Reputation and your brand – the effect of bad publicity
.avif)
Corporate slip-ups don't go unnoticed. Scandals make headline news. Employees go on strike, consumers voice their outcry on review websites, and influencers put all your dirty underwear on full blast. All of this bad publicity can knock a brand's reputation. But what is the real effect of all this - and is the motto no publicity is bad publicity correct?
The Damage Is Done - Bad Publicity Wreckage
Various brand valuators all point to bad publicity as having serious consequences. In 2016, Sports Direct saw their reputation drop to a weak rating by the Reputation Institute. On YouGov's BrandIndex, the brand fell 13 percentage points to -13.4, putting them last on a list of 44 British high street stores.
After Volkswagen's emissions scandal, Brand Finance estimated the company lost 10 billion in brand value.
In 2023, Adidas reported a 23% drop in e-commerce sales, affected by their fallout with Kanye West and the termination of the Yeezy brand.
Bad publicity can set a brand back significantly. Positive associations people once carried can quickly turn sour. Consumers can lose trust in a brand they have been devoted to for years - before a single wrong post or PR misstep.
Bad publicity can also mean brands are in for a rough time financially. Most consumers avoid buying products from companies they don't like, and share prices usually go into freefall.
The Psychology of Harmful Reputation
Companies might also have to deal with the fallout of bad publicity affecting their employees. Morale could drop, and employees who were once proud brand ambassadors would rather not tell people where they work.
Social identity theory suggests that people derive a sense of self-esteem and identity from the groups they belong to, including their place of employment. When a company suffers a reputational blow, employees might experience a diminished sense of pride in their affiliation, leading to a weakened identification with the company.
Cognitive dissonance occurs when there is a conflict between an employee's beliefs or values and the actions or reputation of their employer. If an employee identifies with the company's values, but the company is involved in unethical practices, this discomfort can cause them to distance themselves - or leave entirely.
In 2023, Starbucks faced significant backlash when it was perceived as taking a political stance in the ongoing Palestine-Israel conflict. Employees who had previously viewed Starbucks as a socially responsible and progressive company were faced with a situation where the company's actions were in direct conflict with their personal values - and some chose to resign rather than continue.
The Long-Lasting Post-Negative Reputation Hardships
Having a bad reputation also makes it hard to attract top talent. Companies with a negative employer brand reputation can end up paying at least 10% more to persuade candidates to work for them.
Regaining a good reputation takes time. Lots of it.
Brands can begin to rebuild their reputation by acknowledging and rectifying their mistakes. After the Volkswagen emissions scandal, the company made apologies in newspaper ads, on video, and even directly to the then-current US President Obama.
Brands might even try to reinvent their brand to repair the damage. However, this can't just be a surface-level makeover. The public will be sceptical, so brands need to prove they're working to make a real difference on the inside as well as the outside.
In some cases, selling your brand might be the only way forward. Such is the case with Uber co-founder Travis Kalanick. In 2017, Uber became notorious for a toxic workplace culture, allegations of sexual harassment, and aggressive business practices. Kalanick ultimately sold approximately 90% of his shares and turned a new page with a different venture.
Crisis Recovery by Type: A Framework
Not all reputation crises are equal. The severity, the root cause, and the audience involved all determine the right recovery approach. Here is a practical framework based on what we've observed working with clients across law, finance, and professional services - sectors where reputation isn't a brand metric. It's a commercial survival factor.
What Huddle Knows About Reputation Recovery
At Huddle, we regularly work with clients in law and financial services - sectors where reputation isn't a brand metric, it's a commercial survival factor. A single reputational incident can lose you three clients in a quarter and see your best talent start looking elsewhere, without ever making the news.
What we've found, consistently, is that reputation recovery is not a brand problem first. It's a business problem first, and a brand problem second. Attempting to rebrand before the underlying issue is resolved - before the bad actor has left, before the policy has changed, before the apology has been made - is not just ineffective. It can make things dramatically worse.
The clients we've seen recover most effectively from reputation damage share one characteristic: they dealt with the substance before they addressed the perception. They fixed what was wrong. Then they communicated what had changed. The brand work came last - and it worked because it had something real to stand on.
The Aftermath Is Not Permanent
In the wake of a reputation crisis, it's easy to feel like the damage is irreversible. But the truth is, with the right strategy, your brand can bounce back stronger than ever. At Huddle Creative, we specialise in rebranding services designed to help you rebuild trust, redefine your narrative, and reconnect with your audience.
Whether you're facing the aftermath of a minor mishap or navigating the complexities of a medium-sized reputation challenge, our team is here to guide you through every step of the process. Contact Huddle Creative today and start your journey towards a fresh, revitalised brand identity.