BP leaking brand equity as well as oil

7th May 2010

The "Beyond Petroleum" campaign was helpful in protecting the BP brand from declines in the market - but after the Gulf of Mexico oil spill its brand power is now eroding fast.

Branding is all about creating alignment of your companies  business processes with its corporate culture. British Petroleum (BP) provides a case in point of a brand that got way out front of its business process and culture to produce tremendous exposure to risk.

Back in 2000, BP announced a major change in posture from "British Petroleum" to "Beyond Petroleum" and spent hundreds of millions of dollars promoting their new position. Did it have a positive impact on the company? Most assuredly the impact was positive at the time. But will the brand be damaged because of the major oil spill in the Gulf of Mexico? Without a doubt.
If an oil company is not 100% committed to dealing with any potential catastrophic disaster, how can it contemplate building the brand before it has addressed the basics of the business? With thousands of rigs pumping oil in the Gulf today how could something as fundamental as a shut-off valve not be standard operating procedure?
Logo on smokestacks?
I was once asked by a group of senior managers at a major petroleum company if they should put their corporate logo on the smokestacks of their ships. I asked if all of their ships were double hulled? Their answer was no. How then could they even ask the question?
Exxon still bears the burden of the spill in Alaska more than 20 years after the Valdez ran aground. The management of BP should have learned from the Exxon spill that there must be a better way to manage disaster.
There is no getting around the fact that every dead turtle, fish and bird that washes up on a Gulf Coast shore over the foreseeable future will be blamed on BP. The media and the public will be relentless on these issues.
So, how is BP's image doing? British Petroleum became BP in the year 2000 when it developed the "Beyond Petroleum" tagline.
CoreBrand's "Brand Power" chart illustrates the effectiveness of the tagline campaign as it helped improve BP's Brand Power in the US among business decision makers from a score of 30 (on a 100 point scale) when the campaign was launched in 2000 to an all time high of 50 in 2008.
The decline in recent years is likely caused by industry vulnerability and the fact that BP's current management is no longer as committed to building the value of the brand (i.e. BP has reduced corporate advertising from $75 million in 2007, $53.5 million in 2008, to $32.8 million in 2009).
The savings of a few million in advertising has already likely cost BP billions in brand equity, which has declined from $19.9 Billion in 2008 to $14.3 Billion in 2009. The industry declined more drastically over that time from an average of $13 Billion in 2008 to $7.4 Billion in 2009, which indicates again that the campaign was helpful in protecting the brand from declines in the market. BP's Brand Power will surely erode significantly faster in the near future.
When Ford Motor Company was spending billions of dollars to promote "Quality as Job #1" we recommended that they would be better served by putting those billions into building better quality cars. Ford made that change and today is a far better company with a brighter future.
Moreover, their advertising will be more effective.
Understanding one's brand in relation to its business and culture is critical for allocating budgets properly. More importantly, it should be a way of life for the management of any corporation.

James R Gregory is CEO of CoreBrand.


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