BP has a Brand Problem

They talked the talk but never walked the walk.    

    No industry is more loathed and distrusted than big oil. But while people may hate the industry, oil is a necessary evil that our society depends on. Like it or not, oil companies aren’t going anywhere.    

    Like many companies in unpopular industries, BP launched a massive advertising campaign to put a little lipstick on the oil pig. Advertising is not very good at changing strongly-held perceptions, but in BP’s case it actually worked.

    Too well, in fact. Its “Beyond Petroleum” campaign was able to move the BP brand from the bottom of the barrel to one that was perceived by consumers as one of the greenest petroleum companies in the world. Actually, BP was at the top of a list of companies that had become greener in the previous five years.   

    But the “holier than thou” tone of BP’s advertising placed the company on a perilously high green pedestal it was sure to fall from.    

    A little history might be in order. BP traces its beginnings back to English adventurer William D’Arcy. Bankrolled by Burmah Oil, D’Arcy’s firm in 1908 was the first company to strike oil in the Middle East.

    The following year, the two companies formed Anglo-Persian Oil and in 1914 the British government took a 51% stake. In 1954, Anglo-Persian changed its name to British Petroleum, the name used on its popular gasoline stations in Britain and across continental Europe.    

    British Petroleum merged with Amoco in 1998, and changed its name to BP Amoco. Then two years later, after ARCO, Castrol and a few more companies were added, the company dropped “Amoco” and became just “BP.”    

    In a press release announcing the change, the company justified keeping the BP name because of its recognition around the world and because it stood for the new company’s aspirations: “Better People, Better Products, Big Picture, Beyond Petroleum.”

    In 2000, a rebranding effort was unveiled. It included a new green-and-yellow sunburst logo and a new slogan “Beyond Petroleum.” Launched with a massive $200 million advertising and public relations program, BP was talking the talk of a new, more environmentally-friendly energy company.    

    Unfortunately, BP never walked the walk. Ten years later, BP is still the big oil company it has always been. In the first quarter of this year, BP revenues were $73 billion, only $700 million (less than 2%) were from alternative energy. So much for moving beyond petroleum.    

    The fact that BP is still an oil company isn’t what hurts the brand. What hurts the brand is that BP is an oil company with a terrible reputation for safety. Known for cutting costs on safety and maintenance to increase profits, the company has suffered several disasters over the past few years. (The spill in the Gulf was just the latest and the largest.)

    ·    In 2005, an explosion at BP’s Texas City refinery killed 15 workers and injured 170 others.

    ·    In 2006, 267,000 gallons of crude oil leaked from an Alaskan pipeline maintained by PB. Later that year, another BP Alaskan pipeline suffered a catastrophic split which led to a temporary closure of Alaska’s entire oil supply. “Severe corrosion” caused by cost-cutting and lack of maintenance on BP’s part was blamed for the split.

     ·   Numerous safety and environmental violations from these events and others forced BP to pay $485 million in fines in the United States alone in the past five years.    

    To a company that posted $5.65 billion in profit in the first quarter, the fines are minuscule But the enormous profits show just how greedy and callous management is for not running a safe and ethical company. How could management watch reels of its television commercials knowing all too well it was failing to deliver on its promises?

    The spill in the Gulf has pulled the curtain off of a company that has been blowing smoke up our butts for years. No consumer, regulator or politician will soon forget this tragedy.     Producing oil is an dirty and dangerous business. Pretending it’s not makes disasters like this all the worse. And make no mistake, these disasters are not easily forgotten.

    Consider Exxon-Mobil, the world’s largest private oil company. Its methods of operations are today considered the gold standard in the production of oil. Yet, Exxon still remain cursed by the images of oily seabirds from the Exxon-Valdez disaster 21 years ago.    

    Strong brands with a reputation for quality, safety and honesty are able to survive even the worst tragedies and negative PR stories. Toyota, Tylenol and Goldman Sachs have faced some dark days recently, but for them the future is still bright because the brands are strong.    

    For BP, not so much. A brand with a poor reputation facing one of the worst oil spills ever is damaged goods. No amount of advertising can fix this. Anything BP says will no longer be believed. You can fool us once, but never again.

Comments

[Dr Claude Windenberger]

BP may be able to save itself somewhat if it uses a green solution to clean up the oil spill. One such solution that I like is Adria Brown's patented Golden Retriever product made from dried corn cobs. Apparently she has contacted BP and many people and agencies and is simply waiting to hear from them. Her latest press release and other links can be found at this webpage http://recovery.windenberger.com/

[reactorr online branding blog]

Excellent post. BP used to be one of my favorite brand identities, but now the thought or mention of them makes for mixed emotions.

From a branding perspective, I wonder how they hope to recover in terms of brand reputation management.

The interesting thing about BP as a brand is, when we use their product (unless at the pump) it isn't branded, so we don't always have an option to consciously boycott it if we chose to.

Also, unlike firestone, toyota or others which have had pr nightmares in recent years, this is a product that is more of near necessity than choice.

I wonder if we'll later see a rebranding like phillip morris/altria in hopes of shedding negativity.

[TBD Townsville]

Thank you for an enlightening article on brand vs image. Some excellent commentary as well.

[dining room tables]

This is a nice article. BP does not only have the mobile problem but it has loads of problems that made our environment worst. I know we all need oil, we live in it and also we can die in it.

[Nursing gowns]

Brand is not just a beautifuly designed logo and a enlightening corporate vision. Brand is about how your stakeholders -in this case the whole world- perceive you... and so far this perception is a mess out of control.

[Ryan]

Excellent article on the situation and one in which I agree completely. Branding doesn't replace doing the right thing. I blogged about this exact topic yesterday, with very similar thoughts as yours.

[Angel Lam]

Agreed. No amount of advertising can fix this. Just waste money. Unless BP not only talks the talk but also walks the walk. I believe that many people are expecting BP to make a CHANGE.

[nhl team]

nice article.people used to consider the brand of the products,but Branding is not just about paint on the outside of a product. A brand is what your company stands for in the mind. And if that is damaged the future of the company could be in jeopardy.

[dunk sb]

there are so many thorny problems in our life,my god,save the earth plese.

[Nacho Villoch]

A Brand Problem....to start with. Given the magnitude of the catastrophe -that dwarfens any other known oil spill in history- , I am not so sure if the quick ( and seemingly honest )reaction of the CEO is going to be enough to cure the scars.
We may be seeing pictures of seagulls, dolphins and marine life coated with tar for a long time in the (just till now) pristine waterways of the Gulf.
Brand is not just a beautifuly designed logo and a enlightening corporate vision. Brand is about how your stakeholders -in this case the whole world- perceive you... and so far this perception is a mess out of control. I do not think EXXON ever recovered from the Exxon Valdez runaground in Alaska (++ 20 years ago) ... in a time without Internet, twitter and socialMedia -where companies still had the ilusion of controling the public opinion- ; Yes.... BP now is sinonym of BrandProblem

[Stephen Denny]

Laura: cross posted our conversation and more thought over at my blog - would welcome your thoughts.

http://www.stephendenny.com/

[dd]

Can you please set videos to start downloading ONLY when I click play. Its very very annoying for the computer to do something when I have not authorized it to do so. I am at the limit of my bandwidth usage this month and I don't want any auto videos to eat up my bandwidth.

[Adrian Zacher]

Interesting reading. Makes you think - why do we 'allow' Toyota to make significant mistakes yet buy even more of their cars (note Toyota Prius sales are up considerably year on year) and not forgive BP?

They both claim to be green (have screwed up) and make environment damaging products - whats the difference?

I know we do forgive Toyota but why? Really, why is it impossible to forgive BP - is it because we just don't believe their message that they are 'Beyond Petroleum' - they haven't DONE what they said they would do? As in diversify.

Whereas perhaps we do believe that Toyota will sort themselves out - will pay EXTRA attention to quality and fix faults - and their media bungling actually reinforced the perception that they were not smooth media manipulators but expert product manufacturers out of their depth?

[nike air max 2010]

Compare and contrast to Toyota, GM, and a few others - from what we've been told, they've denied the problems existed, hidden the facts and generally done what good leaders shouldn't have done.Saying BP has a branding problem is like saying the Challenger space shuttle needs a paint job. BP's concerns eclipse "branding." But if it pulls off a rescue operation a mile under the Gulf of Mexico and makes good on what its CEO's commitment, I'll say they've done pretty well.

Thanks for sharing the article.

[Jonathan]

Tiger and BP are birds of a feather.

Two brands that were market leaders, but that was not enough. They had to be more. Different. Better. When in fact, they were no different. They both played us for suckers. Now it's time to pay the piper.

[Stephen Denny]

Laura:

Here's the thing I see that speaks loudly to the branding question: change comes from the top and Hayward has done the right things - catastrophes happen in high risk enterprises (and oil has a tendancy to burst into flames), but in the face of this the CEO has done what a good leader should.

Compare and contrast to Toyota, GM, and a few others - from what we've been told, they've denied the problems existed, hidden the facts and generally done what good leaders shouldn't have done.

If walking the walk is our yardstick, then I'm admiring what this guy has done. If the company succeeds in lowering a 110 ton containment bell 1 mile deep and capping what is a historically dangerous environmental catastrophe - and then pays for clean up, compensation and any thing else a company of BP's size and scope can offer - then this will be a fascinating branding story.

But right now, they're not playing spin - they're working to solve the problem. That's good business, good leadership and frankly the beginnings of a great story.

(Sorry for the long winded response! Don't have time to edit it down this morning - thanks!)

[Laura Ries]

Thanks Stephen. CEO Hayward has been doing a good job of trying to turn around the company and has tried to personally manage this crisis.

But he only came to the CEO job just three years ago. He inherited a company and a brand with a horrible reputation for safety.

A quote from the front page of the WSJ:

"When Mr. Hayward took over BP's leadership from John Browne three years ago this week, the company was at one of the lowest points in its history: badly run, accident-prone and accused in the aftermath of a deadly explosion at its Texas City refinery of putting profits before safety. Mr. Hayward turned BP around, boosting production, cutting costs and significantly reducing on-the-job injuries. Last month, he was confident enough to talk of an irreversible "change of culture" at BP.

"None of that seems to matter now, as BP heads into the crisis grinder that has chewed up big names like Toyota and Goldman Sachs. And with about 5,000 barrels of oil leaking from the damaged well each day, Mr. Hayward knows it.

"In an interview at BP's St. James' Square headquarters, Mr. Hayward, 52 years old, concedes the disaster off Louisiana will "undoubtedly" overshadow his achievements as CEO. BP's share price has fallen 12% since the crisis started."

I disagree. Branding is not just about paint on the outside of a product. A brand is what your company stands for in the mind. And if that is damaged the future of the company could be in jeopardy.

The space program is a good example. Its brand is suffering. It desperately needs support to continue.

Of course, all of these are complex issues. What is interesting about BP from a branding perspective is that they did a good job of communicating "greenness and responsibility" but without the company being able to back it up with a strong safety record it falls apart.

Hayward was on the right track in turning the company and brand around. But this oil spill has severely setback his efforts.

[Stephen Denny]

And in the face of this explosion and loss of life, the massive oil spill and the wrath of an American administration that thinks its job is to dictate policy to the private sector, the CEO of BP says what?

"We'll take care of it. Period."

I think BP CEO Tony Hayward has done what a good CEO should do in the face of a catastrophe. He's on the scene personally, he's told everyone what they're doing and he's taken responsibility. He's been honest about the challenges of doing what's never been done before. He's communicating the riskiness of the procedure, comparing it to the Apollo 13 mission rescue.

Saying BP has a branding problem is like saying the Challenger space shuttle needs a paint job. BP's concerns eclipse "branding." But if it pulls off a rescue operation a mile under the Gulf of Mexico and makes good on what its CEO's commitment, I'll say they've done pretty well.