With talk of adapting its “Blue the dog” consumer education campaign and protecting a multimillion-dollar, two-year investment in building propane’s brand, the Propane Education & Research Council (PERC) approved an assessment rate increase, paving the way for a new program designed to fuel residential and light commercial appliance sales.
PERC’s adoption of the maximum rate (five-tenths of a cent per gallon of odorized propane sales from four-and-a-half-tenths) – to take effect Oct. 1 – will generate a projected $3.3 million in additional revenue and allow the council to proceed with a planned national consumer appliance rebate program in 2018.
The plan was part of PERC’s 2018 proposed $42 million budget, approved at its July meeting in Denver and available for industry and public comment through Sept. 15.
While the Blue campaign over the last two years sought to improve familiarity and favorability of propane, PERC sees the consumer program evolving in the third year into one that stimulates appliance sales through rebates, strengthens customer loyalty and acquisition, and ultimately grows gallons for the industry.
“The last two years have been beneficial for us. We began to understand that it is important to address the consumer, and if we do it properly we can really begin to change the consumer’s mind,” says Tucker Perkins, PERC’s new president and CEO. “We knew going into the campaign the level of expenditures probably weren’t sustainable. We learned how to do it, how effective it can be, but you’ll see us now start to make some subtle shifts to the campaign.”
The council has faced budgetary challenges since the campaign’s launch last year. Back-to-back mostly mild winters across much of the country lowered propane sales and impacted PERC revenue generated through the assessment. Council leaders felt that maintaining a meaningful consumer campaign around national brand advertising and television exposure was not fiscally possible. At the same time, the response to the Blue campaign from councilors and others in the industry has been mixed.
“Based on the current financial outlook, we’d like to make some adjustments to complement the efforts of the organization to be as efficient [as we can] in going forward,” says Dennis Vegas, PERC’s chief marketing officer.
Vegas describes the latest effort as the “2.0 consumer brand campaign.” He says the industry will hear less about branding and more about the sale of appliances and propane gallons – hard metrics that will enable it to better measure the return on investment.
“We’re trying to find a balance to be able to do what we need to protect investments we’ve made and prepare the industry for tomorrow,” Vegas says.
PERC partnered with branding agency The Richards Group and invested $18 million over two years on a national multimedia consumer campaign that featured Blue and his bobtail-driving owner, and focused on propane’s versatility in the residential market.
Blue’s playful demeanor and friendly voice in television commercials and online videos were designed to endear the public to propane. Research by Nielsen, also a PERC partner in the project, showed how the campaign had a mostly positive impact on propane perceptions.
“We’re evolving the campaign and trying to take advantage of that improved environment,” says Pat Hyland, director of industry programs at PERC. “We’re trying to leverage the brand awareness we’ve been doing for two years with appliance sales. That will help us get more burner tips out there, sell more fuel and have more concrete metrics to measure.”
As proposed, a new national consumer appliance rebate program, to launch in 2018, would cover furnaces, water heaters, clothes dryers and cooktop stoves. Funded at $5.2 million for advertising, marketing and promotion, the campaign would target propane marketers, construction professionals and homeowners by using multiple platforms, including digital, radio, print and events, to reach consumer and business audiences.
“Beyond changes in media, we’ll begin to balance when we’re talking to the consumer and when we’re talking to people serving the consumer, like builders, plumbers, HVAC technicians and marketers,” Perkins says. “You’ll see us take this campaign in a new direction where we touch on all of those elements.”
The states and their marketer members would play a key part in a new national appliance rebate program, designed to reach consumers with propane messages closer to the point of purchase.
In PERC’s 2018 proposed budget, states are getting about $8.2 million collectively as part of the council’s legal obligation to rebate 20 percent of its assessment collections back to the states.
Under its proposed budget, PERC would replace the current Partnership with States (PWS) program, funded at $1.5 million, with a new program totaling $2.5 million focused on appliance rebates. The current PWS program supports the states by providing a dollar-for-dollar match to state rebate funds requested by states for eligible safety, training and market development activities.
The national appliance rebate program proposed for 2018 would increase the PWS match to 2 to 1 to the state rebate funds requested by states for applications designated in the new national rebate program – not for eligible market development and safety activities that have been covered with a dollar-for-dollar match.
“It’s time to sharpen our focus and drive even more meaningful change in the marketplace,” Perkins adds.
PERC says it must still work out details before launching the program, including rebate amounts per appliance and deciding exactly how states could augment their respective state rebate programs with a new national rebate campaign. The council also held a lengthy discussion at its July meeting on how to spend $1.5 million earmarked initially for the consumer campaign’s fall media buy. Some expressed an interest in redirecting the funds toward the new national rebate program.
“Nothing precludes marketers from continuing to leverage the campaign,” Vegas says of materials that have been created over the last two years as part of the Proudly Propane Clean American Energy/Blue the dog initiative. “We would like to see marketers continue to embrace it and use it for their respective businesses.”
The council next meets Nov. 2-3 in Tampa, Florida.