Tapping into natural resources

When Calgary's Canadian Occidental Petroleum changed ownership last year, the company embarked on a mass-media consumer campaign rarely seen in the moneyed world of oil and gas exploration.

When Calgary’s Canadian Occidental Petroleum changed ownership last year, the company embarked on a mass-media consumer campaign rarely seen in the moneyed world of oil and gas exploration.

With print ads in national and international publications such as the Globe and Mail, The Wall Street Journal and Financial Times, the central focus was to inform investors and potential shareholders that not only was the company changing hands, but was also changing its corporate moniker to Nexen.

‘It was important for them to communicate to investors that they have a new name and still [leverage] the reputation that Canadian Occidental held,’ says Mario Amantea, president of Nexen AOR Parallel Strategies of Calgary.

What made the strategy noteworthy is that natural resource companies generally tend to shy away from communicating directly with the public at large.

Based on the central role natural resources play in the economy of Western Canada, one would assume advertising budgets would be proportionately significant. Unfortunately for the Western ad industry that’s often not the case.

‘When you look at some of the larger oil and gas companies within this market, they’re not doing mass marketing,’ says Amantea. ‘In terms of where they can effectively spend their communications or marketing dollars, mass advertising is certainly not something that is going to be of huge benefit to them.’

Many close to the industry, including Amantea, say marketing money is better spent in community relations, public relations and, where necessary, investor relations.

For its part, Nexen plans to cut its brand campaign in the coming months following a successful year in which the company’s name recognition increased significantly, says Nexen spokesperson Carla Yuill.

Instead, the company will focus on community relations and road shows, where Nexen executives go out and meet with larger investors.

The reason for the cut to advertising gets back to the age-old issue of measuring results.

‘When you don’t have a consumer product that you’re selling, you can’t measure sales against advertising,’ says Yuill. ‘With a road show, you go out, you’re talking to investors, and you see immediate results.’

While agencies in Central Canada have, until recently, been experiencing growth and prosperity, many of their cousins to the west have struggled. The eastward shift of Telus, Western Canada’s largest advertising account, to Toronto-based Taxi didn’t help matters.

And even in boom periods, as the one the oil and gas sector is still experiencing, marketers have not been able to count on natural resource companies to make up the deficiency.

Many of these companies could be doing more, says Jim Southcott, chief strategic officer at Vancouver-based Bryant, Fulton & Shee.

‘There’s a huge upside for these companies to distinguish themselves and create some value-add for their products, whether it’s lumber, natural gas or hydro. All of the natural resources are still, in the customer’s mind, commodities. People associate positive attributes of the commodity to the company but there’s not much beyond it,’ he says.

Southcott, who works closely with client BC Gas, and whose father worked in the B.C. lumber industry, believes one area in which resource-driven companies can do more branding is international markets.

‘The [B.C. lumber] industry has long struggled with coming up with a really unique B.C.-only-type product whether it be by virtue of the type of wood, the age of the wood, or some other unique differentiator that they’re able to apply before it gets shipped out.’

Tim Holland, VP account services at Highwood Communications in Calgary, agrees that resource companies can do more, particularly those that are publicly traded.

‘As more and more of the resource companies go public, then they’re advertising not to customers, but to existing shareholders and prospective shareholders. That’s where the value of a brand campaign comes in.’

Highwood client TransCanada PipeLines, a natural gas transmission and distribution company, launched just such a corporate campaign last year in the national newspapers and the major dailies. The purpose of the campaign was to inform stakeholders, such as landowners, shareholders and wholesale customers, of the company’s successful turnaround story following a series of divestitures.

‘It was basically to say that we’ve gone through some tough times in the last couple of years but we have definitely pulled things together – and are now looking for opportunities for growth and expansion,’ says TransCanada’s Glenn Hurchak.

While this was the first such campaign in several years, Hurchak says the company will likely do more early next year.

Holland notes that TransCanada could potentially go one step further in terms of building its brand by communicating how it benefits communities nationwide.

‘Because they’re in markets all across Canada, a lot of communities are touched by what they’re doing. So educating people about what a gas pipeline is and what they do and where it fits into the economics of the community, that might be one way of helping them understand the business.’

On the other hand, privately owned oil companies specializing in exploration have less need to advertise because they only need to communicate to a limited number of customers.

‘These companies are only talking to handfuls of players,’ says Philip Coppard, senior partner, brand insights group at agency Ogilvy & Mather in Calgary. ‘They print out their customer lists on five pages. That’s every single customer they have, and 80% of their business is in 10 customers. Those are very different business dynamics than a lot of other industries have.’

The exceptions to this are the major integrated oil companies – such as Husky, Shell, Imperial Oil and Petro-Canada – which have retail divisions that sell gas and other products directly to consumers.

But for years, integrated oil companies have seen gas station sales as the least important revenue stream, says Highwood’s Holland, which counts Husky Oil as one of its clients.

More recently, however, retail has been seeing some real innovation as a revenue generator. Today, these companies run convenience stores and market services such as pay at the pump and, in the case of Esso, the Esso Extras Card.

‘The whole industry is changing and as that changes, you’ll see a lot more retail focus in the advertising,’ Holland says.