Is Your Brand Ready for Trouble? 5


BP Fail Whale

Don't Let This Happen to You

Brands matter, even in the case of Goliath-sized companies, like BP. Why? Because a bad reputation makes stocks plummet, as BP’s own stock has begun to do in response to the Oil Spill debacle. That means lost profits for stock holders, which means fewer people actually wanting to hold your stock, which means eventually you can’t sell the stuff for a decent price. It means less available funding from governments under pressure from vocal constituents who think your brand is now crap. If you depend upon goodwill of the public in any way shape or form, it means your business opportunities may start to vaporize. As one friend told me the other day, in BP’s case, losing business at the pumps isn’t a big factor for their core profit business. That’s because BP acts more like a holding company in most respects, hiring out expertise as needed to meet the production end of big government contracts handled by companies like Haliburton. Even so, some pundits are calculating the days left for BP due to brand loss.

When a company has its “BP moment”, it ultimately loses credibility more in how it responds than in how it actually goofed in the first place. Everyone goofs. Goofing is expected. Sometimes goofs suck big time. But even in the oil industry, goofs are sadly par for course, as in other businesses. The spill itself isn’t spoof-worthy. The goofy response, however, can turn into a negative commercial for the brand.

When a company goofs BP-style, it veers off the path of good common sense and yet somehow manages to think that it can fool the world as to the extent of the damage. Let’s face it. Sometimes, there are going to be losses, perhaps even to the natural infrastructure. Spoiling natural resources is no laughing matter. Trying to avoid losses primarily to the company at such a time just doesn’t make sense. In hindsight, not only is the public going to be furious, but big money sources are going to be scared off. And regardless of what you do later, once you’ve set the precedent, it’s too late to come clean “by degrees”. The public expects the contrition to match the magnitude of the faux pas. Moreover, they expect a reasonable degree of honesty. When the disclosures to the public are not even close to the actual magnitude of a truly epic goof-up, there is a problem that isn’t going to go away any time soon.

So how do other companies with less headaches deal with brand issues, since this is not a model that will fit every industry? Well, I think the lesson here for any and every publicly traded brand is not to stiffen up and act as if nothing out of the ordinary has happened (like how BP is still denying the plume cloud of oil under the surface reported at 6-9 miles in diameter). That just makes people angry, and when people become angry, they often take to the the internet, which means viral social media, nowadays, and that means trouble for any brand, since internet coverage is being seen by more viewers than cable now.

You may as well put a dartboard on your face if you think you can dodge legitimate questions about a scandal of immense magnitude. And the worst part is, while the spill itself may have been avoidable, even if executives wake up to the situation only after it’s gone viral, BP could still have addressed it live, with full acknowledgements in real-time, with their own working super-high-def camera footage which apparently BP had running from day one. The short term brunt of it is going to be harsh, but at least people won’t assume the worst about the brand, and thus the company executives in charge, losing all faith in the future of your stock.

While real-time social media engagement is not perhaps the best response to something this serious, most PR responses can be supported via social media tools. Not to think of the numbers searching for headlines is ludicrous. Paying for search results as your belated response to this realization is not the right approach either. Paid TV spots would make infinitely more sense for getting the message out. Using Fan page and Twitter in a controlled manner for most lesser events would typically be appropriate. Before your moment goes BP, consider what it would take to control the damage after the fact.


About Mark Brimm

Mark Brimm is President of 123interface.com, the Founder of Marcana.com, and runs a personal blog on social media, marketing and entrepreneurship at MarkBrimm.com. He also runs a blog on SEO & SEM at SEMinsider.com.

  • Melinda T.

    Great article on why BP failed in terms of brand management and truly did get the damage control aspects of the debacle all wrong. They could have avoided this if they had only had a more open source mindset, and that is what social media is all about.

  • Thanks, Melinda. Exactly my point. Well we'll see what happens next. Kind of scary on the receiving end here in the gulf coast area!

  • A lot of commentators fail to consider damage to the brand in dollar terms.

    When your company gets huge amounts of negative press, it negates a huge portion of your ad and PR spending. For example, when Apple called the cops on a Gizmodo reporter, it immediately resulted in sharp criticism from both David Carr of the New York Times (http://www.nytimes.com/2010/05/03/business/medi…) and Jon Stewart on the Daily Show.

    That negative press can be taken advantage of by politicians. Now Apple is under investigation by the FTC.

    I criticized the militaristic response to the Gizmodo reporter both on principled grounds and on the damage to the business. Regardless of what you think of Nick Denton, his Gawker is widely read by editors and reporters in the most influential publications in the media. That phone call that resulted in the search & seizure of the reporter probably cost Apple hundreds of millions of dollars in negative press.

    BP is a case of even more damage. BP has spent billions of dollars in advertising, PR, lobbying, think-tank funding, and much more to change its image into that of an “environmentalist” oil company. Now, all that money has essentially been wasted, and way more has to be spent for damage control.

    I think this is where what Seth Godin says about authenticity and branding is important. If your brand doesn't align with *reality,* then you're setting yourself up for eventual destruction.

  • It's funny that you should mention the environmentalist-friendly image BP had spent so much money building up for the past few years. Before this incident, I had been thinking to myself each time I saw one of those info-ads on tv and in magazines “Wow, BP really gets it!” when it comes to the pulse on concern for natural resources and environmental awareness being on the rise. I hadn't been following BP closely before the spill, just their ads. And the spill just sort of blurred that ad-reinforced image for me completely.

  • A wordpress.com search for “BP” returns, as of this writing, is a whopping 74, 858 results. Let's assume that a good chunk of this is not about the recent spill. The phrase “BP oil spill” (without quotation marks) returned 18,294 results. The search with quotes added around the exact phrase returned 5,400 results. These blog posts range anywhere from lawyers discussing legal ramifications to financial and branding implications to average vocal consumers are are just pissed off (like this one… http://destructionist.wordpress.com/2010/06/08/… ) I found this piece indicative of the more social outrage aspect of the blogosphere at the moment… Now multiply that times several more thousands of blog posts, of not tens of thousands of posts over the next few months…it's nothing to sneeze at. The search results on Google won't only be clogged with negative results and commentary, but nearly unnavigable if trying to find more ordinary BP company and stock news and the like. Online, the brand is death throws. How they survive on the balance sheet despite stock price plummeting remains to be seen. From a search perspective alone, it's devastating and explains in part the recent attempts to AdWords their way to the top of search results. In terms of social media discussions, it's ubiquitous and real-time, not to mention easier to bump into or see as a “related post” on WP hosted blogs. Staggering implications that, for the brand, rival the actual disaster, if only in virtual terms.