SHELL’S HARD GRAFT

Image-hit Shell is to ride on the back of household brand names Ferrari and Lego in its first global advertising campaign. But will the 50m campaign, revealed exclusively in Marketing Week, be enough to overcome its well-documented troubles in

By the time Shell unveils its first global advertising in the UK next January, the 50m campaign will already have travelled half way round the world.

But significantly the world’s biggest petrol retailer is not travelling alone.

By the end of the year, the populations of Japan, Scandinavia and Central Europe will all have seen the first ad, featuring a Ferrari being refuelled at high speed by a Shell plane as it drives through the Mojave desert; and a second ad which borrows heavily from the Italian racing company’s heritage. Both support Shell’s first truly global sales promotion programme, which is expected to reach a billion people in over 100 countries.

Both ads attempt to borrow the brand values of other manufacturers to give Shell credibility. There will be further executions early next year to promote links with toy maker Lego. And if the campaign, exclusively revealed by Marketing Week, can also persuade people, mainly in the West, that Shell’s involvement in Nigeria and its controversial attempt to dump the Brent Spar oil platform in the North Sea were not a true reflection of the company, then the architect of this new campaign will be satisfied.

The strategy of grafting the brand values of other companies onto Shell is the brainchild of Shell International’s marketing director Raoul Pinnell – a process the former NatWest marketing director has coined “image transfer”.

It may be more accurate to say Shell is seeking a brand transfusion. In a commodity market traditionally driven by price, price and more price promotions, Shell wants both Ferrari’s sexy, sporty image and the family values of Lego. However, the campaign will have to work on several levels to satisfy the demands of Shell – appealing to the staff – or “brand ambassadors” as Pinnell calls them – in its 44,000 stations and to its shareholders, just as much as consumers.

Pinnell clearly thinks that Shell has an image problem but denies the campaign is a direct response to Brent Spar and Nigeria. “Much of the Far East don’t even know where the North Sea is and even if they did they wouldn’t care,” he says. “This work has nothing directly to do with these issues, but it does add to your emotional bank.”

The Lego and Ferrari promotions associate the Shell brand with fun and pleasure, distancing the company from the serious public environmental and political issues which have dogged it. It is a straight forward emotional appeal to counter rational criticism, which does not suggest substantive change on Shell’s part and could be purely cosmetic.

Ferrari gains sponsorship and royalty income from model car sales, while Lego gets improved global distribution. But arguably, if the plan succeeds, Shell gains the most because it gets to use the brand values created by others without actually having to adopt them.

From a financial point of view, it could be said to be already working. Last year, Shell ran a limited promotional campaign in some markets based on a collection of model Ferrari cars – the one-off promotion managed to shift 35 million units.

“If Shell is a little traditional, old and dull, Ferrari is young and lively,” says Pinnell. “And if Ferrari is young and sexy, Lego is family and children. Unless you are thinking about the image and appeal to young people you will be seen as yesterday’s company. PepsiCo and Coca-Cola, are all borrowing: they borrow pop music, or youth.”

But not quite as explicitly as the new global ad campaign borrows from Ferrari. It is a public acceptance that Shell needs support from others if it is to have any chance of redressing its image problem – it cannot do it alone.

Pinnell argues that other companies will do the same in the years to come and cites McDonald’s and Disney as the model for global partnerships because they use promotions in a strategic rather than tactical way to attract families.

He admits to copying the example of the McDonald’s happy meals promotion for the Ferrari and Lego tie-ins. Next year’s promotion with Lego involves the use of ten exclusive small box toys and a big Ferrari Lego car carrying a Shell logo – Shell wants to shift between 20 and 40 million units of Lego globally. It will make Shell one of the world’s largest toy distributors.

Though Ferrari is not contributing, Lego will partially fund the ad campaign next year. It hopes to improve trial of Lego products.

The two Shell/Ferrari ads, entitled “Journey” and “Refuelling”, were shot by Shell’s two global roster agencies, Ogilvy & Mather and J Walter Thompson respectively and support Shell’s lubricant products and petrol range.

Shell re-established its links with Ferrari last year after a 23-year break. It had spent the previous two years backing the McLaren Formula One team but the company is now extending that sponsorship to put its association at the core of its global marketing activity.

Pinnell says this is partly to get round the sponsorship clutter that dogs major global sporting events and maximise its recognition among Formula One fans.

“This kind of long-term strategic partnership cuts through the sponsor clutter,” he says.

More importantly, the campaign marks Shell’s breakaway from the traditional promotion of the category. The old fashioned rational style of petrol advertising is being dropped in favour of soft sell emotional brand image.

Earlier this year, rival BP launched a branding campaign using the endline “BP. We keep you moving”. But this ad will eventually be rolled out in 90 different versions rather than the two Shell is employing.

“For new markets, quality assurance was the important selling point, you could be ‘Sure of Shell’,” says Pinnell. “When you have the quality assurance and others have it too, the margin of difference is small.” Shell no longer has a unique selling point.

The first global advertising is also an attempt to cut through the media clutter faced by local Shell companies. “In the Far East, the clutter is even greater than here or the US. There are so many ads in magazines and newspapers. The consequence is that advertising has to work even harder to break through.”

However, Lowe & Partners European chief executive Jerry Judge says that Shell may be wasting its money: “Petrol marketing is still all about location, location, location. You can’t change consumer views of Shell through brand advertising. Consumers’ experience at these stations is more important than brand advertising.”

He also says that the only way to have an impact on market share in petrol retailing is through sales promotion activity.

But Pinnell argues Shell is no longer simply in the petroleum and oils business, where sales promotion is the main focus of marketing activity. “We are involved in food retailing, loyalty programmes and with these new promotions we will be one of the world’s biggest model toy distributors – it calls for a different approach.”

Though the brand advertising is intended to help transform consumers’ views of Shell, Pinnell is also concerned to improve the company’s market share in different markets and that is where the global sales promotions fit in.

There is another reason why the idea of global campaigns has been well received by Shell bosses – it could cut as much as $15m (9m) from the promotions budget and improve efficiencies.

Where previously each market produced its own branding campaign, now there will be one, although campaigns for the Smartcard and price promotions will continue on a market-by-market basis. “One of the reasons for success was Shell’s local focus,” says Pinnell. “A year ago not many people in individual markets would willingly buy into the idea of something being co-ordinated on a global basis because it hits at the notion of local power. But now the cost argument is absolutely clear.”

With high quality, expensive single commercials generated globally, Pinnell argues that you could never do at a local level because “complexity costs money”. The production cost for the Shell/Ferrari ads was $3m (1.8m).

The company started cutting costs last year by restructuring its global advertising. It centralised its European advertising through JWT and renegotiated its media buying contracts with CIA (MW November 11 1996).

Though the new global campaigns signal increased centralisation of Shell’s business, Pinnell says the company is resisting imposing global solutions on local problems. “The only kinds of standardisation you will get in Shell stations will be in terms of brand image and quality of service.”

However, there are variations in service at different stations. In some Far East markets, attendants doff their caps to customers; in some in South America, wash and shower rooms are included; and in South Africa armed security guards stand on the forecourts. From Paraguay, where Shell holds a virtual monopoly, to Italy where it is fourth in the market, Shell has to make local responses to local problems.

The company also has a new structure in place to handle global promotional tie-ups whereby all the costs are paid for out of the profits generated by the promotion. A further illustration that cost saving is at the heart of this company. The TV commercials to support the Lego promotion, created by JWT or O&M, depending on which wins the business, will be paid for from the profits generated by Lego sales.

Locally, Shell operators buy the required models from a central organisation and can then sell them, swap them for Smart points or use them to entice people to take a smartcard, as in Australia where the Lego tie-up was tested.

In the UK, Shell has been less concerned with its brand image. The market has been disfigured by the entry of the supermarkets and a vicious price war sponsored by market leader Esso. Shell responded last week by buying 450 Gulf petrol stations to expand market share. It has also been involved in trying to get the troubled Shell Smart card consortium, being tested in Scotland, off the ground with companies such as Dixons, Commercial Union and Lloyds TSB.

Shell is embarking on a risky strategy investing so much in something as volatile and changeable as motor racing. It is using the heritage and values of Ferrari and Lego to boost its own image – it needs to borrow from others because it cannot make out alone.

But if Michael Schumacher crashes or a Ferrari ex-plodes on the track Shell could have an even bigger repair job on its hands.

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