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Richa Mishra

Curb unplanned advertisements, lower ad spend

New Delhi March 22 The state-owned oil companies, which had been facing flak for the past two years for unnecessary corporate promotions, have managed to rejig their promotional strategies to incur lower ad spend in 2006-07.

The companies have not only been able to curb unplanned advertisements, but have also been able to monitor their corporate promotions through a mixed integrated marketing approach and increased below the line activities.

A senior ONGC official said, "We have optimised on advertisements and also saved almost Rs 1 crore by restricting unplanned advertisements."

Indian Oil Corporation Ltd, on the other hand, has adopted a two-pronged promotion — thematic and schematic.

A senior IOC official said, "There are two aspects to our promotion - to promote brands which need support by way of print and television ads, and through brand building strategies."

The schematic approach involves dealer incentives and on ground activities such as sales promotion, customer incentives and local communication.

Analysts view

According to TAM Media Research spokesperson, it is essential for oil companies to advertise to grow their market share in the urban and semi-urban markets and build their image as most of them are listed on the stock markets. They also need to push other profitable bi-products such as lubricants. Towards this, companies are now focusing on creating more touch points and increasing below the line activities. Analysts also point out that apart from traditional mass media, the oil companies are now opting for other communication avenues.

Expenses incurred

As on March 1 this year, upstream major ONGC's expenses on advertising for 2006-07 stood at Rs 29.94 crore, as against Rs 36.33 crore for full year of 2005-06. The brand driven oil-marketing company IOC's expenditure on advertising was Rs 87.98 crore, as against Rs 139.18 crore in 2005-06. However, with cricket sponsorships included, IOC is likely to incur expenses close to Rs 110 crore for the year, sources said.

In 2005, the axe had fallen on the advertising expenses of oil companies mainly due to the huge losses suffered and a directive from the Prime Minister's Office (PMO) to cut costs on corporate promotions. The launch of premium grade petrol, diesel and lubricants had seen the retailing companies furiously advertising. "As the industry becomes more competitive and customer-driven, companies need to focus like never before on marketing strategies," they had argued.

While GAIL has incurred expenses of Rs 4.96 crore on advertising as on March 1 (down from Rs 14.99 crore in 2005-06), Oil India has incurred Rs 1.17 crore (Rs 1.77 crore). The ad expenses of Bharat Petroleum Corporation stood at Rs 31.16 crore (Rs 45.96 crore). However, Hindustan Petroleum Corporation incurred a slightly higher expense on promotions Rs 49.18 crore (Rs 44.95 crore).

More Stories on : Petroleum | Advertising | PSU | Oil & Natural Gas Corporation Ltd

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