BP

Energy Companies and Brand Marketing – Like Oil and Water?

BPAn oil spill is a tragic – but all too real – possibility for an oil company. By the nature of their business, you would think oil companies would expect an incident like the Gulf of Mexico offshore oil well explosion to happen. It should not be a surprise – anymore than an earthquake in California would be a shocker. But, as the latest oil spill in the Gulf of Mexico has shown, these environmental disasters are all but impossible to prepare for. The question from a brand marketing standpoint is simple: what the hell should they do given this probability?

As we at Cult like to do, let’s back up and look at the consumers’ view of the industry. The oil companies are really big and really profitable – even when the economy is in the proverbial toilet. In the deep recession year of 2009, when almost everyone was suffering financially, the oil companies made billions of dollars in profits. In a 2006 study of gas price manipulation, the FTC found that the record increases in gasoline prices were “not substantially attributable to higher costs”. It seems the oil companies always take advantage of their financial opportunities with no regard to consumer goodwill. These companies are often viewed as monopolistic, money-grubbing, price-gouging, predatory goliaths. In a 2008 Harris poll of 20 major industries, only the tobacco industry had a lower rating than the oil companies on the topic of how good or bad a job they perform in serving the needs of consumers.

From a marketing and branding perspective, what is there to love about an oil company? Do you trust them? Do you have any affinity to any oil company? Do they do anything for you as a person? Do they make you feel good in any way? The energy industry has to rank among the worst PR and branding industries. We know all about the 1989 Exxon Valdez nightmare which was widely considered the worst corporate PR fiasco of all time. But what has the industry done to counter its image since then?

Gladly, they have made some strides. Let’s take the current Gulf oil spill. BP has a real disaster on its hands, and they have clearly learned a lesson from Exxon’s PR gaffe. The CEO of Exxon was not seen until six days after the Valdez disaster, and then said at a press conference that it was not his responsibility to read the cleanup plan report. He also blamed the media for turning the spill into a big deal. Hell, it was two full weeks before he visited the spill site in Alaska! The media interview refusals by Exxon’s CEO Rawl and his complete lack of remorse highlighted the worst possible PR moves by one of the world’s most profitable corporations. It conveyed an ivory-tower arrogance. Now, to his credit, the CEO of BP, Tony Hayward, has learned from Exxon’s PR mistakes and has been on air and is taking full financial responsibility for the spill cleanup.

On the marketing and branding front, oil companies have increased their efforts. Shell has been focusing on advanced technologies and product performance enhancements along with sponsorships like Eco-Marathons, Exxon Mobil has been supporting science education, and BP and others have been focusing on their “green” strategy. Unfortunately for BP, that positioning is tough to sustain given the latest environmental tragedy.

Even so, let’s not pretend the problem has gone away. The brand marketing work of oil companies is far from done. Oil and energy companies must develop a sincere, long-term strategy to create brands that connect with their consumers on an intellectual and emotional level. In short, they need to define a plan to evoke positive feelings from their consumers.

One good way to enhance their brands would be to become good corporate citizens. Oil companies make massive profits, so how about giving back? An exhaustive study by the Committee Encouraging Corporate Philanthropy shows that the energy industry’s Total Median Giving as a Percent of Revenue (0.05%) is the lowest of any other major industry! [For reference, health care companies give 0.6%, or 12 times as much as the energy companies.] Once again, the oil companies don’t understand the concept of branding.

Maybe the sad reality is there is no motivation for oil companies to care about their brands or their consumers. What are we to do, stop buying gasoline?