HOUSTON — Brand value for oil and gas companies grew just 3 percent during the past year, a slower rate than all other industries in an annual global ranking released this week by research agency Millward Brown.
Of the five oil and gas companies that made the BrandZ Top 100 Most Valuable Global Brands, Exxon Mobil ranked the highest at No. 48. Shell came next at No. 53.
Millward Brown pointed to intense global debates around hydraulic fracturing and climate change as issues affecting the oil and gas brands. The firm said the industry also suffered from some more typical brand challenges.
“Compounding the normal risks of exploring for oil and gas reserves in fragile environments, oil and gas brands felt investor pressure to return more profit to shareholders,” the report noted. “To accommodate these needs, the major brands sought new efficiencies and looked to sell assets.”
Oil and gas industry brand value had declined 4 percent from 2012 to 2013.
The report found a significant difference in public opinion of private international oil companies, or IOCs, and their government-owned counterparts, even though they’re engaged in the same business.
“National oil companies are seen to be more supportive and essential to their country of origin, while the IOCs are generally vilified,” the report noted.
Millward Brown forms the ranking based on each brand’s financial value (based on current and projected company earnings) and the firm’s unique “brand contribution” calculation. Brand contribution is based on consumer loyalty, brand uniqueness and other customer-based values assessed from ongoing research and interviews with consumers worldwide.
The total value of all top 100 brands grew 12 percent to $2.9 trillion during the past year, a rapid rise that Millward Brown researchers attribute to global recovery from the economic recession. In recent years since the financial crisis, brand value increased an average of about 6 percent annually, according to the report.
Big tech brands reign
While oil and gas brands struggled, brand value soared for top tech companies, which have been key competitors for the energy industry in the workforce.
Google’s brand — which displaced Apple to take the No. 1 spot — saw the largest jump in value, rising 40 percent from 2013 to 2014. Social media companies Twitter (No. 71) and LinkedIn (No.78) entered the Top 100 for the first time in the ranking’s nine-year history.
Broken down by region, oil and gas had a better showing in the United Kingdom, where Shell ranks as the third most valuable brand (behind No. 1 Vodafone and No. 2 HSBC) and BP ranks No. 6. Tech companies dominated North America’s top brands, with Google, Apple and IBM taking the top three spots.
Social media effect
Millward Brown noted that social media have become a larger driver of brand value in recent years. But the firm warned that social media can be a treacherous world, particularly for oil and gas companies.
“Consumer interest in pumping gas tends to be relatively low, whilst criticism can be swift when there are environmental concerns,” the report noted. “Nevertheless, because energy is a potentially emotive topic, (social media) can be used to enhance brands in this sector where there is a positive story to be told.”
However, Chirs Gidez, executive vice president of global energy, suggested that oil and gas companies shouldn’t be too worried about the impact of public opinion on the bottom line.
“Regardless of the degree of controversy surrounding an oil company, there isn’t any substantial or sustained impact at the pump,” Gidez said, according to the Millward Brown report. “People aren’t driving past the filing stations. They’re not cutting up their credit cards or driving grass-roots boycotts on social media.”
Also on FuelFix: