Prosper Business Development, a purveyor of interactiveadvertising systems, warns energy marketers simply “building abrand” won’t be enough to compete for commercial and residentialcustomers in deregulated markets. Key to success will be makingadvertising a sales tool rather than just a brand awarenessvehicle, the company maintains.

In a report that briefly touts Prosper products, the companyoutlines mistakes it says marketers must avoid. For one, Prospermaintains clever ad campaigns aimed only at “building the brand”won’t work in the commercial/residential market. “With more than243 investor-owned electric utilities vying for the same customers,[marketers] can’t afford to spend millions of dollars on lengthycampaigns that raise brand awareness only without selling energy,”said Prosper President Gary Drenik. Prosper cautions marketers tobeware of advertising agencies offering only brand awareness. “The’building of a brand’ will be one of the major campaigns agencieswill sell. For them this means, ‘Let’s spend a lot of money sopeople will remember or recognize your name,'” the Prosper reportreads.

Prosper questions the effectiveness of direct mail and coldcalling, particularly when one considers the number of contactsrequired to reach so many residential/commercial customers. Marginswon’t be high enough to reward a sales force. “The cost ofacquiring a customer must be in the $30 to $40 range in order to beproductive in the competitive energy environment.” Prosper citesindustry sources and quotes annual utility advertising expendituresof $80 million. “That amount is expected to rise to more than $2billion after the year 2000.”

While companies strive to compete by offering diverse productsand services, it doesn’t take long before players are offeringessentially the same things. “The product phase will be short livedbecause it doesn’t create a unique competitive advantage and willbe quickly integrated into the final phase, the marketing phase.”The marketing phase requires a whole new set of skills, Prospersays. Telecommunications deregulation, often cited as a model forenergy, is not analogous. “For example, there is no nationalAT&ampT type utility with over 80% market share as was the caseprior to the 1984 break-up of AT&ampT. Specifically, just theopposite exists in the energy industry.”

Prosper notes there are more than 3,000 electric utilities, 243of them investor owned, with each serving a defined geographicmarket as a resident monopoly. “AT&ampT’s biggest challenge was toretain customers whereas electric utilities will be battling twofronts – to retain customers in current service areas and find newcustomers in foreign service areas.”

The company doesn’t push its products in its report, but clearlythe conclusions drawn are intended to support the use of itsproducts. One of them, Direct to Market, puts a form in the handsof a supplier’s prospective customers through direct mail or insertinto publications. The end user fills out the form with data oncurrent energy costs paid to the incumbent utility and faxes it toProsper. The form is machine read, and a rate quote is generatedand faxed back to the prospect with a contract. At the same time,information on the prospect is forwarded to the client or its callcenter. The supplier can then call the prospect for follow-up.

Joe Fisher, Houston

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