digital measures frequently underplay the contribution of offline marketing and other media 'levers' and, while econometric modelling is great at budget allocation and provides a powerful basis for budget optimisation between markets, brands and different channels, it rarely reflects the importance of reputation.

Different - and appropriate - techniques are available for measuring the corporate value of reputation. The 'brand lesson' which we preach, therefore, is to understand how these different measurement techniques are best used - not to provide a universal panacea, but to inform better quality decision making.

Taking action

Messaging

Ensure that corporate and brand messaging are aligned - addressing the key issues in a coordinated manner.

Example:

British Airways is aiming to rekindle pride among staff and consumers via a new 'heritage' marketing campaign; the aim is to regain the trust of both the general public and its own employees disillusioned by strike action, cancelled flights and low morale.

Organisation

Ensure that the company organisation is aligned organisationally. This doesn't have to imply a merger between corporate affairs and marketing.

Example:

Nestlé has appointed Pete Blackshaw - author of Satisfied Customers Tell Three Friends, Angry Customers Tell 3000 - as Global Head of Digital and Social Media, with dual reporting lines into the global heads of both Corporate Affairs and Marketing.

Measurement:

Ensure that tracking and measurement are able to answer these two questions from a consistent and comparable perspective: - What are people saying about us and our competitors? - What are our competitors saying about themselves?

Example:

In response to client demand, Ebiquity has developed an integrated message alignment reporting and benchmarking service, which draws upon data from its Portfolio and Echo Sonar monitoring software, and which feeds into both the marketing and corporate affairs functions.

Brands are promises. To be strong, those promises have to be lived and authentic.

And brands are judged by the company they keep - think Disney (& Coca Cola & HP), think McDonalds (& Dreamworks), think WWF (& BSkyB), think the 2012 Olympics (& Visa), even think Accenture & Tiger Woods. These associations can be powerful metaphors until there is a disconnect with your target audience's values. And that's what's happened here.

Part of News of the World's brand promise has been as the people's champion - the nation's newspaper fighting 'little people's' battles against the large, rich and powerful. Now they've turned against the ordinary people - soldiers' widows, parents of murdered children - and look more like the cynical corrupt elite they claim they target. Their brand promise is broken. If but on that basis, News of the World has become 'damaged goods' and would struggle to survive this.

Legal issues and ethics aside, which the full and proper investigation should confirm or otherwise, the sense of betrayal that such a significant and trusted 'people's newspaper' would encourage, allow or turn a blind eye to abusing the vulnerable is staggering. People will remember that - those in Liverpool are still boycotting The Sun after its Hillsborough coverage.
For major advertisers, to do nothing, in terms of changing allegiances or stopping the association, indicates tacit approval and acceptance - and potentially tarnishing their own reputation as uncaring and socially irresponsible.

That is why the likes of Sainsbury's, NPower, Boots, O2 and even the Royal British Legion would not wish to be connected with the distaste that the hacking scandal has provoked among the general public, many of whom swell News of the World's significant readership. Keeping their own reputation intact by being true to their and their customers' core values matters more to them than the effectiveness of advertising through what was once the largest circulation newspaper in the country.

This is a legal matter, but it's also emotional, commercial and political. More has yet to come out and other media titles won't let this die.

Such as today's Economist piece on 'Streets of Shame':