For BP, post-spill advertising comes at an unknown cost

By Shelley DuBois, reporter


FORTUNE -- UPDATE: According to figures from BP, advertising costs were $5 million a week during the spill. BP provided the data to Congress late Monday, after the time of this article's filing but before publication. Read our full update and the letter from Congress.

The coverage of BP's Deepwater Horizon spill is teaching the typically secretive oil industry something about life in the limelight. Now, the company has to account for every cent it spends.

On August 16, the Congressional Committee on Energy and Commerce sent a letter to BP demanding that the company report how much money it had spent on advertising since the spill on April 20. Florida Representative Kathy Castor prompted the letter -- she's been lobbying hard for BP to pay the difference for any spill-related decline in Florida tourism. Monday was the deadline for BP (BP) to come back with the numbers. So far, the committee hasn't heard from the oil giant.

The British newspaper Telegraph reported that BP has spent at least $1 million per week on advertising, although there's no official number yet and sources Fortune spoke with didn't know where the figure could've come from. It's been over 18 weeks since the accident. If that estimate is right, members of Congress will certainly make the point that the $18 million could have been better spent on recovery in the gulf.

But in the context of advertising in a crisis, "a million dollars a week is nothing," says Gene Grabowski, senior vice president and chair of the crisis and litigation practice at Levick Strategic Communications. "I don't know how much they're spending, but it's probably less than they would have spent on a global ad campaign to advertise the benefits of what they generally do."

BP's ad strategy now follows the typical trajectory of crisis PR, he says. It didn't start out that way. BP was slow to connect with consumers and gulf residents right after the spill. Tony Hayward's numerous gaffes didn't help the company's image, which came across as inept and out of touch. There's little question that his mismanagement of the company's public image led to his ouster as CEO.

Oil advertising, post-spill

Now, BP is advertising the way it should, from a marketing perspective, says Grabowski. Ads focus on how BP is mitigating the disaster it caused. At this stage, pro-oil ads would disgust consumers.

"You don't see any ads like that from BP. As a matter of fact, you don't even see Exxon advertising like that right now," Grabowski says, because consumers are wary of all companies in the oil industry. "What consumers want to hear now is what they're doing about the environment."

This is called issue-based advertising, Grabowski says, and any company in BP's situation would do it.

"In a crisis, issue-based advertising is essential. You have a relationship with your customers, and implied in that relationship in the 21st century is a conversation."

That conversation eventually advances. Grabowski says there's a critical moment in advertising after a crisis when people are still tuned in to the product, but aren't anxious anymore. This is when companies start to release more product promotion ads to regain trust. BP isn't there yet by a long shot.

In fact, BP's image is so tarnished that Congress can take the company task over anything without much opposition. Take the request from the Committee on Energy and Commerce.

"I'm frankly surprised that Congress would do this," Grabowski says. "I think that for executives at BP and throughout the oil industry, this might appear to be piling on." So far, it seems like BP executives agree. To top of page