How can PR affect a brand?

Recent news has seen high profile examples of the impact of negative PR. With the Oxfam scandal and the KFC chicken crisis being two big news stories of 2018. But negative PR can have varying effects depending on the brand and the type of PR. This PR can come in the form of employee misconduct, widespread industry scandal or having your brand appear on the dreaded Watchdog.

How to measure the impact of negative PR?

This is where Brightblue comes into effect. Brightblue’s predictive models measure and quantify the impact of bad PR. This condensed article captures 3 main factors that should be considered and should be used to guide any estimated impact. Brightblue recommends bespoke analysis to measure the specific impact onto each Brand. Factors to consider:

  • Whats is the impact on sales?

Negative PR will almost always have an impact on key business measures. But how much will be dependent on a number of factors?

Where the key characteristic is industry wide and an immediate category crisis has occurred, such as industry scandal (e.g. 2 Sisters Chicken scandal) or contaminated product (e.g. eggs salmonella of 2017). In these examples Brightblue would expect a week 1 impact of 3-8% negative impact on product sales in that industry. This impact whilst big is typically lower than Brands expect.

However, what would be the difference when the crisis is specific to the brand such as for Oxfam or a brand appearing on Watchdog? Typically we would expect the first week impact to be larger than 10%. For Oxfam in particular where the scandal impacts the core Trust based offering of the charity, Brightblue would predict the impact to be larger than 10%.

However, this is not always the case when PR specifically impacts the Brand. For one brand Brightblue measured a client that had negative PR on the operations of the brand but that didn’t impact the core product offering. For this brand we measured a low 1% impact on sales. This could be similar to the expected impact of VW emissions scandal, whilst the PR was bad it didn’t impact the core product offering of VW. With VW share price today being similar to what it was at the start of 2015.

  • How long does the impact last?

Measuring the initial impact is something that many companies are able to directly measure. However, looking at the longer term impact is something that requires predictive modelling looking at multiple variables over time.

When measuring industry scandals Brightblue have typically seen that consumer purchasing habits return to normal within one month of the initial scare. For some industry scares this impact for less than one month, as consumers quickly forget. Similarly for KFC we would not expect there to be a significant long term impact.

For a brand specific scandal that impacts the core product offering we would expect this to have a long term impact. Take for instance Seaworld after CNN’s 2013 Blackfish documentary — the company’s stock decreased by 33%, not to mention the mass protests and advocacy for improved conditions for their famous orcas. And, it’s only this year that such protective measures have been put into effect. Similarly we may expect the long term impact for Oxfam to be lasting.

  • How should brands react?

Negative PR doesn’t always bring bad news for brands. If selling a branded good in a category that is impacted by a negative PR, consumers can trade into branded goods that they trust. For example the 2013 Horsemeat scandal exploded in Europe where in some cases falsely advertised beef was found with 100% horse meat content had a significant detrimental impact on Tesco. As a consequence, this forced consumers to look at brands they could trust. Although this may not increase sales immediately, this provides brands with an opportunity to outline the message of trust in their goods over the longer term.

This condensed article captures an overview of factors to be considered when negative PR occurs. For more details on how to measure the impact of negative PR contact Brightblue directly at info@brightblueconsulting.co.uk

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