2017 ENTRY FORM - Comms CouncilBut changing brands almost inevitably delivers a significant drop in sales for an extended period.2 We identified three specific challenges to overcome:

2017 Comms Council New Zealand Effie® Awards

Entry Form – Category O

Best Strategic Thinking

Page 1 of 19

Entry Number: 01904

2017 ENTRY FORM (Note: word count 2,500)

Entry ID: 01904

Entry Title: Mercury: Energy Made Wonderful

Client: Mercury

Product: Electricity

First Media Appearance Date:

31 July 2016

Category: O – Best Strategic Thinking

Category

Description:

Campaigns that display particularly strong strategic

thinking. This is the thinking before the creative brief,

as opposed to the creative idea or execution.

Judges are looking for examples of where an

agency has taken a client’s brief, and through fresh

insight or inspired problem solving, developed a

ground breaking strategic direction. Judges will

need to see a clear delineation between the

strategic and creative thinking, and understand

how the strategic and creative platforms have or

will deliver long-term success for the brand.




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Entry Number: 01904

Title: Mercury: Energy Made Wonderful

Client: Mercury

Product: Electricity

1. Case Summary (0%) Please write a brief summary of the case study and results not exceeding 90 words.

Rebranding a company that sells an invisible product, in a grudge-purchase category where apathy rules?

Time to do something profoundly differentiating, long-term.

Not a fleeting creative splash. Something genuinely strategic.

Like Mercury’s new brand celebrating Energy Made Wonderful: achieving or exceeding every objective –

customer retention, staff engagement, brand scores, company performance, acquisition; everything – in under

a year.

Mercury now enjoys the lowest churn rate amongst the Top 5 retailers, and is #1 for net customer gain in

arguably the world’s most competitive electricity market.

Seeya, apathy. We’re on a roll.




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2. What was the challenge and what were the objectives? (10%) What was the market context, what was the strategic challenge the client faced, what was the

creative challenge the agency was set, and what were the short and long term objectives that

were set for the campaign?

Mercury Energy retailed electricity. Its parent – Mighty River Power – generated it.

Although these established brands were trusted, they were swimming in a “sea of sameness” with the other

large, traditional electricity retailers – seen as ‘old fashioned’ in a market rife with new tech-driven start-ups.

Both were losing salience. And Mercury Energy was losing customers.

In a market where people care about the size of their electricity bill, but are largely apathetic about who it

comes from,1 losing salience was a real problem.

It’s a vicious circle: because churn averages an eye-watering and terrifically expensive 20%, virtually every

company fights for customers month-by-month – training customers to switch for promotional offers, thus

driving churn.

1 Agency / MERCURY PROPRIETARY RESEARCH




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If you can’t break through with a strong brand, you’re in for a long-term pounding on price.

Success meant modernising – bringing two businesses together to create a single, strong, salient brand.

But changing brands almost inevitably delivers a significant drop in sales for an extended period.2

We identified three specific challenges to overcome:

1. COMMERCIAL: dramatically improve business performance. Take two aging brands out of the market,

launch a new one, and make it stick – changing customer, employee and investor behaviour in NZ’s

super-competitive electricity category.

Simply changing the logo wasn’t going to cut it.

2. STRATEGIC: build a strong new brand that changes behaviour, long-term.

Ehrenberg-Bass has proven a strong brand is critical in a commoditised market. It shortcuts decision-

making, creates trust, builds salience, and remains top-of-mind in trigger moments that vary widely.

For example: feeling confident saying no to a $300 acquisition offer from a competitor; feeling secure

enough to happily sign a long-term contract; or liking Mercury enough to recommend it to others – or

switch to Mercury at the next opportunity.

2 “Sales typically drop 10-20% immediately following a rebrand and it takes 3-4 years to restore levels” – Millward Brown, Steps to successful brand changes




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It’s not just about customers: we wanted people to invest in Mercury’s values and direction, as an

employee; invest in Mercury, as a shareholder; recommend other people invest, as an analyst; and

even partner with Mercury (governmental or commercial).

3. CREATIVE: drive an emotional connection with the new brand that means something to all those

audiences, in all those moments. Something that could help make the world a better place – for

generations.

Measuring effectiveness against those challenges:

OBJECTIVE 1. STABILITY. Using brand, retain existing customers – driving churn down, and keeping it down,

long term:

1.1 Customer churn – maintain pre-campaign 2.8%-point gap to market (18% vs 20.8%)

1.2 Customer satisfaction – improvement (i.e. +3 percentage points) from pre-launch baseline 58%

1.3 Customer brand relationship – improvement in drivers (i.e. +10) from 57 points, pre-launch

OBJECTIVE 2. PREPARATION. Using brand, help turn performance around – from the inside out:

- 2.1 External brand perception – improvement in brand measures across the board

- 2.2 Investor confidence – positive recognition from analysts; ideally, share price stabilisation and

growth

- 2.3 Partnership opportunities – demonstrate reach and engagement with customers through unique

channels (retail stores, content)

OBJECTIVE 3. GROWTH. Using brand, acquire new customers, in greater numbers and at lower cost:

- 3.1 Net customer numbers – improve to 0+ from -2800 in the year before launch.




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3. What was the strategic thinking that inspired your big idea? (25%) You need to convince the judges why this entry deserves to win based on your strategy. You need

to show how your market analysis, insights and interpretation were developed into a clever strategic

direction that unlocked the solution and was instrumental in the success of the campaign.

NZ’s unwritten electricity marketing rule?

Make it clean – or sell it cheap.

But unlike fossil fuel-driven countries, consumer research revealed that renewable generation is simply table

stakes in NZ.

And fighting on price is completely unsustainable.

However, while researching what electricity means to people, we discovered an opportunity to remind Kiwis

how amazing electricity really is, and what it can do – leading to our strategy, based on four strategic principles:

INSIGHT #1: Research told us NZers want someone to lead – not just show the benefits of sustainability, but

make energy exciting.3

PRINCIPLE: Be inspirational.

We developed a new brand promise standing for something Kiwis really care about. That brand promise:

Mercury inspires New Zealanders to enjoy energy in more wonderful ways.

INSIGHT #2: Make the new brand position tangible. Electricity is already invisible. It doesn’t need another ad

campaign based on abstraction.

PRINCIPLE: Focus.

Puns, metaphors, sock puppets – all out. Instead, we would champion one specific thing symbolising our new

brand promise. We didn’t have years to develop a radical new technology. We saw plenty of electronic

gimmickry. But what would make a real difference, long-term?

Insight #3: The audience is apathetic – accentuate the positive, and don’t ask too much.

3 Agency brand development research 2015




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PRINCIPLE: Create positive associations.

We needed to make connections – between Mercury, and something that would give people a wonderful, fresh

appreciation of electricity.

We reviewed innovative uses for electricity to find something visibly transformational, readily available, and new

enough to be “fresh”, but not futuristic.

Electric vehicles stood out as an option – but realistic uptake for your average Kiwi is still five years away.

Enter e.bikes.

It’s a moment you hardly ever get in adult life, but one you’ll always remember: the child-like delight of riding an

e.bike for the first time. We know – because we’ve watched, and filmed, grown people grinning their faces off.

Best of all, e.bikes were poised to take off. They just needed a bit of a boost.4

Insight #4: Actions speak louder than words. Leading also means delivering a real benefit to customers.

PRINCIPLE: Focus on “doing”.

Beyond making wonderful ads about e.bikes, we’d centre our marketing around their tangible benefits – actively

making it easier to like, understand, try, and buy one.

4 https://www.nzta.govt.nz/assets/resources/research/reports/621/621-regulations-and-safety-for-electric-bicycles-and-other-low-powered-vehicles.pdf

https://www.nzta.govt.nz/assets/resources/research/reports/621/621-regulations-and-safety-for-electric-bicycles-and-other-low-powered-vehicles.pdf

https://www.nzta.govt.nz/assets/resources/research/reports/621/621-regulations-and-safety-for-electric-bicycles-and-other-low-powered-vehicles.pdf




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4. What was your big idea? (5%) State in one sentence. What was your core idea that drove your effort? Consider ‘idea’ in the

broadest sense, ie., ranging from communication-based to the creation of a new service or

resource. The idea should not be your execution or tagline.

Celebrate e.bikes as the ultimate expression

of using electricity in more wonderful ways.

5. What was the creative execution and how did it bring the big idea to life? (10%) Describe the creative work that delivered the big idea. Give the judges a sense of why this was

a particularly innovative, original, progressive approach.

On an e.bike, even the steepest of hills disappear.

So we literally flattened hills – tilting the camera, to make New Zealand’s hilly land look flat. The star of our ad

rode effortlessly across the country, enjoying her freedom – and we delivered an available-right-now

demonstration of how wonderful electricity can be.

The key creative insight

Likeability is an extraordinary driver of acceptance and effectiveness – especially in avoidance categories5,6

So we made a very conscious decision: break away from category norms – techy, hippy, or cheap – and aim for

a likeable consumer-brand tone.

From geek, to chic.

The aesthetic: Fashionable, cool, relaxed, thoroughly accessible, and genuinely wonderful.

The music: We commissioned a track building on that wonderful feeling – so close to a real pop song that

people still ask us where to get a copy.

The tagline: One short, evocative statement underlined everything: Mercury. Energy made Wonderful.

The rollout: We created banner ads you could tilt-to-play-with, short films sharing the enjoyment, print ads

showing people enjoying their e.bikes in everyday ways, editorial partnerships, and more.

5 Ehrenberg et al 6 http://www.psychology.nottingham.ac.uk/staff/ddc/c8cxpa/further/Dissertation_examples/Rimoldi_08.pdf




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All including “aha-moment” headlines celebrating the “wonderful”:

Like parking – “Less carparks, more parks”

Or traffic congestion – “Peak happiness at peak hour”

And even your local commute – “College what hill?”

Not to mention the dreaded Lycra™ – “Activewear optional”

6. What was the communications strategy? (10%) Outline the media and communications thinking and strategy that brought the creative solution

to life in the most powerful and relevant way for the target audience.

We wanted all of NZ thinking and talking about our wonderful new brand, concentrating on three audiences:

• 327,561 existing Mercury customers

• 800+ staff

• 93,000 shareholders

We crafted a multi-layered campaign to reach Kiwis, INSPIRE people, MAKE IT EASY for them to engage, and

REWARD them for their behaviour:

- A wonderful DM piece giving existing customers a preview of Energy made Wonderful

- A gorgeous TVC, designed for repeat viewing – shared with staff first

- Innovative, inspirational mobile ads, flattening hills as people tilted their phones

- A completely re-imagined website bringing the campaign front and centre at launch – packed with

e.bike info, and making reasons to join and/or stay with Mercury easy to find and digest

- Building editorial and influencer partnerships

- Buying a fleet of e.bikes, building a branded trailer, and giving thousands of Kiwis their first e.bike

experience, at 30+ Ride Days around NZ over 6 months

- Celebrating people’s enjoyment of their e.bikes in Social.




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The geek-to-chic strategy delivered major benefits:

1. Increased efficiency and effectiveness. Showing e.bike benefits in everyday situations allowed us to advertise

in unexpectedly wonderful ways. There aren’t many electricity companies amongst fashion, culture, traffic, and

sports content – or on barrier arms in carparks (a little bit of “cheeky wonderful” given we were promoting

e.bikes)!

2. Opened up partnerships. Championing e.bikes let us negotiate with e.bike suppliers and retail networks

across NZ – providing up to $500 off e.bikes for Mercury customers, putting our bright yellow posters in their

windows, and hanging swing tags off bikes.

List all consumer communications touch points used in this campaign.

TV, Cinema, Online

Billboards, Ad Shells, Street posters

Radio

PR – Native & Influencers

Magazine and News platforms including advertorials

Digital banners – interactive & standard

Search

Social

eDM & DM to customer base

Bill messaging

Website

Partner POS

Ride Day Activations




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7. What was the $ spend? (0%)

Outline the media and production spend on the campaign. Use actual spend rather than

rate card. In the case of donated media please list the rate card value separately

from the bought media spend.

Media Spend:

Outline the media spend in relation to competition and versus last year:

Creative Production Spend:




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8. What other marketing efforts were used in conjunction with this campaign? (0%) List all other marketing or communications programmes not considered part of this campaign, that

also affected the results e.g. coupons, sales promotion, planned PR, sampling, direct response,

point-of-purchase, etc.

Indicate the extent to which any revised pricing, distribution or promotion programmes also

affected the results.

Any marketing communications that contributed significantly to delivering an integrated

campaign strategy and results should be described elsewhere in the entry form and any relevant

contributing partners acknowledged in credits separate to the entry form.

- No material change in the strength of acquisition pricing or offers, and no new sales channels.

- Mercury & competitors added contract products throughout 2013-2015 to combat churn.

- Free Power Days introduced in Autumn 2015 continue to be used to reward existing customers.

- Mercury joined Airpoints on 17th October 2016, primarily for existing customer loyalty

o 34% of customers signed up

o An acquisition promotion ran in October-February 2016




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9. What were the results? (40%) Outline the results achieved by the campaign against the short and long term objectives set, provide

conclusive proof that it was the campaign that drove the results and outline the return on investment.

In this section the judges will be looking to see a clear cause and effect between the campaign’s

breakthrough strategic thinking and business performance over time and why it is a stand out

effectiveness case study in this specific category. They will be awarding points on the following basis:

Overall achievement against objectives (10%)

Clear demonstration of sustained success beyond 6 months (5%)

Convincing proof that the results were a direct consequence of your campaign (15%)

Return on investment. This should be measured ideally in terms of additional profit earned or

revenue generated. (10%)

Mercury has achieved:

1. The best churn rate amongst the Top 5 retailers

2. Our highest ever levels of customer satisfaction

3. Our highest ever levels of staff engagement

4. The highest increase in customer numbers in the market

5. Our highest ever share price

The numbers are all up7. Only the most important number – the only one we actually wanted to fall – is down.

We’ve driven a massive drop in annualised churn, to just 14.6% – while the market trends upwards to 21.7%.8

OBJECTIVE 1. STABILITY. Using brand, retain existing customers – driving churn down, and keeping it down,

long term: ACHIEVED OVERALL

1.1 Customer churn – maintain pre-campaign 2.8%-point gap to market (18% vs 20.8%)9 – ACHIEVED, WITH

DISTINCTION (Graph next page): 10

7 Full details available on request. 8 Electricity Authority / EMI 2016-2017 9 Mercury internal data & EMI data, includes transfers to sub-brands Globug & Bosco 10 Mercury internal data & EMI data, includes transfers to sub-brands Globug & Bosco




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1.2 Customer brand relationship – improvement in drivers (i.e. +10) from 57 points, pre-launch: EXCEEDED

(+23)11 across all drivers of brand connection, particularly momentum:

11 Agency / Mercury Residential Tracker 2016-2017




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OBJECTIVE 2. PREPARATION. Using brand, help turn performance around – from the inside out: ACHIEVED

OVERALL

2.1 External brand perception – improvement in brand measures across the board: ACHIEVED

- Recognised and recalled by nearly 50% of Kiwis surveyed, with attribution hitting 57% in this low-interest

category:12

- 32% of people associate the Bee (solus, no lockup) with Mercury; +15pp from Sep 1613

- Top-of-mind awareness improved markedly:

12 Agency / Mercury Residential Tracker 2016-2017 13 Agency / Mercury Brand Asset Monitor 2016-2017




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2.2 Investor confidence – positive recognition from analysts; ideally, share price stabilisation: ACHIEVED;

EXCEEDED

- Hydro storage, climate, competitor activity, regulation – they’re all factors, but the brand’s role is

explicitly noted in NZX commentary: "Mercury's owners can have confidence that their business is

performing well, and they can see evidence of our customer-led strategy. We have real momentum in the

business."14

“Mercury’s results for the six months ended 31 December 2016 show strong customer loyalty around the

new brand.”15

- Mercury’s share price not only stabilised, it is trending upwards – hitting an all-time high:

2.4 Partnership opportunities – demonstrate reach and engagement with customers through unique channels

(retail stores, content): ACHIEVED

- NZX sees “significant progress on value-enhancing partnerships […] a leadership position in encouraging

the electrification of transport, supporting the adoption of e-bikes and EVs, and partnering on charging

infrastructure.”16

14 Mercury Chair Joan Withers on paying a dividend in April 2017 – https://www.nzx.com/markets/NZSX/securities/MCY/analysis 15 IBID – NZX commentary 16 IBID – NZX commentary




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- We own in-category association with e-bikes (23%) – (range 4-5% for other providers with next to no

misattribution)17

- The highest ex-category association with e.bikes (6% of any recalled alternative – beating bike brands &

retailers, battery brands, technology companies etc)18

- We’ve grown the e-bikes conversation: 41% of people have seen, read or heard something about e.bikes

in the last month or so (up 14%-pts from pre-launch, peaking at 46% in Apr 17)27

- People’s biggest source for hearing about e-bikes: TV. From 13% pre-launch to 57% post-launch (Aug 16)27

- As at Jun17, of those aware of e.bikes:

a. 61% believe they’re cool and exciting (vs. 52% pre-relaunch)

b. 45% believe an e.bike would enhance their life (vs. 36%)

c. 27% would consider (net definitely/probably) getting one in the next 12 months (vs 21%)27.

OBJECTIVE 3. GROWTH. Using brand, acquire new customers, in greater numbers and at lower cost: ACHIEVED

OVERALL

3.1 Net customer numbers – improve to 0+ from -2800 in the year before launch: FAR EXCEEDED.

12-months pre-campaign: -5,172 net switches, plus new ICPs, minus decommissioned ICPs

17 Agency / Mercury Brand Asset Monitor 18 Agency / Mercury E.bike Market Monitor




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= NET CUSTOMER LOSS of –2,79319

For the year ending Jul-17: +17,254 net switches, plus new ICPs, minus decommissioned ICPs

= NET CUSTOMER GAIN of +18,435 – a 21,228 ICP improvement20

- Mercury is adding more customers than anyone else – even with seven new competitors in market.

- All of Mercury’s main competitors experienced year-on-year switching losses.

- Proving aggressive acquisition doesn’t last, TrustPower reversed gains made through tactics stopped by

the Commerce Commission

- Never being the cheapest, Mercury Energy historically lost thousands of customers in autumn each year,

when prices are reviewed and cost becomes the dominant factor ahead of winter. This year Mercury held

net losses to almost zero:21

And ROI?

With an overall sales and marketing spend just 7.8% up on 2015-2016, we:

19 Mercury internal data & EMI data 20 Mercury internal data & EMI data 21 Mercury internal data & EMI data




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- Comprehensively avoided a potentially massive drop in sales22, while rebranding the country's 8th biggest

company23

- Improved our brand scores significantly.

- Lost fewer customers – driving down and cementing that churn gap

- Turned a 2793 net customer loss (2015-16), into an 18,434 net gain (2016-17). Each customer’s lifetime value

is commercially sensitive, but the turnaround in performance relative to the modest increase in cost illustrates

significant ROI.

For a long-term brand investment, this is a staggering first year return.

But ROI wasn’t even on the list for year one.

The campaign was required, and engineered, to successfully launch the new brand – by effecting positive change

in perception, retention, acquisition, and the company’s externally-perceived health, giving it a stable and strong

platform from which to grow for at least a generation.

And we’ve done that – Emphatically!

TOTAL WORD COUNT (count only words you insert in answer boxes 1 - 9):

22 IBID, Millward Brown 23 Market Cap, NZX data

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Documents

2017 ENTRY FORM - Comms CouncilBut changing brands almost inevitably delivers a significant drop in sales for an extended period.2 We identified three specific challenges to overcome: