That “Chinese Wall” Between An Advertiser and Being Able to Editorially Criticize That Advertiser Is Crumbling As Major Corporations Decide To Play Hardball: “Criticize Us, Then Pull Our Advertising.”

Philip Stone May 25, 2005

We warned when General Motors withdrew its advertising from the Los Angeles Times because GM didn’t like the Times’ stories about the automaker that it was firing a bombshell which would be heard around the media world. With great regret it’s already “told you so” time, and it’s getting serious. Go To Follow Up & Comments

BP, the British oil giant, is adopting a new policy under which a publication must give notice it is running an adverse story about it, a competitor, or the energy industry in general and then BP can then consequently pull its advertising from that publication. US investment bank Morgan Stanley has issued similar guidelines, and no doubt the list will grow longer.

And while any publisher proud enough of his profession would tell these companies what they can go and do with their new policies, the truth is that newspapers and magazines are businesses currently suffering major circulation and advertising losses, and it’s uncertain for those doing the worst exactly where journalistic pride lies in their order of priority.

Withdrawing ads when there is general bad news about a particular industry is not new. When there is major plane crash, for instance, airline advertising disappears for a while. The philosophy goes there’s no point spending money trying to promote a specific product (airline travel) when there is so much bad news about the general product (the same or another airline crashes). When things settle down after a few days the advertising returns.

But BP and Morgan Stanley are taking that policy an additional step. They are telling a publication that if it writes or carries a negative story about them specifically that the publication must give warning so their advertising can be pulled if so desired.

Seen from the BP and Morgan Stanley standpoint it’s the same general philosophy that has been in place for airlines for many years -- why spend money promoting yourself if there is bad news in the newspaper that taints the advertising message?

Without even taking into account the administrative nightmare such a policy would dictate, from an editorial standpoint, of course, it boils down to something much more onerous. Advertising money is being used as a weapon against the publication not to run negative stories about it or its industry. And if these companies get their way then that so-called Chinese Wall that separated advertising from editorial will crumble before our eyes and a free and fair media will never be the same again.

For publishers the question becomes where is that line in the sand? Again, never forgetting that the media is, after all, a business requiring business-minded decisions, will publishers break the taboo that stops advertisers having sway over editorial policy in order so they can earn a few dollars more, or will publishers realize that if they compromise their editorial integrity they won’t long have a public reading their product?

And how many publishers will sign the new clause and then tell editorial they still have complete freedom, but add the overt pressure, “but of course if you write a negative story it’s going to cost us money.”  One wishes the answer would automatically come down on the side of telling such advertisers what they can go do with their money, but that old proverb “money speaks louder than words” has the real possibility of becoming the norm where finances are tight.

Here’s a recent example of a news story that BP must have really detested, and perhaps serves as good a reason as any to illustrate why companies might find the new advertising policy attractive.

On March 23 BP suffered a terrible fire at its Texas City refinery in which 15 people died and more than 170 were injured. On a PR basis BP handled the catastrophe as a class act. After its own internal investigation was complete, it issued its findings quickly and completely, including putting the entire report on its web site and issuing a news release headlined, “BP Products North America Accepts Responsibility for Texas City Explosion”

The report said its people were responsible, it explained what happened, and how it happened, it did not try and lay the blame on others, and it has started the compensation process. It said disciplinary procedures have started and it has appointed a new site manager who will concentrate fully on its safe operation.

BP also bought advertising to explain the steps it was taking to ensure such an accident would not reoccur, and some of those reforms will be very expensive to implement. All in all it seemed a class act – the corporate giant accepted blame, said it would rectify the situation, and was ready to make compensation.

So with that damage control under its belt BP executives could not have been happy to then read a story a few days later in the Houston Chronicle headlined, “BP Makes a Doubtful Run at Taking Responsibility” This newspaper, right there in the Texas oil and gas capital, took issue with BP’s report because BP blamed the accident only on its own low-level and mid-level staff in Texas City. Senior management was not faulted.

The Chronicle story was scathing of senior BP management for not accepting it was they who hired the staff at Texas City, therefore it is they who are ultimately accountable for what happened. And in a city that is still suffering greatly from the Enron scandal the Chronicle went right for the small hairs, “When BP says it takes responsibility, it knows better. What it has done is swipe a page from the Ken Lay Management Handbook: ‘we’re responsible, but not for the bad stuff. That was the little guys.”

Now a senior BP executive could well ask him/herself: Why spend money to advertise in a newspaper that damns me that way? It’s a fair question. It is BP’s money to spend where they want. If they want to pull their spend completely from a newspaper that ran a piece such as the Chronicle’s, then that is the advertiser’s privilege.

But the twist now is that they are saying, basically, to the media that we’ll buy advertising as long as you are nice to us, but if you run stories like that then you’re going to pay – we’ll take away our advertising.  In such cases publishers have traditionally told editorial, “Print and be damned.” Still the case?

The tradition, the rule, has always been that advertisers buy advertising space. They do not buy editorial space. By threatening to pull advertising if there is a negative story is a venomous threat that crosses the line into editorial integrity.

It’s a very clever ploy, but one should remember why companies advertise in the first place -- because they want to get their message across to the public. They are not giving advertising money to a publication for charitable reasons – advertising provides a positive financial return for the advertiser.

So if the likes of BP don’t advertise where they normally do then they will be shooting themselves in the foot – and there will be times when they really will want to get their message across.

The media’s answer is really quite clear – publishers when presented with the BP, Morgan Stanley new clause asking for notice of a negative story and allowing them to withdraw ads consequently should tear that piece of paper up into tiny little pieces.

Whether the Chronicle is correct or not, it seems that BP has done a lot of right things after the Texas City calamity. But this new advertising policy is NOT one of them.

ftm Follow Up & Comments

BP says It Is Rewording Its Advertising Document - June 16, 2005

A BP spokesman in London says that while the document mentioned in the above story was legitimate, it was written by a junior staff member and that it went further than the company had intended.

The new advertising policy was intended to be applied just to news magazines and not daily newspapers or television.

“It looked as though we were trying to influence content by using our (advertising) power, but we certainly do not have such intentions,” a company spokesman said.

The document is now being reworded. BP said it found the entire situation embarrassing.