To prescribe a marketing cure for the auto industry's current woes at all -- let alone in a short article like this one -- would like be like providing cold medicine to someone whose stuffy nose is caused by a systemic, life-threatening disease. So, the key here is not so much to put forth a magic cure or two but to address some of the root causes of the current domestic auto situation head-on, combined with information that all of us in the interactive space can use to help Detroit be more efficient in reaching the right consumers at the right time, and to drive efficiency and results for an industry that is very important to the future of our country.
Causes, challenges and facts
There are entire books devoted to the full explanation of how we got here, but knowing the basics is important if you're going to have a conversation with someone deeply involved in the industry. Following is a quick summary of the challenges we're facing:
- Cost per vehicle must be competitive. The bottom line is that the factories operated by the Big 3 are just as efficient (in most cases) as the competition, but the because of a host of factors, the full scope of costs required to design, manufacture, and market, and distribute a Big 3 vehicle is $1,500 - $2,500 more than import brands. This isn't sustainable.
- It is now a fully global auto industry. Camrys and Accords are made in the U.S. while the Ford Fusion is made in Mexico (made = final point of assembly). This is OK, but “Buy American” can now be used by imports as much -- or more in some cases -- as the traditional domestics.
- The competition is only going to get tougher. Toyota and Honda were just the first wave of competition. Hyundai and Kia both posted year-over-year U.S. sales gains in January -- two of the only three manufacturers to do so. Korea is here in a big way and China and India are next, so being competitive with first-wave rivals isn't enough anymore.
- Many Big 3 vehicles are already as good as anything offered from Europe or Asia. It's easy to remember the last 30 years and say "if they only built products people wanted." Those products that people want are here in many cases. The new Dodge Ram, Pontiac G8, Cadillac CTS, Chevy Malibu, and Ford Fusion Hybrid are all world-class vehicles that deserve to be bought, not just considered, by Americans now. If you approach a conversation with the Big 3 as an attempt to secure marketing budget but think in the back of your mind that, in reality, the budget will be wasted, you are part of the problem, not the solution.
Ways to improve marketing The Big 3
There are the popular things to say, and then there is reality. Working with Detroit requires knowing some hard facts and to make informed decisions to spend money only in the most efficient ways. This advice is not based on personal opinion but rather derived from basic math that most, if not all, automotive marketers would believe in soundly.
Mass reach marketing tactics need to stop being used. It's not that TV should go away. A plan with 50, 75, or worse, 80 percent reach with 3x frequency needs to stop being the measure of success when evaluating a media plan. Feeling a knot in your stomach? Reading on might make it worse. According to the most recent data:
- Among all licensed drivers in the U.S., only 29.9 percent will buy a vehicle (new or used) in a given year. This data is a few years old, meaning it's certainly much less now.
- Within that pool, only 27.7 percent will buy a new car in the same year. This means that in an entire year, just over 8.3 percent of licensed drivers will purchase a new car.
- Forget that those 8.3 percent then break down into compact cars, family sedans, crossovers, and so on. Let's be generous and say we should be targeting all 29.9 percent of the population that will buy any car and bump it up to 40 percent just to sway some of those folks who are on the fence and account for some spill. We're still at 40 percent, max!
It doesn't matter whether it's a launch, a sales event or you-name-the-occasion -- reaching more than 40 percent of the market is simply a waste of marketing dollars. Don't get me wrong. Using TV can still be very effective, especially using cable and niche programming to target audiences that index strongly against the audience. However, online should fall in line too. Homepage portal takeovers are untargeted and inefficient, as is selecting an ad network because of its massive reach. (Note: Full disclosure: Goodway Group owns and operates the Beep! Automotive ad network.)
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