Google’s brand image has been damaged by the criticism of it’s tax avoidance of taxes, a major survey of consumer attitudes has found.The search engine has plummetted over the last year in the Brand Desire research rankings of brands compiled from a survey of 12,000 consumers by Clear, M&C Saatchi’s branding agency.
Google was named the fifth most desirable brand by Britons in the same survey in 2012, but new figures reveal that it has fallen out of the top 20.
Google was the worst performing media brand in Britain. It fared even worse than the BBC, which was rocked by the Jimmy Savile sexual abuse scandal and the disasters that followed, but lost only 10pc of its brand desirability. The broadcaster was hit particularly hard in the measures of respect that contribute to the index.
Google’s fall follows a year in which the company has been repeatedly battered by negative headlines around its tax affairs. It was twice called to defend its almost complete avoidance of UK corporation tax to MPs on the Public Accounts Committee, and was forced to deny misleading Parliament over whether British staff actually sell advertising.
The MPs’ claim that, contrary to their corporate motto, Google executives “do evil” by channelling billions of pounds in British advertising revenues to an offshore tax haven via Ireland made front page headlines and led television news bulletins.
Since its grilling in Parliament, Google has sought to shift the debate away from criticism of multinationals and towards reform of the tax system, but this research indicates that it’s moral stance is not credible.
According to Clear, the series of stories have nevertheless had a major impact on Google’s reputation among consumers. Its “Brand Desire Index”, which captures nine measures of attitudes to brands including respect and future use, fell by 38pc on a year ago.
The suggestion that damage to Google’s brand was caused by its tax affairs was corroborated by data from 3,700 Australian consumers. Tax avoidance has similarly risen up the political agenda there, with Google among the top targets for criticism. In Australia its brand desirability fell 20pc.
The tax controversy had an impact on other multinational brands. Starbucks, which was also hauled in front of MPs to explain why it had paid no corporation tax for four years, saw its brand reputation flat-line while its rival prospered. British-owned Costa enjoyed a 70pc surge in its Brand Desire Index, while Starbucks edged up just 3pc.
Clear said Starbucks’ sheepish reaction to criticism of its tax avoidance may have saved it from brand damage on the scale suffered by Google. Following its Public Accounts Committee roasting in November, the coffee shop volunteered to pay £20 million to the Exchequer and this week said it had paid the first £5 million in corporation tax despite making a loss in Britain.
The survey suggested the long-term squeeze on spending following the financial crisis is now having an impact on perception of consumer brands. The budget supermarket Lidl gained 80pc, for instance, and was the best performer in its sector.
The moral of the story is that claiming to be legal when one is caught actively avoiding tax is not a business winner- and it will effect your sales and profits.