A powered up ad sector

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Want to generate some heat with the next big account win? Then it's time to call on the gas and electric company. Agencies in search of the next hot ad category are increasingly eyeing the energy and utility sector, which, due to deregulation, is undergoing a rapid transformation.

"It's the way telecoms were in the ... '80s," said Paul Bernasconi, creative director and partner, Oasis, New York.

The shift from monopolistic to competitive conditions has paved the way for new power companies to court customers. Now, newcomers creating a brand identity from scratch as well as companies that have been local landmarks for decades are employing agencies in the battle.

Up until 1995, advertising for the entire $210 billion utilities industry only amounted to annual billings of about $87 million, according to Sam Tornabene, director of communication services at the Edison Electric Institute, a Washington D.C., association representing more than 200 shareholder-owned U.S. electric companies. "Consumers would sign up for electric service when they bought a home, and that was it," he said. "The market was 100% penetrated."

But in 1996, the landscape changed dramatically: Federal Energy Regulatory Commission orders required open and equal access to utilities' transmission lines for all electricity producers, which made restructuring of the industry possible, according to the Department of Energy. (In addition, the commission has encouraged the development of competitive wholesale power markets for two decades.)

Now individual states are deciding if-and how-they'll open up their energy markets. As of last month, 24 states and the District of Columbia had enacted laws to restructure; another 18 states were studying options that could allow consumers to have a choice of energy providers, according to the DOE.

Power companies poised to take advantage of the new open markets are turning to ad agencies for advice. In the past four months alone, eight power or utility companies conducted agency searches, according to Pile & Co., a Boston-based advertising consultancy that compiles a list of agency reviews.

Agencies are paying attention. "Two years ago, if I put a list together of all categories we wanted to be in, utilities wouldn't have made it. This year, it would have been high on every agency's list," said Curtis Zimmerman, principal at the Zimmerman Agency, Tallahassee, Fla. "Can you think of a subject, other than the stock market, that has been in the news or more relevant to people's lives in the last year?"

But utility deregulation and utilities have gotten a black eye from California. National news outlets document on a daily basis the fallout from that state's failing plan for deregulation. Reports show poor and elderly customers concerned about paying skyrocketing bills, consumer advocates decrying price gouging and waves of energy blackouts expected to continue through the fall. Additionally, in a research report last month, utility industry analysts at Deutsche Banc Alex.Brown projected every region of the country likely will be short on generating capacity in 2001.

"It's a relatively low-interest category until the lights go out," said Scott Franks, CEO of Tierney Communications, Philadelphia, a unit of True North Communi-cations.

Rather than dim the potential for the category to become a marketing giant, the California crisis actually may expand energy companies' need for marketing. For example, the California government launched a campaign promoting energy conservation last month. Similarly, near-bankrupt Pacific Gas & Electric Co. debuted last month a "consumer education campaign" with four new spots from WPP Group's J. Walter Thompson, San Francisco, focusing on conservation, and a fifth espousing the company's view that the state's energy problem centers on rising demand and inadequate power supply.

Mr. Tornabene, from the Edison industry trade group, acknowledges utility companies will have to contend with the negative association consumers form when faced with soaring bills. "They first of all need to realize customer perception is going to be directed toward the company that is giving them the bill," he said, adding that monthly bill inserts, rather than paid media, are a popular method for communicating with customers.

The trade group itself hired Oasis in January to create a communications campaign that will, in light of the nation's energy challenges, encourage consumers to be more efficient and promote the need for increased supply, Mr. Tornabene said.

Tierney Communications has represented Philadelphia's PECO Energy since 1988-pre-deregulation-and "migrated" the company's ad strategy somewhat following California's crisis, Mr. Franks said. "We're providing concrete examples of where PECO Energy is really helping in a proactive way to assure that your confidence levels are high," he said. "Our strategy very much had to do with the level of trust that you have with this company, the hometown nature of this company as opposed to the carpetbaggers, if you will."

In addition, Tierney launched in January a $10 million national brand campaign for Exelon Corp., the utility company formed when PECO and Chicago's Unicom merged (PECO and Unicom will continue to exist as separate brands). That campaign, "Reinvention," positions Exelon as a proponent of change by referencing product innovations in other industries.

Utility mergers and name changes are creating opportunities for advertising and marketing services. For Mirant Corp., which changed its name from Southern Energy in January, New York-based Siegelgale created a new moniker, logo and branding campaign. David Srere, group director-consulting for Siegelgale, said advertising was designed to differentiate Mirant by portraying its philosophy and insight about the world of energy.

"In terms of positioning a company, most deregulated competitors out there are sort of fighting it out in terms of trying to describe what they do," Mr. Srere said. "We wanted to elevate them above the fray." Copy in some ads reads: "The most important thing an energy company can generate is opportunity."

Mr. Zimmerman, whose agency won environmentally friendly Green Mountain Energy's advertising account in February, said the problems in California are making consumers in other states hesitant to switch to a new energy provider. But he is still optimistic about long-term prospects.

"The beauty about electricity and utilities is that you won't talk to a human today who doesn't need electricity, and that's what the company is selling. Some people wear Nikes, and some people don't, but everyone needs electricity," he said.

Contributing: Alice Z. Cuneo

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