Citgo Revs Up to Deal With a 'Devil' of a PR Problem

Subsidiary of Venezuela's Oil Company Readies Ads in Wake of Chavez Remarks

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Citgo petroleum has suffered a PR headache ever since Venezuelan President Hugo Chavez called President George W. Bush a "devil" and an "alcoholic" before the United Nations a few weeks ago. Now the Houston subsidiary of Venezuela's state-run oil company is readying an ad campaign to prove it's as American as apple pie.

Citgo issued a press release Oct. 2 to calm the waters and clear up recent "inaccurate and misleading information" about the company. Among other things, the missive stresses that the company has roughly 4,000 U.S. employees and indirectly employs an additional 100,000 people here who work at its 13,000 independently owned gas stations.

Now the gasoline marketer, which TNS Media Intelligence said spent just $10 million in measured media in calendar 2005, is taking it up a notch.

Its new ad campaign will highlight some of the points in the press release, including Citgo's American workforce, number of gas stations and commitment to its customers. Jennifer Moos, general manager-brand development, said the goal is "to help set the record straight." Citgo is still reviewing the media schedule, but she said print ads can get out more facts faster than a 30-second TV spot.

"Setting the record straight" could head off U.S. backlash against the company, whose most recent ads positioned Citgo as neighborly and a good corporate citizen. After Mr. Chavez's speech, no fewer than a dozen blogs urged a Citgo boycott. A city councilor in Boston called for the removal of the famed decades-old Citgo sign in Kenmore Square outside Fenway Park. Aleutian natives in four remote Alaskan villages have refused free home-heating oil from Citgo this winter in protest of the incident, and a Florida state lawmaker wants Citgo taken off the state's turnpike.

A Citgo spokesman said it's too early to tell whether the incident has caused a slowdown of its gasoline sales. The company is not publicly traded, so sales figures are not available. But several experts doubt Citgo will see a big impact on its bottom line, much less have to deal with a boycott.

"Boycotts are very hard to pull off," said Larry Kamer, president-North America at Manning Selvage & Lee. The missing link from boycott-Citgo websites he visited was third-party validation from big, respected organizations or unions. "That's what gives a boycott critical mass," he said.

Citgo is facing what he described as a "yellow-light issue" that could escalate to a red-light one unless the marketer takes the discussion away from politicians and the media

John Kilduff, an oil analyst with brokerage firm Fimat USA, said Citgo will have to repair its image, but he doesn't expect a boycott to bubble up since it didn't right after the incident. Still, Mr. Kilduff called President Chavez a "game-changer," and said his image in the U.S. hasn't been helped by his offer to Iran to base missiles in Venezuela or his earlier accusation that the Bush administration plotted to assassinate him.

Although President Bush's popularity with Americans is quite low these days, the institution of the U.S. presidency is more powerful than the person with the job, said Gary Berman, CEO of Market Segment Research. While he predicted Citgo would see "some negative effect on its bottom line," Americans tend to have short memories, so that impact won't last, he said.

Independent Barkley, Kansas City, Mo., handles Citgo; its most recent work, themed "Fueling more than your car," broke last summer. The first wave of that push, dubbed "The Citgo Story," focused on Citgo's track record as a good corporate citizen. Other ads spotlighted the company as an attractive brand choice for consumers due to its value pricing and neighborly approach.

Meanwhile, Citgo's contract to supply 7-Eleven stores expired Sept. 30. "We did not drop Citgo," said a spokeswoman for the chain. She said it was a coincidence the 20-year contract expired a week after the U.N. incident with President Chavez; it was due to expire then anyway. The retailer had started studying as early as 2002 whether to offer its own branded gas, she said.
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