Seeking Customers, Not Bodies

Each year, automakers spend about $10 billion in advertising to change Americans' attitudes about the new cars they wish to buy.

"Rising above the clutter is a big challenge," says Tom Peyton, national advertising manager for American Honda. "Today there are 345 models of cars in the market. Fifteen years ago the number was half of that."

Key to success in this voracious marketplace is branding, Peyton says. His company spends over $433 million in advertising Honda cars across multiple media and he says, "Our product and our brand must win the admiration of our consumer."

Eric Johnston, director of marketing at Mazda, points to another dimension of clutter: media fragmentation. Mazda spends over $230 million here in the United States (according to TNS Media data quoted in Automotive News) and was an early fan of the online medium. "In the beginning we used online primarily as a measurable way to deliver leads to our dealers, but over time, the medium has become more mature. We participate in the upfront buys for online media (on automotive Web sites). We have also advertised on enthusiast sites as well as on Maxim for the Mazda 3 launch."

Johnston likes the lifestyle aspects of cable television and often runs advertising on ESPN channels. "When we run commercials with them, we will often negotiate a presence on ESPN magazine and," he says.

Honda uses multiple media in synergy as well. One of the company's most successful TV campaigns in the United States in recent years was "It must be love" which depicted consumers who looked like their Hondas. Taking advantage of the interactivity of online, Honda asked consumers to submit their own photos to match their cars at Thousands of consumers participated.

Regardless of the media they use, carmakers have a challenge in persuading consumers to change their attitudes about such a high consideration purchase. Dynamic Logic's MarketNorms database bears this out for online advertising. Although, on average, automotive campaigns significantly increase all five core branding metrics, carmakers as a whole have

Launches get biggest dollars

"The main trends in the automotive advertising market that I've seen in recent years have been the focus on incentives and new model launches. Thirty to 50 models are redesigned or introduced each year," says Chuck Hoover, senior vice president of marketing at CarsDirect.

A look at MarketNorms data offers some clues about why automakers and their agencies concentrate so much of their media attention to "new product" whether it is truly a never-before-seen-design with a new name, or an old model dressed up in automaker's lingo as "all-new." The graph below compares attitude changes caused by new product advertising with product that is not a new model. Brand awareness, ad awareness, message association and brand favorability are all influenced more by new product advertising.

Change is in the air

Everyone I spoke to sees changes ahead for the ways cars are marketed in the United States. CarsDirect's Hoover expects more big-budget brand level advertising, like Nissan did for its full line, in addition to the targeted model-level campaigns. Johnson of Mazda expects to see more focused positioning and more targeted media. "We are seeking customers, not bodies, he says, adding that Mazda is finding a considerable success with the lifestyle aspects of cable television shows.

Honda's Peyton has more strident predictions for his competitors that have relied on incentive to goose up sales. "At some point the piper will be paid," he says. "At Honda, we have taken the high road and we expect to be at a distinct advantage [for not having used incentives], five years from now."

Frequency matters

The branding metric automakers care about most is purchase intent. Most state laws prohibit direct to consumer sales so the objective for carmakers' advertising is to drive consumers to dealer showrooms. Let's look at how frequency of online advertising impacts purchase intent:

The graph shows change in purchase intent plotted against frequency of online advertising and you can see an upward trend to about seven to nine ads per consumer. Now most of Dynamic Logic's studies are conducted over a three- to six-week period so it is possible that the frequency curve may look different for sustained campaigns of many months or fixed placements and annual sponsorships.

The age paradox

Most young people don't have enough money to buy a new car, yet a good chunk of auto advertising seems to target youth. I asked Peyton to explain the paradox: "Most of our buyers are in the 40 to 60 age range, and they do have money to buy a new car. But while you can sell a young person's car to an older person, you can't sell an old person's car to a younger person. Our advertising portrays youthful activities and targets a youth mindset rather than youth audiences in particular."

MarketNorms data does not show any significant changes between the response of young and old people, supporting Peyton's observation.

What about gender? Surely with Volvo touting a car designed by women for women there must be differences in the way men and women respond to advertising. MarketNorms data surprised me, showing no appreciable difference by gender. This was confirmed by a young man I know who works in the new car retail business and has sold Oldsmobile, BMW and recently moved to selling Suzuki which he appears to like most. "I'm bisexual," he declared to me over a drink, "All I need is people."

Gunjan Bagla is a mechanical engineer and entrepreneur who has been active in marketing and media for over 15 years. He is presently responsible for Dynamic Logic's business with movie studios, automotive companies and others in the Southwest. His writing has appeared in Direct Marketing, iMarketing News, Silicon India, Channel Seven and ClickZ.