The fallout from the News of the World phone hacking scandal has been stunning. Equally shocking was the reprehensible actions some News of the World journalists took to scoop their competitors, including hacking into the mobile phone of 13-year-old Milly Dowler, who went missing in 2002 and was subsequently found dead.

While pundits and journalists continue to flesh out the aftermath of this escalating global scandal, yesterday The Guardian reported that reporters from The Sunday Times, News International’s venerable broadsheet, had attempted to hack the voicemail of former Prime Minister Gordon Brown while he was in office—the question for public relations professionals now turns to the long-term impact these transgressions will have on how we counsel clients in managing their reputations.

Jane Wilson, CEO of the U.K.’s Chartered Institute of Public Relations, wisely notes that the closing of the News of the World “is a great example of traditional and social media working together to produce a staggering outcome.” In this case, following immense pressure on several News of the World advertisers earlier in the week from online activists and the general public, brands started pulling their advertising, en masse, beginning with the high-profile defection of Ford.

Unfortunately, this combined with several other factors led to the loss of more than 200 editorial and staff jobs as the 168-year-old British tabloid was shuttered; a loss no one should cheer.

Writing in The Globe and Mail, marketing columnist Simon Houpt posited that the power of social media to enhance or topple brands’ reputations and that of their proprietors is beginning to take on an Arab Spring-like significance. In revealing the concern of Unilever CEO Paul Polman that if social media activists can “bring down the Egyptian regime in weeks, they can bring [companies] down in nanoseconds,” he perfectly summarized the new realities and challenges of reputation management in the digital age.

Beyond the impact that social media played, the totality of the scandal encompasses something PRSA has been saying for quite some time: Reputation management in the digital age is becoming an immense challenge for many businesses—even for News Corp., which has weathered many crises over the years.

The immense pressure being exerted on Rupert Murdoch and News Corp. will undoubtedly become a case study for business schools and public relations professionals on the potential perils of not properly managing a company’s reputation.

But we shouldn’t fool ourselves into thinking this is a “PR disaster” as The Washington Post declared on its July 8 front page. It isn’t. In trying to save the career of one of his top lieutenants—News International CEO Rebekah Brooks—Murdoch is torching the reputation of all his brands.

What Rupert Murdoch (and the many global CEOs watching the evolving fallout of this scandal) has learned, I hope, is that reputation is not merely built upon corporate success or big profits. It comes from years, not moments, of doing and saying the right thing. In the News of the World phone-hacking scandal, Murdoch’s far-reaching media brands will now all take a collective hit for the transgressions of one.

Whether News Corp. made the right decision in closing the News of the World is debatable at this point. But what is not is that the power of social media continues to heavily influence how brand reputations are formed and sustained.

We have many more lessons to learn from this evolving scandal.

Arthur Yann, APR, is the vice president of public relations for the Public Relations Society of America (PRSA).

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