Yesterday I finished reading Seth Godin’s All Marketers are Liars, a fascinating book with terrific advice on how to build markets by being “remarkable”. Godin does not really believe that marketers are liars, he teaches that good marketers are storytellers that use ancient techniques to bond with their customers and meet their needs. The subtitle of the book – The Power of Telling Authentic Stories in a Low-Trust World – is more reflective of his advice than the attention getting main title.
Godin maintains a blog about his book and marketing advice at http://www.allmarketersareliars.com/.
I thought about Godin’s book when I came across an interesting set of articles in yesterday’s Times Online:
- BP doubles corporate ad budget in $150m bid for greener image
- Oil majors pumping cash into reinvention of image
- Subtlety is the way to sell these challenging clients, says adman
The articles describe efforts by BP and other major oil companies to try to convince consumers that they are really more interested in environmental protection than in filling their coffers with incredibly large profits from selling a necessary commodity in a market where there is more demand than available supply.
I have written about BP’s “Beyond Petroleum” campaign several times in the past, but repetition is sometimes needed. The numbers involved are interesting, and would be almost amusing if they were about a less important topic.
BP’s revenue in Jan through Sept of 2005 was more than $263 Billion, up from $207 Billion for the first nine months of 2004.
BP’s net revenue (profit) for the same period was almost $19 Billion, up from $13 Billion for Jan-Sept 2004.
BP’s 2005 production measured in barrels of oil and millions of cubic feet of natural gas was within 1% of its production in 2004; all of its increased revenue and profit came because the price of its products increased. BP’s results were fairly typical of the petroleum industry. There are very few other examples of industries where this is true.
I tried to break out BP’s renewable energy revenue and net income from its last three quarterly statements, but apparently it is so small that it becomes a rounding error. The published statements all include a page titled “Customer Facing Segments – Gas, Power and Renewables” but the only figures on the pages relate to gas and natural gas liquids (NGL). You can try to dig through the statements yourself – they are available as PDF documents at:
The point of digging through the financial statements of this incredibly large and wealthy company is to try to figure out why it is spending $150 million in advertising to try to convince people that they are somehow something other than a major oil company.
In the articles linked above, there were quotes like the following to try to explain the behavior:
BP insists that its new campaign is brand building, not a tactical manoeuvre. David Welch, BP’s head of marketing, says: “It is a long-term effort to make people understand the full breadth of what we do.”
It might sound disingenuous but it is probably true. Simmons, a lifetime supporter of the oil industry, despairs of oil’s image problem. “One reason it is so disliked is it has never been able to project a human face,” he says, criticising the industry’s weak public relations response to the hurricane disasters.
I am more cynical and believe that there is something sinister going on here. It seems to me that the petroleum industry leaders know exactly how they make money and recognize that they actually profited when they lost production capacity during Hurricanes Katrina and Rita. I believe that they are trying to perform the same kind of distracting deception used by magicians and the Wizard of Oz to keep people from getting too wise to their true motives. They like the idea of keeping the supply of energy slightly below the demand so that the price remains far above the cost of production.
As Godin says on page 101 of All Marketers are Liars I am angry when marketers use all of the sophisticated tools at their disposal to try to perpetuate a fraud. Like Godin, however, I am an optimist who believes that frauds like this one are not sustainable for long, otherwise I would not be writing this entry. Here is his comment on the topic:
“The good news is that even though marketing is far more powerful, it’s now harder than ever to get away with a fraud for long. The millions on the Internet are watching the reactions people have to your stories. Google is tracking your behavior. It’s almost impossible to keep a tangled story straight. The only robust, predictable strategy is a simple one: to be authentic. To do what you say you’re going to do. To live the lie, fully and completely.”
If BP really wants to convince skeptics like me that it is “beyond petroleum” it will have to begin investing real money into developing sources of energy that are not petroleum. Methane (natural gas) and NGL do not count; they are still petroleum products.
Of course, I highly recommend that major oil companies pour some real money into developing nuclear fission power plants, but if they really believe that solar and wind are viable, let them put their money where their advertising is.