August 2017 Exclusive Story
U.S. Oil Output Poised To Hit Historic High
DALLAS–The difficult question that has faced generations of oil and gas C-suite and marketing management is once again an issue: When (and to what extent) should companies begin to revive their marketing efforts following a steep industry downturn?
Companies are often reluctant to commit a significant amount of their budgets to marketing when a reasonable amount of uncertainty still exists. At the same time, companies also do not want to be late in establishing themselves, and lose the opportunity to make an early impact and gain market share in a potentially expanding market. As in the oil and gas business itself, timing means everything in marketing.
Over the past few years, the oil and gas industry has seen the good ($100-a-barrel oil and record annual capital spending programs), the bad ($30/bbl oil and massive budget cutbacks), and the ugly (tens of thousands of industry workers laid off). Today, we are experiencing a limited, but seemingly sustainable, rebound. Oil appears to have found a steady price range between $45 and $55/bbl, maintaining a level within that range for more than 10 months. Even Henry Hub natural gas prices have ticked up from the low-$2/Mcf level of late November 2016 to trade in the $3.00 range at the start of the summer cooling season on June 1.
Predictably, the industry has responded to the higher commodity prices by increasing activity, with the domestic rig count rising for 23 consecutive weeks (and counting) through late June–adding more than 400 working rigs year over year. Week after week in 2017, oil and gas companies have been putting capital to work to implement strategic drilling plans and capitalize on stronger commodity prices.
Pertinent to the issue of marketing to the oil and gas industry is the fact that as activity comes back to life, many companies find themselves in need of additional trained and skilled workers. This situation may seem a bit ironic, given the massive layoffs experienced over the past few years throughout all sectors of the industry. However, this talent shortage is a real issue and represents another driver for marketing to the industry. With a shortage of personnel, oil and gas companies will be looking to suppliers and service providers for an even greater level of support and expertise. This situation gives service and supply firms the opportunity to build strong relationships with customers that can endure through both good and bad times down the road.
New Buying Influencers
There are a number of ramifications associated with the evolving nature of today’s oil and gas business. The foremost is found in the radically changing base of buyers and buying influencers. Many talented people have been laid off since late 2014, and some of the industry’s more seasoned talent has chosen to retire. Those layoffs and retirements have, in turn, thrust new people into positions of buying authority. As a result, the impact of old buying patterns and former brand loyalties has been reduced, if not completely severed. The bottom line: There will be new people making buying decisions. You will not know them, and they most likely will know little about your company or its specific products.
There is a whole new generation of buying influencers who, in effect, act as free agents in terms of their preferences and loyalties. They will be the ones forming opinions and brand preferences, which makes marketing to them a priority.
Today, we have an industry that is still feeling the financial effects of a dramatic downturn, and at the same time is struggling with developing the manpower to capitalize on even a moderate recovery. Since many of the industry’s companies are reticent about hiring, new buying influencers are often being tasked with mounting job responsibilities. As noted, these new influencers will increasingly look to suppliers for the support they need. Eventually these new buyers will develop a better sense of what products and services they prefer, and what brands they can trust. The purchasing habits these new buyers develop, and the business connections they make initially, will guide the way they do business for some time.
Based on this scenario, now may indeed be the right time to restart marketing efforts that target the oil and gas industry. Establishing an early presence in the market while new buyers are forming brand opinions can be a positive differentiator for companies having aspirations to emerge as a market force. In addition, given the uncrowded nature of the oil field marketing space today, even a moderate effort should generate sales leads and create opportunities to meet potential new customers. Parallel to the effects of marketing, logic also dictates that supplier companies that meet potential customers early on will have an advantage in terms of building new relationships.
At the same time, the oil and gas industry remains a relatively unstable market. Therefore, programmed spending on marketing should be based on tangible objectives: awareness building, branding, lead generation, and/or other objectives that are aligned with a company’s marketing and sales direction.
Depending on specific objectives, a company’s marketing effort may now engage in a broad range of options, including advertising in trade magazines, exhibiting at tradeshows, engaging in social media, and aggressively pursuing public relations opportunities. Search engine marketing is another area where one can both build awareness and generate leads. Finally, if the target audience is reasonably well defined in terms of prospective companies and job titles/functions, a company also may opt for email or direct mail marketing. And for almost any market situation, the effective use of relevant content will prove to be an outstanding marketing strategy.
Whatever form a marketing effort takes, there are several key points to bear in mind. First, any marketing approach and messaging should take into consideration the nuances of a newly developing buying audience. By carefully monitoring and reviewing responses to a marketing effort, media selection and messaging can be refined in order to best connect with the industry’s buying influences. Finally, if a product and service can help to fill a knowledge or resource gap in a customer’s organization, that point should be emphasized. Many oil and gas companies are in search of suppliers and service contractors that can help them optimize their operations and meet their bottom-line goals without increasing fixed overhead.
The marketing efforts for any company should be developed in line with its current situation, both its short- and long-term goals, and its current financial condition. However, whether dealing with a small or large budget, any marketing program will be executed more effectively–and more cost efficiently–if it is carefully planned and implemented in line with a comprehensive strategy.
Today’s oil and gas market is in a state of change. With that change, comes opportunity. Ultimately, how the various companies supplying products and services to the industry address this opportunity today will have a lasting impact on their business for years going forward.
Tom Prikryl is founder and president of Triad, a Dallas-based business-to-business marketing agency. With 35 years of professional experience in B2B advertising and marketing, he founded Triad in 1994 to offer services tailored to meet the requirements of oil field marketers. He has successfully marketed a wide range of technologies and services–from drilling equipment and tubular goods, to completion and production tools–to clients including LeTourneau Drilling Equipment, Alcoa Oil & Gas, TIW, Schlumberger, Archrock, Bright Automation, Hoffer Flow Control, and Double E. Prikryl is a graduate of the University of Texas at Austin.