BP s Deepwater Horizon Oil Spill Crisis and Its Recovery Through Team USA Olympic Sponsorship

Transcription

1 BP s Deepwater Horizon Oil Spill Crisis and Its Recovery Through Team USA Olympic Sponsorship An analysis of reputation management and corporate sponsorships

2 Situational Overview On April 20, 2010, the Deepwater Horizon oil rig exploded, triggering what is considered the biggest marine oil spill in the petroleum industry. By June 2010, 81% of American consumers viewed BP in a negative light. In the span of 2 months (April June 2010), BP s share price dropped down by 55%. At this critical juncture, BP launched a massive effort to both restore the Gulf and showcase its efforts to mend the situation to its consumers. This plan did a lot to help, but it wasn t until BP began championing its Team USA Olympics sponsorship, that it saw the needle truly shift. Public perception improved significantly.

3 Company Background 1908 William Knox D Arcy strikes oil in Persia British government becomes major BP stakeholder, prompted by onset of World War I. BP would go on to play a part in World War II as well. 1980s and 1990s BP creates a presence within United States John Browne becomes CEO of BP and repositions BP as an environmentally friendly company Explosion in BP Texas refinery kills 15 workers and raises questions about BP s safety measures and social responsibility Oil spill in Alaska intensifies public outcry about BP s safety issues and ongoing lack of social responsibility Deepwater Horizon oil spill occurs and BP finds itself at the forefront of a battle between the petroleum industry and environmentalists. Brand reputation and public perception is low, and BP has to mitigate the crisis situation. Core Values: Safety. Respect. Excellence. Courage. One Team.

4 Deepwater Horizon Oil Spill On April 20, 2010, the BP-leased Deepwater Horizon drilling rig exploded off the coast of Louisiana, killing 11 workers and releasing more than 200 million gallons of oil Loss to BP: loss of stock value was estimated at $70 billion by June 2010 lost its position from Interbrand s Top 100 brands company s dividend was estimated to be 65% lower in 2011 over 350 Facebook groups were protesting BP blogger sentiment dropped from 24% in March to 51% in May tweets increased from approximately 2,200 to 19,900 per day Both a business crisis and a brand perception crisis.

5 Initial Mitigation Public Relations BP CEO, Tony Hayward, issues statements in media Press releases issued Ad spots released showcasing recovery in Gulf Social Media Microsite created on main website that discusses BP s efforts to restore the Gulf Facebook page updated daily BP_America Twitter handle updated daily. Addition of Oil_Spill_2010 (later renamed Restore_TheGulf) handle and engagement Channel creation on YouTube. Posted videos that show BP s work with the Gulf and the reality of the situation. Flickr page used to post images of the Gulf Live stream created showcasing the Gulf

6 Public Reaction & Further Brand Reputation Restoration Needs BP s social media engagement and efforts to create a two-way conversation helped greatly. But public perception had not yet been restored. BP met with opposition from environmentalists, scientists, former employees, and its overall consumer base who were placated, but not convinced. The oil spill is to the Gulf what smoking is to a human. You're still able to function overall, but not nearly as well. Doug Inkley Senior scientist with the National Wildlife Federation

7 Solution: Leverage Sponsorship to Demonstrate Corporate Social Responsibility BP had announced its Team USA Olympics sponsorship prior to Deepwater Horizon. After the crisis, it made the decision to stand by that commitment & continue to delegate resources to that sponsorship. In 2011, BP further extended its partnership with the United States Olympics Committee (USOC) as an official energy partner through 2016 BP worked with ad agency Ogilvy to create a campaign highlighting its work with Team USA and the athletes inspiring stories. Campaign focused on Facebook gave fans unique opportunity to interact with the athletes and learn about each athlete s story Collaboration with Time magazine yielded the Time app gave fans opportunity to send good luck messages to their favorite athletes before the Olympics Sports Illustrated gave fans chance to put their faces on the cover

8 Why Leverage a Corporate Sponsorship? Though corporate sponsorships are often placed within the marketing arena, they can be an important part of a company s corporate social responsibility. Corporate Social Responsibility is a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders. - United Nations Industrial Development Organization 71% of Americans would pay an extra $2.28 for a $10 product if the product supported a cause 60% of consumers would switch to a competitor if they thought a brand was harming the environment To BP, working responsibly means seeking to have positive impacts on the communities in which we operate. - BP Sustainability Review Report, % of Americans would travel an extra 1-10 minutes to buy a cause-supporting product

9 Results of BP s Team USA Campaign (Positive Brand Perception Shift) Secondlargest increas e among all Olympic sponsors

10 Results of BP s Team USA Campaign (Increased Engagement on Social Media) BP surpassed its goal to raise visibility of BP s relationship with the United States Olympic Committee (USOC) Initial goal was 15%. BP reached 23%. Surpassed all other major USOC sponsors. On Facebook, BP s following grew to over 300,000 fans By July 2012 during the Olympics, Facebook post comments were 74% positive in support of BP s commitment to U.S. athletes BP was one of the most popular brands on Facebook during the Olympics, receiving the most likes and comments of any single Olympic-related Facebook post with 93,000+ likes, 2,000+ comments and 1,300+ shares

11 Results of BP s Team USA Campaign (Lingering Negative Backlash) The impact this company has had on the lives and environment around the globe is shameful and criminal. BP's corporate sponsorship is nothing more than a continued effort to believe that "money can buy them love". Their incompetence, arrogance, and behaviour are not worthy of Olympic participation, in London, or anywhere on the globe. -Boycott BP Facebook Group vandalized billboards spoof Facebook and Twitter pages activist protests

12 1. Tell the truth Page Principles Application In an effort to be transparent, BP released photos, videos, and live streams of the Gulf situation in order to provide people with a clear view of what was occurring. BP also regularly posted third-party articles and case studies in order to make sure information being presented was not all housed within BP. BP s sponsorship efforts with the Olympics were also not created after the oil spill, but simply brought more to the forefront. However, public relations gaffes early on from BP s former CEO, Tony Hayward, and lack of verbiage directly showcasing acknowledgment of responsibility hurt BP s credibility. In an age where people are increasingly aware of corporate social responsibility - and are increasingly skeptical of the petroleum industry at large BP is still missing a crucial opportunity to take ownership of the situation and refocus on being a green company, as former CEO, John Browne, had originally envisioned.

13 2. Prove it with action Page Principles Application BP has contributed approximately $27 billion so far in clean-up costs, fines and settlements from Deepwater Horizon. BP has also undergone significant efforts to restore the Gulf and highlight its efforts in a transparent way through social media channels. The company s microsite also continues to showcase latest press releases, updates from the Gulf, and a variety of subtopics such as restoration of the economy and long-term research. However, detractors see similarities between the Deepwater Horizon oil spill and previous oil spills such as the 2005 explosion in BP s Texas refinery and the 2006 oil spill in Alaska, leading many to wonder how much action is truly being taken. Former employees such as David Senko, manager of the Texas site during the 2005 explosion, feel that the same safety issues and cost-cutting measures that were problematic before the 2005 blast were also causes of the 2010 disaster. In order to ensure that not only this crisis is mitigated but future crises are prevented, BP needs to prove it by action.

14 3. Listen to the customer Page Principles Application BP listened to its customers by creating two-way communication channels and transparency within its social media channels, making sure that it did not appear that BP was trying to spin the story. BP also focused on its customers by continuing to pledge money and resources towards corporate social responsibility initiatives it cared about, such as the environment, athletic communities such as the Olympics and Paralympics, and arts initiatives such as the National Portrait Gallery. BP engaged its customers through its corporate sponsorships, especially through the Olympics Team USA campaign, where it created several innovative ways through which the community could engage with the athletes and feel a greater emotional connection. In order to sustain the positive public perception shift BP has received through its efforts, it is imperative that BP continue to use its Olympics sponsorship in a thoughtful way and simultaneously make true strides towards repairing the damage to the Gulf.

15 4. Manage for tomorrow Page Principles Application At stake is not just BP s immediate perception, but its sustainability in the long run. By putting dollars and resources into both restoration efforts and public relations/social media strategy, BP set the stage for it to maintain its consumer base. BP s focus on its value-add to the community at large through its sponsorships such as with the Olympics and Paralympics Committees and athletes will also go a long way in showing that BP is sincere in its desire to do good within the community. In order to better manage any future crises, BP should plan more carefully for the future both in terms of its internal functions (such as safety focus) and crisis communications (such as ensuring that there is an in-house PR team to give guidance on media relations). BP should also think about the role sponsorships such as the Olympics play in its company as a whole and how it can better align its values and efforts to demonstrate corporate social responsibility through sponsorships.

16 Page Principles Application 5. Conduct public relations as if the whole company depends on it After the Deepwater Horizon crisis, in many real ways, BP s future did truly depend on its public relations. BP has stated time and time again that it is a company that cares about the environment and it has fallen short, which lost it credibility in the public eye. Post the crisis, BP put in significant effort into using public relations to mitigate the damage done, first through a concentrated Gulf Recovery social media campaign and then through its Team USA campaign. Prior to the oil spill, BP was barely engaged on social media, so the majority of the strategy and implementation for this whole endeavor was done in a very short time span. BP has since maintained its social media engagement efforts. In order to continue to use public relations more effectively, BP should consider media training for its key players keeping in mind the strong negative reaction to former CEO, Tony Hayward s, public relations gaffes.

17 Page Principles Application 6. Realize a company s true character is expressed by its people BP lists One Team as one of its core values and states Whatever the strength of the individual, we will accomplish more together. We put the team ahead of our personal success and commit to building its capability. We trust each other to deliver on our respective obligations. In terms of its sponsorship focus, BP created opportunities for its employees to truly be a part of the 2012 London Olympics volunteer opportunities, Games Maker opportunities, coach tours of the Olympic Park, competitions to win London 2012 prizes; and opportunities with the Cultural Olympiad. BP also launched a global employee recognition program that recognized outstanding employees and rewarded winners with London 2012-based prizes and experiences, including the opportunity to attend the Olympic Games. Still, there are other indicators that point to issues within BP s corporate culture. Several former employees commented about how BP was negligent with safety issues and did not respond to efforts being made to change that. Employees claim they see patterns within BP s crises and they have not responded optimistically about BP s ability to change. In order to move past this crisis and develop a better future, BP should make more efforts to get feedback from employees and execute on employee recommendations. BP must also work to regain the trust of frustrated employees and showcase its values from top-down.

18 Page Principles Application 7. Remain calm, patient and good-humored Despite detractors of their efforts and significant opposition, BP has not directly criticized any of the activist or environmental-focused groups. It has focused on its own initiatives and has endeavored to move past the Deepwater Horizon crisis. The focus on BP s Olympic sponsorship also highlights that it has maintained a positive outlook on the oil spill crisis and that it would like to continue to make a difference in the community as much as it can. The issues with maintaining good humor has primarily come from key leadership such as former CEO, Tony Hayward, who among other unfortunate statements, stated, I d like my life back. His statements met with significant media and public backlash. In order to manage a crisis situation and keep its consumer base satisfied as a whole BP needs to consistently showcase that it cares about the community through its words and statements. BP would benefit from focusing on its core values and taking responsibility, instead of its executive leadership expressing their personal frustration with a negative situation such as the oil spill crisis.

19 Discussion Questions 1. How can corporate sponsorships be used in a business sustainability model? To what degree do they need to align with a business s core mission and values? 2. What is the value of using a sponsorship to mitigate a crisis situation? What are some ways in which other companies can use their sponsorships to demonstrate their core values? 3. Is BP s use of its Olympics sponsorship to mitigate the oil spill crisis unethical? Is the focus on Team USA a deflection from the real issues? 4. What other ways could BP have handled the Deepwater Horizon crisis and what would be the potential repercussions of those choices? 5. From a public relations lens, what statements issued from BP could be modified or changed altogether, and what are some possible messages you would have recommended to them?

20 Discussion Questions 6. How would you rate BP s social media strategy and Team USA campaign overall? Is there anything you would have changed? 7. From a public relations standpoint, what else should BP do in order to address its detractors? 8. What, if anything, can BP do in order to more effectively mesh its environmental endeavors and sponsorships such as the Olympics? 9. With an eye to the future, what are some things BP can do to reestablish itself as an environmentally-friendly company and showcase its core values? 10.Where do you see the future of corporate sponsorships going?

21 BP s Challenge BP continues to work towards cleaning up the Gulf. In terms of its Olympics sponsorship, it is now prepping for Rio 2016 and working with Team USA. As BP moves forward from the Deepwater Horizon crisis, it must ask itself how it can ensure that the mistakes that have happened in the past do not occur again. Though it has done much to recover from the crisis and regain positive public perception and public trust, it will lose all its progress with another disaster. BP must be honest and tell the truth about what has happened, and what it continues to do to fix the problems it has. Owning its mistakes and moving forward will establish credibility in its consumer s eyes. BP should also continue to maintain a two-way conversation through social media engagement, and provide its consumers with fresh ways to interact with its sponsorship endeavors. BP must also refocus on its core values and work to reestablish itself as an environmentally responsible company.