Power firms' marketing budgets surge

JASON KRUPP
Last updated 05:00 20/12/2012

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Major power companies appear to be fighting harder than ever to win customers from rivals, according to the latest Nielsen advertising numbers.

The data show total advertising spend among retail electricity firms rose 42 per cent to $13.6 million in the 10 months to October versus the same period last year.

The biggest spender among retailers was Genesis Energy, which racked up costs of $4.8m in the period, up 16 per cent on a year ago. Meridian Energy's ad spending rose 11.4 per cent to $2.9m, and Contact Energy spent 18 per cent more in the period at $2.4m.

However, it was Mercury Energy's "Good Energy" television campaign, featuring musician Tiki Taane, which chalked up the biggest increase in spending at $3.2m, just over 46 times higher than in the previous year.

TrustPower and Powershop were the only retailers to cut their advertising costs ($207,000 and $242,000 respectively), compared with $393,000 and $429,000 previously.

The Electricity Authority, which lifted its ad spending by 60 per cent to $3.3m over the period, said that the rise in spending stemmed from the Government's "What's My Number" campaign. The flow-on effects saw high levels of customer churn.

As it stands, industry figures show about 30,000 Kiwi households change their power provider each month. That is down from more than 50,000 when the switching campaign started, but it remains near the 12-month moving average peak of 40,000 seen in April, making New Zealand one of the most flexible markets in the world.

On a regional basis, however, New Zealand lags behind Victoria, in Australia, which is regarded as the most flexible power market.

Ari Sargent, who heads Meridian subsidiary Powershop, said he was expecting ad spend, as well as marketing costs on door-to-door campaigns, to pick up as the market moved along the Victoria trend.

That would probably see the big power firms "competing with each other by shouting louder", he said.

He conceded that it probably would not make much difference to the end cost that users paid as total retail industry spending - currently $13.6m - was relatively modest in the grand scheme of things.

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- BusinessDay.co.nz

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