• by Larry Dobrow , May 12, 2003

A study commissioned by the Magazine Publishers of America (MPA) revealed that automobile manufacturers would see increased sales if they advertised in magazines with greater frequency, the organization announced yesterday.

The study was conducted by marketing-effectiveness research specialists The Hudson River Group (HRG). It was endorsed by the MPA but executive vice president/chief marketing officer Ellen Oppenheim claimed the result was no slam dunk. "To be honest, it was a huge risk on our part," she said. "We invested significantly [in the study] with the belief that magazines would be shown to be effective."

For the study, HRG's researchers convinced a "major automotive company" to share sales and advertising data for the period between January 1999 and December 2001. The researchers then analyzed three different nameplates within the company, with a host of variables thrown in for good measure (old model versus new model, consistent brand strategy versus recently repositioned brand strategy). The automotive company shared its data on the condition that it remain anonymous.

The study's findings showed advertising remains an important contributor to automotive sales volume - which isn't a surprise, as ROI-conscious marketers would have long since withdrawn the dollops of dollars devoted to ads if they weren't seeing results. Slightly more revealing, however, was the efficiency of auto advertising. Incremental sales per dollar spent ranged from $3.47 (for brand B) to a robust $19.97 (for brand A), with the three-brand average sitting at $9.80.

Television and magazines proved the most efficient venues for automotive ads, with magazines significantly outperforming what the study dubbed "secondary media": outdoor, radio, Internet, newspapers and Hispanic television. These media averaged $3.62 in incremental sales per dollar spent; magazines averaged $8.23. "Each [advertising] dollar invested in magazines generates a higher level of sales," noted HRG chairman and chief executive officer Sean Rice.

While television proved a more efficient ad buy than magazines for all three brands, the study concluded that TV advertising reached the point of saturation (after which additional ads had no significant effect on sales) 48% of the time for the three brands, as opposed to 1% for magazines. What this suggests, according to Rice, is that automotive companies would benefit from reallocating some of the "excess" dollars into another efficient medium - say, magazines. "We can shift saturated dollars from TV to magazines, and drive 10% increases in [sales] volume due to advertising," he said.

Finally, the study found that magazine advertising drove an average of 2.2% of total sales volume (2.9% for brand A, 2.5% for brand B, 1.1% for brand C). This compares favorably to HRG's "All Industry" average of 1.9%. Given the oft-quoted J.D. Power & Associates statistic that a percentage point in the automotive industry today is worth nearly $4 billion, magazines are now armed with quantifiable results about their effectiveness within the automotive category.

When asked whether the participating automotive company had increased their magazine advertising as a result of the study, Oppenheim pointed to a pre-approved client quote: "...The findings have added to the company's research knowledge base and helped validate the strategic role of magazines in the mix and the direction the company has taken in their use."