Oilpocalypse Now! Why Marketing Can Save Oil and Gas
Let’s get it out of the way that the argument that follows is self-serving in that Signet Interactive is a marketing company that benefits from clients continuing to pay for marketing. Done. Now onwards.
Since June 2014, the price of oil per barrel has dropped by more than half. In the wake of this “oilpocalyspe”, many oil and gas companies have put a hold on marketing budgets, and laid off entire departments. This is actually a pretty common knee jerk reaction in most industries when times get tough. Is this because most financial “cutting” decisions are made by finance and accountants just don’t understand marketing? (As a CPA I am allowed to say these types of things). Whatever the reason, cutting your marketing budget in tough times is a bad decision, with long-term, negative ramifications.
Marketing in Tough Times
First of all, shame on you for not planning for the draught when it was raining. (Yes, you can Tweet that #mulgrewism.) Maybe you were too busy servicing customer accounts to think strategically? Maybe you were tied up taking clients to big steak dinners? As a business leader your job is to look ahead and set your company up for success in the future, to strategically plan, to anticipate, and to lead. And your marketing is crucial for all of that.
For many O&G companies, marketing is the department where the brochures come from. It’s the place where millennials manage the company’s Facebook page. It is not an integral part of the business – some might even try to argue “non-essential.” You would be surprised by how many times I hear, “Well, that doesn’t really apply to us, because this is a relationship business.” Yeah, sorry, but if that is what you truly believe, then you do not understand how connecting with customers/prospects is changing in 2015 or the role it will play in your future.
In tough times you need to differentiate yourself from your competition. Let’s face it, when oil is between $90-100 per barrel, E&P companies are begging for rigs - and service companies are turning away business. This happens in any industry experiencing rapid growth where demand is outstripping the labor supply. Who needs marketing or branding when you are at capacity?
Despite the current oilpocalypse, not every E&P company is shutting down its operations. But ask yourself, with WTI down to just under $50 a barrel, how are you going to win their business now that you actually need it? Ask yourself:
- What is your lead generation process?
- What sales enablement tools do you have?
- How are you scoring leads and following up?
- Are you using marketing automation?
- Does your website, social media and digital footprint tell your story well?
- How do you convey “why we are different” consistently to protect margin erosion?
- Where and how are you advertising? Yes, advertising.
That’s marketing - and you just eliminated that department.
Staying Ahead of the Cycle
Ok, that advice might be a little late for some companies, but still sage for others and after all, the price of oil, and the general business cycle are just that – cyclical. Here is my layman’s explanation of how I see how things play out: $47 a barrel is bad for the oil and gas, but good for just about every other industry. The use of petroleum-based products impacts almost every facet of life (you would be surprised). With lower costs and increased demand, these industries become more profitable and expand, which in turn increases the demand for petroleum-based products. Guess what happens next? Oil prices go up and we do it all over again.
The role of marketing in this process is integral and continuous, not something you can turn on and off. When you shut down marketing, you have no way of fighting the competitive battle in the downturn. And when things turn up, by the time you get the team back on board, you have missed the most lucrative and steepest part of the upturn.
- Be a strategic thinker and plan for things going south when they are going great.
- Gain an understanding of modern marketing and make it an integral part of your business.
- When times are tough, marketing can’t be the first thing you cut. It should be who you look to for solutions.