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WHEN a potentially image-destroying event occurs in the middle of an image-building campaign, what should a company do? Ignore it? Concentrate on it exclusively? Or address it briefly, then go back to image building?

Those were the choices that the Citgo Petroleum Corporation, a subsidiary of Petróleos de Venezuela, faced in late September after Venezuela’s president, Hugo Chávez, stood before the United Nations and likened President Bush to the devil. Not long after, a news agency reported that 7-Eleven Inc. had dropped Citgo as a supplier, intimating that the move was linked to Mr. Chávez’s remarks. Rumors of a consumer boycott of Citgo stations soon percolated through the blogosphere.

No matter that none of it was true. “We did not drop Citgo; our contract simply expired on Sept. 30 as planned,” said Margaret Chabris, a 7-Eleven spokeswoman, who said that 7-Eleven would probably sell its own branded gasoline. Citgo sales did not fall off markedly either.

Nonetheless, in mid-October, Citgo ran a full-page ad in the form of a letter from Feliz Rodriguez, its chief executive, in USA Today, The New York Times and several other newspapers. The letter, with the headline “Citgo Sets the Record Straight,” clarified the timing on the 7-Eleven contract, and discussed Citgo’s track record as a big employer of Americans, a reliable supplier of gasoline and an exemplary corporate citizen.

Citgo then resumed the image-building campaign that it had begun in July and that is scheduled to run through the end of March. On Monday, for example, it ran full-page ads in numerous newspapers, with the headline, “Citgo. Fueling More Than You Might Imagine.”

•Mr. Chávez’s speech has disappeared from headlines, and the flurry of bad publicity that surrounded Citgo has died down, too. But the company’s handling of the episode remains a matter of lively debate among branding specialists. Some applaud Citgo; some castigate it. Here is a sample of their mutually exclusive schools of thought:

¶Citgo should have ignored the 7-Eleven rumors; by trying to counteract the misinformation, the one-time ad helped to perpetuate them. “Sure, if there’s a real crisis, it’s a good idea to neutralize the negative in one ad, then continue to address the positive in later ads,” said Judy Hopelain, a partner at the marketing consultant Prophet Brand Strategy. “But none of the people I know made any connection in their minds between Chávez’s speech and Citgo, so I question whether Citgo had to address this at all.”

So does Michael Watras, president of the brand consultant Straightline International. “They should have just let it all blow over, then sometime after the election do a campaign that emphasizes their product and their brand,” he said. “After all, Americans don’t care about any of this, they just want to put gas in their car.”

¶Citgo had to address the issue; most people may not connect Citgo and Venezuela, but a subset of influential people most certainly do. “Of course, Citgo knows that consumers don’t use politics as a criterion when they buy gas,” said Nicholas Donatiello Jr., president of the research firm Odyssey. “But they needed that one-time ad to set the record straight with the reporters, the pundits, the politicians, all the members of the chattering classes.”

¶Citgo should not have stopped with just one rebuttal ad, but should have continued to address the potential fall-out from Mr. Chavez’s speech. “By going back to the regular ads too soon, it looks like they are trying to distract people by changing the subject,” said Allen P. Adamson, managing director for the brand consulting firm Landor Associates. “They needed to run a few more ads, wait, make sure they are not getting clobbered in the blogosphere. Then, when they’re sure they’ve cleared the decks, they can go back to saying, ‘Hey, we’re the good guys.’ ”

¶Citgo should have fought the misinformation, but through nonadvertising venues. “If they were attacked, they should have countered on their Web site and with public relations,” said Simon Williams, president of Sterling Brands. “Instead, they ran a noticeable, impactful defensive ad, which will make the others look smarmy in contrast. In effect, they hijacked their whole corporate image campaign.”

To hear Jennifer Moos, general manager of brand development at Citgo, tell it, Citgo is pretty comfortable about its choices. After all, she says, the image-building campaign that began in July was always aimed at playing up, not down, the synergies between Citgo’s American roots as the Cities Service Company and its current Venezuelan connection. And the reasons she offers for the campaign are of the type taught in Economics 101, not Advanced Crisis Management.

Citgo, Ms. Moos said, had been selling more gasoline than it could actually produce, and it had been buying high-priced gas on the open market to meet its obligations. So earlier this year it decided that it would stop selling gasoline in several locations in the Midwest, and concentrate instead on beefing up its presence in the Northeast.

But, the company knew its pullback could be misconstrued. “People could assume Citgo was getting smaller, not stronger,” Ms. Moos said.

So in July, Citgo began running full-page ads in newspapers, detailing its refining capacity, its program of subsidizing home heating oil for poor people in New York, its support of the Muscular Dystrophy Association — and yes, the fact that its status as a subsidiary of Petróleos de Venezuela gave it access to Venezuela’s crude oil reserves, the largest in the Western Hemisphere.

•When the erroneous information about the 7-Eleven contract and the rumors of a boycott surfaced, “we had to set the record straight for our brand image,” Ms. Moos said. No boycotts materialized; sales have not dropped off. “So now our campaign is picking up the Citgo story again.”

Ms. Moos would not discuss budget, but she said the campaign would include television spots and full-page ads in large newspapers, and would run through March 31. The ads will continue to stress employment, reliable supply, corporate citizenship — “all the areas that Citgo’s marketers and distributors say they want to see addressed,” said Shad Foos, a vice president of Barkley of Kansas City, Mo., Citgo’s agency.

Marketing experts might well add the codicil — providing all is quiet on the blogging and rhetoric front.

Claudia Deutsch writes for the New York Times.Petroleumworld not necessarily share these views.

Editor's Note: The preciding article was publish by The New York Times, November 1, 2006 . Petroleumworld reprint this article in the interest of our readers.

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