Online Reputation Management Case Studies: BP Oil Spill, Toyota Recall, and Goldman Sachs Fraud Charges

Two years ago, I wrote “Online Reputation Management Requires Cabinet War Rooms.” In the post, I asked, “Is your company prepared for the inevitable crisis to come?” Today, one of the most important lessons learned from the BP oil spill, Toyota recall, and Goldman Sachs fraud charges is just how few companies are prepared for a crisis.

So, why aren’t more companies prepared?

Although crisis events are unpredictable, they are not unexpected. During the next five years, 83 percent of companies will face a crisis that will negatively impact their share price by 20 to 30 percent, according to Oxford-Metrica.

Just take a look at the BP oil spill. It is a classic example of George Santayana’s famous quote: Those who cannot remember the past are condemned to repeat it.

As Anne C. Mulkern of Greenwire wrote in The New York Times, “BP’s PR Blunders Mirror Exxon’s, Appear Destined for Record Book.”

Both Exxon and BP underplayed the impact of the spills. In 1989, Exxon’s CEO said that the environmental impact of the Valdez oil would be small. This year, BP’s CEO Tony Hayward told the Guardian on May 14 that “the Gulf of Mexico is a very big ocean. The amount of volume of oil and dispersant we are putting into it is tiny in relation to the total water volume.”

So, if you aren’t prepared because you cannot remember the past, then you say dumb things like “the environmental impact of this disaster is likely to have been very, very modest,” as Hayward told British TV station SkyNews on May 18.

The mixed messages are captured in the Upright Citizens Brigade Theatre’s video uploaded June 9, 2010, which already has more than 2.5 million views. It’s the #10 most viewed video on YouTube this week.

BP Spills Coffee

It’s worth noting that the official YouTube channel for BP America on its Gulf of Mexico response to the oil spill was launched on May 18. As Taylor Buley of noted in “BP Turns To Google,” the branded channel on YouTube cost BP about $250,000 to create, so somebody somewhere within the company must have already determined that the public relations impact of this disaster was likely to be very, very significant.

It’s also worth noting that BP America’s online reputation management tools include a Facebook page, a Twitter feed, and a Flickr photostream.

Although BP does not appear to have been prepared for this crisis event, their online reputation management tactics since the April 20 oil rig explosion are worth studying.

As Dana Bash of CNN has reported, “For new ad campaign, BP looks outside Madison Avenue.” The team behind BP’s $50 million ad campaign is Purple Strategies, helmed by Democratic political consultant Steve McMahon and Republican political consultant Alex Castellanos.

And Purple Strategies is working alongside the Brunswick public relations firm, which has had BP as a client for some time. Its Washington office is run by Democratic strategist Hilary Rosen. Another source familiar with BP’s communications strategy says the company also hired local public relations firms in the four affected states.

This all-hands-on-deck approach costs a ton of money. And it may not be enough, especially since BP has already let the genie out of the bottle. How do you manage your online reputation after Doonesbury has already decided to spoof your daily briefings and Google has already created Crisis Response: Gulf of Mexico Oil Spill?

Google Crisis Response Gulf of Mexico Oil Spill.png

If you need another example of the cost of being unprepared, just consider the Toyota recall.

As Chris Woodyard of USA TODAY wrote in “Toyota PR blitz plays catch-up after storm of problems,” apologizing to customers “may be whistling in the wind as more reports of problem vehicles surface.”

On April 6, 2010, The US government sought a record penalty of $16,375,000 from Toyota for its delayed response in notifying the National Highway Traffic Safety Administration regarding the defective accelerator pedals. On May 18, 2010, Toyota paid the fine without an admission of wrongdoing.

Nevertheless, apologizing to customers even as it is paying a record fine is better behavior than the unapologetic response by Goldman Sachs to fraud charges by the SEC.

As Katie Paine of The Measurement Standard wrote, “Goldman Sachs Has Amassed All 3 Vital Ingredients For Permanent Reputation Damage.” This includes:

  1. Doing bad stuff,
  2. Not showing remorse or compassion, and
  3. Ignoring the relationship between all that bad press and their bottom line.

Paine concluded, “Only after their stock fell by 23% and shareholders got antsy did they launch a PR charm offensive. And it has fallen on very deaf ears. It is a classic case of too little, too late. No amount of spin can reverse the effects of decades of bad behavior.”

So, what should you do? Crisis events are unpredictable, but they are not unexpected.

So, I recommend that you read Crisis Management and Communications by W. Timothy Coombs, Ph.D. It on the Institute for Public Relations website.

I especially urge you to read the section on the pre-crises phase. According to Coombs, “Organizations are better able to handle crises when they (1) have a crisis management plan that is updated at least annually, (2) have a designated crisis management team, (3) conduct exercises to test the plans and teams at least annually, and (4) pre-draft some crisis messages.”

These are the ultimate lessons to be learned from the BP oil spill, Toyota recall, and Goldman Sachs fraud charges: “Be prepared.”

Preparation involves creating the crisis management plan, selecting and training the crisis management team, and conducting exercises to test the crisis management plan and crisis management team. And as the three online reputation management case studies cited above demonstrate, you also need to prepare your YouTube channel, Facebook page, Twitter feed, and Flickr photostream now, not after a crisis hits.

If you aren’t prepared, you have no one to blame but yourself.

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