Bang for the Buck

January 1, 2005 By    

Since 2001, Americans have been introduced to “the exceptional energy”
from smiling babies, contented babysitters, stinky skunks, busy moms and the
popular Energy Guys featured in advertisements on television, radio and print.

Their message appears to be getting through. Surveys used to measure public perception show that consumers increasingly agree with the key strategic messages being promoted in the ads – propane’s efficiency, reliability, good value and trustworthiness.
It also indicates a significant improvement in propane’s favorability versus electricity.

Professionals hired to design and run the campaign say these trends indicate the public is increasingly prepared to change its buying habits in favor of propane. They also point to the 100,000 consumers who used the PERC website to locate a propane retailer as evidence that the advertising push is getting
results.

But after four years and more than $36 million spent to sway prospective customers,
the inability to show propane sales growth has some industry leaders questioning
the bang earned for the enormous bucks being spent.

The Propane Education & Research Council last month ponied up another $17
million to run the campaign through 2005, but with a caveat: prove the investment
is generating more sales or the plug may get pulled.

“Some of us feel we are not getting the dollar back in our pocket in response
to all the money that is being spent. We have the warm, fuzzy feeling (from
the campaign), but haven’t seen the cash results,” noted council member
Kenneth Green of Oklahoma Liquefied Gas Co.

“I think the ads are great, but I don’t think it is influencing sales,”
added councilman Patrick Chesterman of Ferrellgas. “I don’t want to scrub
the program, but I know that other marketers feel the same – we are spending
a lot of money and not getting any return for it.”

The $54 million poured into the campaign from 2001-05 comes from the per-gallon
assessment paid by propane industry members. To date, PERC has only marketer
feedback to calculate their return on investment.

“We are hearing anecdotally from marketers that customers are responding
to the message, but I agree that we need the sales data to verify,” PERC
Chairman David Lugar of AmeriGas said. “I feel good about the campaign
and agree with what we are doing, but I am concerned that we have to answer
to the industry in 2005.”

Councilman Tom Nunan warns that the clock is ticking on proving the campaign’s
worth to the industry.

“We have been telling our industry for five years now that we will have
(sales) numbers to show them. It’s not good enough for the industry that people
are feeling good about the product. We have got to follow through on our commitment
to get them the metrics to show we are making progress in sales,” he said.

Number Crunching

In September 2003, the council swallowed hard before agreeing to spend $1 million
to generate those numbers.

Energy and Environmental Analysis Inc. and Wirthlin Worldwide were hired to
measure propane market performance over the last five years by building a consumption
database that is more comprehensive than any previous public or private source.
The raw consumption values will be analyzed to identify trends and market growth
opportunities, according to Bruce Henning of Energy and Environmental Analysis.

The project also will provide a model to evaluate the impact of external factors
– such as weather, the economy, pricing of competing fuels and the PERC advertising
campaign – on overall sales growth. Henning promises the report, which is due
this spring, will be brutally honest in evaluating the campaign’s effectiveness.

However, the data being crunched for the report uses propane sales numbers
from January through December 2003, the last year for which sales data is available.
As a result, it will not measure the impact of subsequent advertising investments.

Looking Ahead

Encouraged by propane’s highest favorability rating to date, the 2005 campaign
will aim public relations and advertising messages at current and prospective
homeowners, home builders, the manufactured housing market, engine fuel/fleet
users, and the rural hospitality industry.

According to Kate Caskin, PERC senior vice president, new Energy Guys spots
that focus on efficiency, reliability and good value have been created and will
be filmed in January to be added to spring advertising schedule.

She says this year’s campaign has three main strategies:

  • Concentrate on seasonal advertising. As in 2004, broadcast advertising
    will hit in two phases – one in spring and another next fall. The strategy
    to run at higher levels of frequency by running fewer weeks in each phase
    will continue.
  • Coordinate media outreach. Campaign organizers want to complement the ads
    with public relations efforts by developing and pitching propane stories to
    get the kind of media endorsements that reinforce the message and maintain
    visibility during off-air time.
  • Marketing partnerships. Sponsorships of popular shows like the Country Music
    Television’s Flameworthy awards or NASCAR will again be sought to leverage
    national ad placements to create partnerships and get opportunities to extend
    the brand and message.

TV advertising will continue in a mix of home planning programs such as HGTV
and shows popular to the rural viewer – like NASCAR and country music. The Weather
Channel will continue to be used, since temperature-driven programming is particularly
relevant to heating and outdoor living themes, Caskin says.

Radio spots also will continue on network radio because it enables the message
to run on a variety of programs like Paul Harvey, Rush Limbaugh, Country Music
and ESPN radio.

Print and online advertising will be used to target consumers looking to buy
or build year-round. Special interest publications that contain home plans are
the most likely targets for those messages.

Caskin says the campaign hopes to see improved marketer participation its online
Find a Propane Retailer program in 2005. The goals are to add 200 new propane
companies, double the current consumer referral rate, and have 100 percent of
retailers follow up with the consumers who ask to be contacted.

PERC also is looking to expand its partnership with states program, which provides
a 50-cent match for every dollar states spend to push the campaign out through
media in their local communities. Currently, 45 states participate in the $4
million program.

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