When the Internet began, it was a theorist's fanciful dream. Now it has caused a cultural change in how public companies communicate in the new economy. Many are able to capture greater "mindshare" than ever, but the energy sector seems reluctant to scream "Look at me!" the way other sectors do. That's one reason investors put their dollars into Internet and other high-tech alternatives and keep the window shut on energy stocks. The energy sector isn't competing with its peers for capital; it's competing with every public and private company in another sector that has an idea to sell. Citizens of the new economy are well informed and increasingly in tune with financial-world events, and more inclined to invest, although selectively. What do they know of the oil and gas business? And, more specifically, how will they know if your company can differentiate itself from its peers? Competitors in the new economy are fearless of marketing themselves, to capture mindshare of these citizens. How do we know this? Just ask any friend or neighbor to name the biggest or most well-known firms in computers, software, healthcare, biotech-even pet stores. Then, ask them to name the best land drilling company. Or the biggest natural-gas producer in Texas. I know that no one in my neighborhood can tell me who builds the world's largest semisubmersible rigs. Technology now makes it possible for an operator to drill deeper, faster and cheaper and find the energy we need to support the longest financial expansion the world has ever known. And no one knows about it! Why is that? Because independent oil and gas companies don't scream, "Look at me!" They do scream, "Why is everyone looking at them [instead of me]!" No doubt, some kind of communication is lacking. All of this is about to change. And it needs to, quickly. Just consider this: there are roughly 65 mutual funds in America that invest in natural-resource stocks. Portfolio managers can't be expected to buy large blocks of shares in every upstream, midstream and downstream energy entity that exists. First, they must consider the trading liquidity of the stock: a person managing $500 million of assets and looking to put 5% to work has to look at companies with a market cap of more than $250 million that trades at least $5 million worth of shares daily. It would take just a week or two to move into the stock without the price moving away and, more importantly, the portfolio manager leave the stock quickly. Second, a portfolio manager has many energy-company stocks to choose from. There are about 19 independents-oil companies without midstream or downstream assets-with a market cap of more than $1 billion: seven between $500 million and $1 billion, and 15 between $250- and $500 million. (There are 58 publicly traded independents of this type with market caps below $250 million.) What do these portfolio managers know about oil and gas? G. Bryan Dutt of Ironman Energy Capital LP, Houston, was quoted in this publication a few months ago as saying Shell and Exxon Mobil are the only true oil and gas investments and "everything else is a trade." West Coast-based portfolio managers at a recent energy conference in New Orleans said, when asked, that their portfolios hold Shell, Schlumberger, BP Amoco and similar energy-related stocks. They inquired, in return, "I'm here to learn about who else operates. Got any good names?" Does the market know who you are? Where you fit, how you operate, who your people are? A new marketing perspective could rescue the energy industry from irrelevancy with investors. Companies must be in the marketplace every day with their story, but investor relations officers (IROs) can't be everywhere, around-the-clock. Or can they? No longer can management sit idly by, expecting investors to seek them out and chat. Investors can click on Investorguide.com, Cnnfn.com, Quote.yahoo.com or any number of web sites and get stock quotes, charts, earnings estimates, stock-split data and insider trading information. Securities and Exchange Commission filings are easy to obtain, such as through Edgar-online.com and 10kwizard.com. Getting numbers into the hands of investors is simple; who is explaining to investors the meaning of these numbers? IROs spend up to 80% of their day talking with analysts, working on models. There's little time left for setting up their own agendas, road-show schedules, advertising campaigns or editorial-board meetings with the likes of The Wall Street Journal, Houston Chronicle or Oil and Gas Investor. Further, the IROs are hamstrung by increasingly smaller budgets and staffing. When times are difficult, the investor-relations effort usually gets cut first. But the CEO keeps asking how to attract buyers to the company's stock. Sorry Chief, you can't have it both ways. An energy company in the new economy must embrace the idea that to increase shareholder value, the old ways of communicating with The Street must change. There is an interconnection between investor relations, public relations and marketing relations. Each is as invaluable as prestack depth-migration analysis. These marketing disciplines distinguish one company from another. Yet, no one's tackling all three at the same time. The best tools at hand for the new-economy energy company are advertising, media, web and Arrows™. There are alternatives to breaking through the clutter with your message. It's important to note that institutional investors are saying loudly to us, "Live within your means." Outspending cash flow and not returning economic value are now passe. E means earnings, not expectations. Now is not the time to dust off those plans to drill that deep wildcat offshore Madagascar. Rather, this is the time for companies to begin comparing ROIC (return on invested capital) or EVA (economic valued added) or P/E (price-to-earnings) ratios, rather than cash flow or enterprise value multiples. Natural gas just hit a three-year high-in June! But investors are not yet convinced the group is capable of making money, even with $30 oil. Clearly, more communication-and of the right kind-is needed. If not at $4, then when? The primary goal of oil-company advertising is to increase investor awareness and acceptance, to cause positive action on a company's common shares. Every upstream company has a retail component, a product, related to its story-the common stock. Raising awareness of the company's brand-its ticker symbol-can attract the attention of new individual and institutional investors. What is your purpose? Is it to build brand image, break out of the "independent clutter," persuade investors that you are supplying natural gas, the environmentally preferred energy source? Demonstrate the economic value of your efforts in a particular basin? A study to determine the drivers of reputation, completed by the Corporate Branding Partnership, Stamford, Connecticut, and the Association of National Advertisers, concluded that "the more a company spent on advertising, the better its chances of improving its reputation." The CBP research, which was of 50 companies within the Fortune 100 over seven years, determined quantitatively that there is "a stunning correlation between advertising expenditure and image, and image and common-stock price. Earnings growth and stock performance consistently rose and fell with image." The study also found that image affects the way the stock market evaluates a company in terms of P/E ratio and cash flow multiple. Think of the image of some of the dot-coms that have not made money yet, but whose stock price is very high, based on image or perception. There is more to advertising than spending money, however. Simply look back on the past 18 months as venture-backed tech startups burned through millions of dollars on haphazard, profligate advertising. The most egregious of these never paid the publications for advertising, forcing some publications to demand payment in advance from startups. Our recommendation is to begin an advertising campaign (paper, web and radio) with influential trade and national outlets, coupled with prominent local newspapers where the company has a significant operating presence. The primary goal of this campaign is to bring to the forefront the company's work to meet the rising demand for energy in North America (read: the U.S.). The ad campaign should also put a face on a company's people and services-thus eliminating the negative thoughts of "Big Oil" from the minds of the investing public. The secondary goal is to generate investor and analyst interest in common equity. There are three ranges of efficiency in an advertising effort. Dollars spent in the first range have the greatest effect on the company's image. Called the "breakout efficiency," the cumulative dollars spent here increase the chances for a company's image to break out from its competition. The purpose of the advertising effort is to begin creating an image of the company's operations and potential. As the company continues executing its plan for shareholder value, the effect on its image reaches more of its intended audience as its cumulative advertising dollars increase. The death of print has been greatly exaggerated. There is power in using consistent visuals and key messages with any branding campaign. The "Are you Connected?" campaign by Oildex.com is an example of going from "don't know" to "known" in a very short period of time. The company began an advertising campaign in February to battle the ad clutter from the oil-equipment auction sites. During the first 60 days of the campaign, Oildex.com was featured in three major investment banking research pieces. It also saw all of its marketing metrics rise exponentially: web hits, requests for product demos and requests of its management team to give their "vision" at key conferences. The print exposure for Oildex.com is active and selective. People who look at and study print ads do so for longer periods than they do TV commercials. There has been no measurable difference in ad performance between placement on the right or left side of the page. The full-page size is important to rise above the clutter of the ubiquitous quarter-page squatter. And finally, the back of a magazine is as good as the front, with cover positions scoring higher retention marks. Worth a thousand words Speed is the key on the Internet. The same is true for writing news releases for the new-economy investor. Headlines are what draw people in. "XYZ Company Reports First-Quarter Results" will not get a busy and selective person to stop and read the news release. We perk up when we see action and descriptive words like growth, record, new or exciting. Think about the TV-news 10-second-teaser, or how the Internet portals use headlines to bring surfers in. News for the new economy investor must be short and more on point. Made a new discovery in East Texas? Put that into the headline, write the lead paragraph in 40 words or less, and have a quote from a senior official or key employee describing the well's impact. Finally, put your URL next to the ticker in the first line of the news release, with a paragraph that says, "For more information on this announcement and the company, go to our web site." When they click, the URL brings them to a richer, more in-depth news release. Broadly defined, the web is now the great equalizer for investors large and small. They are information centers to your company that are accessible 24/7 via any number of browsers and ISPs. So why aren't you using your web site to make it easy for investors to understand how you're creating shareholder value? Your web site should tell people what just happened-but more important, it should also tell people where you're going next. Arthur Levitt, SEC chairman, has said in speeches hither and yon that the commission sees the web as one way of meeting minimum disclosure. However, companies view the web as a static brochure, making updates only when someone has the time. The web is like any other public document. Someone in your organization should review the data and update it often. Add a button for investors or interested parties to click on to view your latest presentation, or a map that shows the acreage in your last acquisition. Remember, it's information flow that investors demand. Investors have always shown a willingness to own the stocks of companies they know. A final thought about the web and the Internet. Recently a client held a conference call with investors. This small-cap company used the phone and web for the call, and chose to put 12 slides on the web site to pictorially describe the quarter and where the firm is going. The last time it held a conference call, fewer than 20 people tuned in. This time, 25 dialed in and another 50 used the Internet to listen to management's description of the quarter and view the slides. Additionally, the company e-mailed the conference call slides and audio replay to another 60 targeted buyside and sellside analysts. All told, 135 people were made aware of the company's 70% rise in production, record revenue, earnings and cash flow and were given an overview of an important acquisition completed subsequent to the end of the first quarter. The stock traded three times its daily average volume. Go on the road If the only time you're out telling the story is when times are good, you're working counter to your entire marketing efforts. The slogan is "buy low, sell high." Telling the story after the stock has moved up with the group keeps the money folks away. What is more important is telling the story when everyone around you is staying home. For the past 18 months, we've had clients on the road when everyone around us was warning of a difficult market for the sector. During this period we were very cognizant of one important fact-not a single company ceased trading because no one cared. In other words, buyers and sellers came together every day transacting business over the sector's common stocks. Too many times companies over-rely on the chairman, president or chief executive to be the main spokesperson. Companies need to understand that there are tremendous opportunities for middle managers, scientists, marketers and engineers to tell the story. This creates in the mind of the buyer or analyst a sense of depth and breadth. One of the best compliments that I've ever heard came from a portfolio manager is "I like this company because every person I talk to, from the chairman to the production superintendent to the secretary, knows the story and tells the same one." ust as you can't have too much fun, you can't attend too many conferences. Create teams to tell the story and speak at every conference. One of the biggest complaints from executives is that they attend too many conferences and that there are too many conferences. I disagree. If anything, there are too many conferences in New York City. We believe companies aren't attending enough of them. If you're trying to reach a buyer outside of the 65 natural-resource funds, you're going to have to work your way into every investment conference you can. After all, we've never hear a geoscientist complain "We're shooting way too much 3-D seismic," or an engineer lament, "We're producing too much oil and natural gas." The oil company is competing for dollars with companies that have nothing to do with finding or producing energy. Meet with investors on the West Coast or Middle America. Compare your story and metrics with those of your financial peers-those with similar balance sheets, P/E ratios, debt ratings and top-line growth. The portfolio manager (who is in most cases a generalist) will become more aware of the growth and potential of XYZ Oil Co. Not every portfolio manager is an oil and gas industry expert; numbers must be presented in a fashion that emotionally moves a portfolio manager to action. Investors are everywhere. The glass is half-full. This sector has a lot to tell investors in the upcoming months and years. Taking the old-fashioned route of using snail-mail and telephone to tell your story puts it at the bottom of the in-box stack. Changing the method of information outflow is the key to breaking through the clutter. After all, this is the new economy. And investors are capable of getting information in new ways. Gregory B. Barnett is founder and president of EnerCom Inc. He has more than 19 years of financial and managerial experience in banking, oil and gas, public accounting and financial public relations for public companies. He is a member of the National Association of Petroleum Investment Analysts and National Investor Relations Institute.