BP as Victim: A Cynical but Smart Pitch to Its Stakeholders
BP's latest campaign tied to its 2010 Gulf oil spill, including this full-page newspaper ad last week, argues that the company is now the victim -- of thousands of illegitimate claims for damages. Trial lawyers are to blame, along with their unscrupulous clients, BP says. It has established a hotline for people to squeal on their neighbors, and anecdotal examples of perpetrators are somehow popping up in news stories and blogs.
This anti-charm campaign might seem nuts, but it's cynically smart. BP is working to restore its reputation, only not the reputation you might think.
In its defense, it has done much of what it was told to do. Billions have been paid to people impacted by the spill, and billions more spent on penalties and direct clean-up costs. BP has funded ads that report on the progress of its reparation efforts, and supported marketing to lure tourists back to the Gulf region. It axed its CEO and made changes to its board, all in response to the standard demands for change when public opinion turns sour. Granted, its PR hasn't been perfect (I cringe when I remember its former CEO griping that he "wanted his life back" as the crisis dragged on, seemingly out of control), but I'm not sure what else it could do to sway public opinion.
Fortunately for BP, public opinion about its reputation isn't what matters.
Oil companies aren't businesses that people "like" in the way they identify with, say, their favorite clothing or tech products. They choose gas stations based mostly on immediate need and proximity, which is why outlets tend to congregate at major road intersections and freeway ramps. It's a commodity business, mostly, and its supply chain is convoluted, so it's not always clear which company's gas ends up in what pumps, let alone who owns the stations (almost all of BP's branded stations in the United States are independently owned, as are those of its big-name competitors). It makes little revenue from consumer sales anyway.
Calls for consumer boycotts of BP fizzled back in 2010. I'm sure there are some folks who've sworn it off to this day, but there's been little lasting effect on the hundreds of billions it makes in revenue (2011 was a record year for the company). Where it has seen measurable damage is from the settlement payout process, which has whacked its profits, and lingers as a somewhat open-ended threat to future earnings.
Imagine its lawyers and accountants trying to determine how much money to set aside for settlements, or hoping to nail a date on which the torrent of lawsuits will end. This uncertainty impacts a host of other operational decisions, from investments to insurance. It could affect funds available for paying its largest suppliers, which would influence the contracts and terms they require. It could up the costs BP's charged for borrowing and other financial transactions. The stock price evidences this uncertainty: it has danced around both sides of a flat line since the spill was capped.
To all of these stakeholder groups, BP's "reputation" is what it has always been: The company yanks gunk from underground that's dangerous, difficult and tremendously important to civilization (and therefore very valuable), so it needs to do it within the requirements of law and social custom. None of us have to like it as much as trust BP's ability to do it reliably and profitably, and past environmental disasters are factored into the expectations of every company in the sector (they've all experienced horrible incidents). It's the threat of lawsuits that clouds this expectation of BP with risk, and it's costing the company dearly.
So its victimization strategy tells stakeholders that BP is going to fix this drag on its reputation, while directing the public conversation away from its culpability and toward a group that it's still alright to hate simply because it exists (trial lawyers). This campaign won't earn it another penny at the pumps, and the ad isn't particularly good. Yet the strategy makes perfect, if not cynical sense. BP has a clearer understanding of its reputation than we do.