By Craig Little, Senior Consultant
At the turn of the 21st Century, British Petroleum (BP) launched a $220 million public relations and advertising campaign to re-brand itself as the world’s greenest oil company.
WPP Group’s Ogilvy & Mather ‘Beyond Petroleum’ campaign paid off. It was praised by consumer business press as a prescient model of corporate social responsibility and won the Gold Award from the American Marketing Association. In 2007 it was found by a customer survey to have provided BP with the most environmentally-friendly image of any major oil company.
But an award-winning, multi-million-dollar, green-branding campaign can’t fortify BP against the environmental (and public relations) catastrophe unfolding from the company’s Deepwater Horizon rig in the Gulf of Mexico.
Negative media has been extensive and sustained after outlets belatedly devoted lead coverage to the story more than a week after the leak first occurred. That the increase in coverage coincided with the increased visibility of the oil spill is no coincidence – and an arguably foreseeable consequence when you’re haemorrhaging approximately 800,000 litres of crude each day (the worst case scenario is well beyond that figure).
Also haemorrhaging is BP’s ‘Beyond Petroleum’ re-branding investment – something that may have been prevented for a fraction of the cost.
Less ads and media releases, more mitigation on safety
One quarter of one percent of BP’s public relations and advertising campaign spend ($550,000) would have equipped the Deepwater Horizon rig with a remote-control acoustic trigger – a back-up system that would close the underwater well even if the rig above were destroyed, as happened on 20 April.
Such a trigger, while not foolproof, may have been the best chance to prevent the leak. It would have allowed workers escaping from the burning rig by boat to send a remote signal 1,500 metres below the water’s surface to close the valve and stop the oil. Oil producing countries such as Norway and Brazil require these triggers as added precaution for rigs of their coasts. Everywhere else – including the United States and Australia – it is voluntary.
Three years after BP launched their $200 million re-branding campaign, the US Interior Department’s Mineral Management Service considered mandating the triggers. They decided against it after pressure from oil companies, including BP, who complained the $550,000 devices were too burdensome.
The oppressive cost of inaction
If $550,000 proved burdensome to BP, the potential costs as a result of the spill will be outright oppressive.
The prospective economic implications of the disaster are gargantuan — albeit highly uncertain. According to the Harte Research Institute for Gulf of Mexico Studies, the annual commercial seafood harvest in the gulf is $727 million, recreational fishing contributes $832 million and nearly 8,000 jobs, and tourism related to wildlife adds $569 million.
It remained unclear on Monday (May 3) how much damage those industries will incur from the oil spill, and how long that damage will last. The research group estimates that $1.76 billion in annual economic activity is tied to the wetlands directly exposed to the spill.
Much of BP’s time and resources will be required to address claims that are likely to be in the thousands – legitimate and otherwise. Tony Hayward, BP’s chief executive, reiterated a promise that BP “will honour all legitimate claims for business interruption”. Asked for examples of illegitimate claims, he said: “I could give you lots of examples. This is America — come on. We’re going to have lots of illegitimate claims. We all know that.”
The negative press is not limited to the nature of the oil spill. Some of the facts exposed in sections of the media following the explosion of the Deepwater rig do not flatter BP’s environmental credentials – credentials inconsistent with the key messages of the $220 million ‘Beyond Petroleum’ campaign.
Last year BP cut its investment in alternative sources by 28.5 per cent – from $1.54 billion to a little over $1 billion.
In announcing its first quarter results for 2010, BP reported that only about $770 million of a revenue figure of $81 billion was from alternate energy sources.
Toxic government relations
Not only has BP’s environmental credentials taken a hit, so too has its relationship with the US Government. Having played a role in willing the Interior Department’s Mineral Management Service not to mandate remote control triggers, it now finds itself in the gun of the Obama administration and a Democratic senate.
The Obama administration’s language towards BP has been strong – it has vowed to “keep a boot on the throat” of BP to ensure the corporation is held accountable for the spill. Concerned about what compensation BP is willing to pay, a group of Democratic senators have introduced legislation to raise oil companies’ liability limit retroactively to $US10 billion (in response to a law passed after the 1989 Exxon Valdez spill requiring companies to pay for cleanup costs but no more than $US75 million for other damage).
The emperor’s new clothes
In the absence of business practices that reflect a brand, public relations is little more than the emperor’s new clothes and speaks of an organisation more prone to corporate vanity than legitimately realigning its business.
Had BP made major investments into alternative energy and had they rigorously alleviated against the risks of fossil fuel, the “Beyond Petroleum” campaign would’ve played a vital role in building the new BP brand and its credibility with consumers.
Such credibility (and the ability to demonstrate all measures of mitigation were put in place) is vital when ‘protecting the brand’ against a crisis such as the catastrophic oil spill in the Gulf of Mexico and would’ve justified the $220 million spend several times over.
BP’s exposed lack of credibility is likely to cost significantly more.
1. Landor “ImagePower Green Brands Survey” reported that BP was regarded as more green (21 per cent) than Shell (15 per cent), Chevron (13 per cent), ExxonMobil (11 per cent) and Texaco (9 per cent). BP also topped the survey of companies that had “become more green” in the last five years.
I’m just disgusted by this horrible spill. Where can I find an realistic assessment of the true size of the spill? The statistics are widely different from different sources. Thanks for your good post.
I get more and more furiated with every bird I see covered in oil. I hope this containment cap works. This is just terrible.
It is nearly unbelievable that this oil spill is still not taken care of. It’s been what, like 46 days now?? All i see on the television all day long is washed up fish, and poor pelicans covered in oil.
Everytime I see Tony Hayward and one these BP commercials I want to throw up. Thanks for ruining our great coast. Keep lying about how much oil is flowing.
Perhaps one day our PR profession will require its practitioners to extract not only a binding promise but extensive evidence that the company client (from the Board chairman on down) does intend to practice what it has hired us flacks to preach, that would somehow prohibit the client from launching such communications efforts until the PR firm was convinced of their genuine intentions. Why a corporation would fail to invest in fail-safe measures when its shareholders and board are demanding more and more profits in a world where wealth is the only virtue should be self-evident to professional PR practitioners. The PR profession is more and more becoming the tool (in its worst connotation!) of corporate arrogance–make it all go away so we can go about our business.
There are many methods for extracting oil from tar sands and tar sands don’t always exist on the surface, such as in Alberta Canada where the sands are too far below the surface for open pit extraction.