Auto Ads Grind Gears

While advertising has long played a key supporting role in America’s love affair with the automobile, that role is undergoing some dramatic revisions right now.

In the past, marketing cars, at least on a national level, was as much about brand and image as anything else, with carmakers spending billions to convince consumers that the type of vehicle they drive is truly an extension of who they are. Playing a key role in all this was magazine advertising, as oftentimes that first bond between car and driver began with a reader lingering over a glossy page showcasing a shiny new vehicle racing along a winding stretch of highway or perched atop a mountain.

But in recent years many auto industry marketers have turned what used to be a lengthy multi-month courtship into the consumer equivalent of a fraternity rush week, and magazine advertising is feeling the hit. Obsessed with what those in the industry term "moving metal" in this uncertain economy, automakers over the past few years have dialed back the brand- and image-building strategies that play to the strengths of the traditional magazine creative. Instead they are opting for the fast and furious call to action, and that has impacted not only the messages they create but also the media they use to distribute those messages.

The Publishers Information Bureau notes that automotive magazine pages were off 8% in May, continuing a yearlong slowdown. On the ad revenue side, advertising tracking service CMR reports that automotive magazine advertising during the first quarter dropped nearly 5%, or $16 million, to $322.6 million from the first quarter of 2001. Total auto television spending, on the other hand, rose 5% to $1.724 billion, with all of that growth coming from national and spot buys. Syndicated and cable television were both off during the first three months. Local newspapers rose to $377 million from $366 million, national newspapers were up just 8% to $66 million, while national and spot radio combined was up more than 20%, to $62.5 million, from $49.8 million.

But one look at the myriad market forces at work right now in the automobile market in general — and automobile advertising in particular — suggests the magazine industry may consider itself lucky that car ad pages are down by only single digits.

The year started slowly for magazine advertising overall, primarily because of the aftereffects of one of the most tumultuous years in recent American history. Ellen Oppenheim, senior vice president and chief marketing officer for the Magazine Publishers Association, notes that ad pages at the beginning of any year are traditionally slower. "It’s not unusual for January magazines to have a little less advertising," she says. "Because of the budget year process for many advertisers, many haven’t made their calendar year decisions by then. What’s unusual this year was that the uncertainly of Sept. 11 made that period extended, because many advertisers did not know their messages or their budgets for the following year."

Most automakers, however, did have a marketing plan in place — to continue with the incentive programs that have been an industry staple for years but were heavily emphasized in the post-9/11 uncertainty.

Paul Taylor, chief economist for the National Automobile Dealers Association (NADA), suggests these incentive programs have a track record of success, as monthly auto sales fluctuate depending on the number of incentives in place. "There was a moderation of sales in May as incentives were repositioned and somewhat diminished and then a reinvigoration in June as some incentives were brought back," he says.

But make no mistake — those 0% financing and $2,000 cash-back offers are costly to run, and the funding for these programs has to come from somewhere. "There’s just one big pot of money at each of the car manufacturers," explains Jim Moore, executive vice president with Foote, Cone & Belding Worldwide. "So if they’re shoving more dollars into the local dealers’ incentives, the car manufacturers’ support is being pulled out of national dollars. When one goes up, the other goes down."

There is some ongoing concern in the auto industry that these incentive programs have created a sort of artificial demand by enticing consumers who would normally be in the market for a new car in six months to make their purchases now. But once you get on the incentive bandwagon, it can be painful to your sales to get off. "The auto industry has been very strong, but it hasn’t been a natural market," notes Richard Balsiger, vice president of marketing, product planning, and dealer network planning for the U.S. division of Isuzu. "It’s been very heavily stimulated by incentives."

These incentive programs do need a lot of advertising, but the messages aren’t ideally suited to magazines. Balsiger says the emphasis is now on what he refers to as tactical campaigns aimed at spurring a customer to walk into a dealership in a next few weeks rather than strategic brand building.

"There certainly is a place for print as a vital component in an advertising plan," he explains. "It has some great strengths in the ability to be very targeted. But it’s weighted more toward the strategic than it is to the tactical. And with most of the print vehicles, the longer lead times for the message create more limited flexibility."

The prevailing wisdom, among auto industry marketers at least, is that television, newspapers, and radio are much better for delivering the calls to action that incentive programs require. "Generally, the use of magazines is for image advertising," says Tom Healey, marketing analyst for J.D. Power and Associates. "If you’re advertising a sales promotion or an interest rate, you have to get it into something that’s fast-breaking. It may be you’re initiating a big-dollars-off promotion because the other guys did it last it last week and you’re getting hurt. And national newspapers, sometimes local newspapers, and TV and radio are the medium of choice if you want to get something out pretty fast."

This perception that they are somehow not fast enough makes the magazine world bristle, as many publications, especially weeklies, have bent over backward for decades — for example, by letting advertisers deliver an ad on Friday for an issue that reaches newsstands Monday.

But Coby Low, senior vice president and director of media planning with Ruben Postaer and Associates, says a quick hit requires more than just expediting the creative content into the media outlet. "Magazines have always been willing to work with you in terms of fast closes, and a lot of magazines are moving up their production schedules," says Low, who developed the campaign for the launch of the new Honda SUV, the Pilot.

But, she adds, "with television, when you have a spot on the air within 30 seconds, your message is out there. When you run an ad in a magazine, depending on how quickly the audience accumulates the magazine, it may take two months before you get the total audience of the magazine."

Low says Honda went with outdoor and television for the June launch of the Pilot, the first SUV totally built by the Japanese carmaker. The campaign is aimed at a 25-to-49-year-old demographic with a slight male skew. But, she adds, they will begin integrating print into the media mix this fall. "I think our spending on print is going to be flat this year, [but] our overall budget is flat as well," she says.

This emphasis on the short-term sale also means a greater shift toward local marketing. According to the NADA, dealership advertising nationwide has nearly doubled in the past decade, to about $6.5 billion. Even when you factor in that more cars are being sold now than 10 years ago, total dealer advertising per new vehicle sold is up from just under $300 in 1992 to $387 in 2001, with these costs being shared by the automakers and the dealership.

Isuzu’s Balsiger explains: "There are two pieces to this type of program. The first is where we would make a buy in the local markets for our message and include the dealer name as part of the ad. The other type is where we co-op with the individual dealer, but that dealer is obviously able to advertise what he wants and the way that’s best suited to his market."

Oppenheim argues that the magazine industry has a strong argument for some of these ad dollars as well, either with lifestyle publications targeted at specific markets or with some national magazines splitting their print runs so regional ads can be included. But the reality is that the vast majority of dealer marketing expenses is devoted to radio, television, local newspapers, and, to a lesser extent, outdoor, and is aimed squarely at a consumer who’s in the market right now.

NADA’s Taylor says even advertising through these local traditional media has been flat in recent years, with the biggest growth in 2000 and 2001 coming in the alternative category, which includes everything from ads on the sides of buses to sponsorship of local race cars. In addition, while not a lot of money is being spent locally on banner ads and other types of online creative, a staggering 92% of U.S. dealerships now have a website where consumers can research makes as well as check prices and models.

The Web is also making its presence felt in auto advertising on a national level, although that’s cooled dramatically in the past year. Every manufacturer now has a website that integrates traditional brand- and image-building with detailed information that potential buyers can peruse at their leisure. While the estimates vary depending on whom you ask, somewhere between 60% and 100% of consumers who are in the market for a vehicle visit a manufacturer’s website at some point during the buying process.

There are also a host of other Internet-based marketing tools, from sponsored racing games for both PC and PDAs to other types of contests aimed at both crafting an image and enticing the consumer to learn more about a particular car. Jeff Hicks, president of the Miami-based ad agency Crispin Porter & Bogusky (CPB), which works on the relaunch of BMW’s Mini brand in the U.S., says the Internet’s advantage as a marketing tool primarily lies in giving brands a chance to break the traditional advertising molds.

But while it is certainly growing in importance and works well for a car like the Mini — which has total U.S. sales around 20,000 units — the Internet is not yet a major long-term threat to take away money from magazines. Indeed, CMR reports total Internet car advertising suffered far worse than any other media, off 33% to $22.3 million in the first quarter. J.D. Power’s Healey says this is not a short-term phenomenon, noting, "Internet banner ads are down and probably not coming back."

Right now the challenge for magazines lies in recapturing some of those dollars lost in the chase for the short-term consumer. The good news is that auto advertisers are beginning to step back from appealing to consumers strictly on the basis of the latest deal.

Kerri Martin is guardian of brand soul (marketing director) of Mini USA and the driving force behind the award-winning campaign for the car’s relaunch in the U.S. The campaign, which launched nearly a year ago, attempted to appeal to the risk-taking nonconformist in everyone and featured a number of truly innovative print creatives, including several that shattered by traditional full- and half-page print ad mold. They included a Mini centerfold for Playboy, a Mini-themed cartoon pamphlet for The New Yorker and a recent Auto Week issue that used orange staples and enabled readers to slalom a little Mini down the center of the magazine.

Declaring that brands these days need a different nontraditional formula to break through the automotive clutter, Martin says that not just print, but all advertising media will have to adapt their approach to advertisers or diminish in importance. "My point of view is it’s not just the magazines that will be showing more flexibility and evolving," she says. "The traditional ad units are evolving as well and may slowly become a thing of the past as marketers become smarter and have to stretch a dollar a little farther."

But what worked for the Mini may not work for the Big Three automakers. While he had nothing but praise for the Mini campaign, Foote, Cone & Belding’s Moore pointed out, "Their volume is different than when you’re trying to move a million Chevrolets. It’s a little easier to do."

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