Scraping the Bottom of the Oil Barrel
In a low oil price environment survivors will cut capex, but not at the cost of reputation
Though we work with businesses across the energy mix, as a team focused on the energy sector, oil prices affect budgets.
Today Wood MacKenzie suggested that capital expenditure on upstream projects has been scaled back to the tune of nearly $400 billion just as oil prices recovered slightly to end yesterday just above $30 a barrel. Communications and brand budgets are not immune. Any communications leader signing a contract for a large advertising campaign right now either knows something that the rest of us don’t, or just hasn’t heard the mood music.
That said not all communications are equal and it would be equally foolhardy to take a blanket percentage haircut to all budgets in the current context.
The fundamental reasons for communications do not go away in much the same way that it will be fundamentals of supply and demand that dictate oil prices. Companies still need to engage with government – perhaps even more so to help shape the fiscal and regulatory content that they will need to save operations and jobs. Companies still need to tell their stories – perhaps even more so to help markets, investors and communities understand their predicament and their plans to survive the short term without jeopardizing ability to benefit from the upside that will come. Companies still need to engage their employees – perhaps more so to ensure that poor morale and productivity do not jeopardise recovery. And companies still need to develop reputation, invest in partnerships and build brand – perhaps more so to aid shifting strategies, understand and respond to the shifting dynamics of the market and forge new alliances that enhance and protect reputation.
Oil can stay in the ground and retain value. Brands and reputations need continuous investment and communications leaders need to focus on the right priorities.
Image credit: Eva Kröcher