Valuing Your Reputation

Analysis by TrustedReputation of the 2009 FTSE100 and AIM50 annual reports shows that:

• Profitable companies have higher reputation value (recorded as goodwill) than non-profitable – 17% vs. 7% in FTSE100; 14% vs. 7% in AIM50.
• Goodwill is recorded as up to 70% of total assets in some FTSE100 companies.
• On average across the FTSE100 index, goodwill represents £2.7 billion of total assets.

There is no consensus method of valuing corporate reputation, despite what some PR agencies might tell you. This is because the underlying research is complex and involves fully understanding several disciplines. For example:

• Economists believe that reputation can be given a market value as a seller's guarantee of a contracted good or service. Reputation value is the premium paid by the buyer (customer, supplier, employee, investor) for the guarantee.
• Computer scientists have shown the value of reputation in permission networks, peer-to-peer systems, and online risk management.
• Evolutionary biologists attribute value to have sparked a flurry of commercial interest by proving the value of reputation in complex adaptive systems, like niche marketplaces.
• Sociologists find value in reputation’s central role in hampering or facilitating innovation and technological change, particularly at the meso and micro levels.
• Political scientists have started to put economic value to the role of reputation in regulated industries.

Because we are rooted in cutting edge academic and commercial research, TrustedReputation can make sense of these complex strands. We can help tailor a business case for reputation management that shows your Board the current and potential value of your organisation’s reputation.