Commentary

The Auto Bailout And Online Video Advertising

As I write this article on Thursday morning, Dec. 11, the headlines are that the House passed a $14 billion government rescue plan for the Big 3 automakers. [Update: the bill was later rejected by the Senate, but we are still looking at the possibility that the Big 3 will continue to exist and try to work through their problems, while avoiding bankruptcy.]

The auto industry has not only been a fixture in our hearts and minds for nearly 100 years, but also in the economy. According to Michigan Governor Jennifer Granholm, it supports one out of every 10 U.S. jobs. Closer to home for those of us in the ad industry, the Big 3 accounted for 3.3% of measured U.S. ad spending and roughly 6% of the revenues for the top four agency holding companies. One could be forgiven for watching this saga unfold closely.

Those are some of the reasons why the entire online world went abuzz when General Motors' CEO, Rick Wagoner, said that part of G.M.'s strategy toward a more efficient model would include a "substantial" shift of its $500 million budget to online advertising. Online's efficiency and effectiveness versus other media is already well known. But think about the potential opportunity this creates: if the other automakers survive and follow suit, the online industry could have a much stronger 2009 compared to the flat to slightly up year that most are projecting, out of nowhere. And in a recession!

In my opinion, online video is the ultimate brand/response tool for automotive advertising. Combining sight, sound and motion with the ability to customize vehicle options and set dealer appointments make for an unbeatable combination. However, while we in the industry debate how to build a predictive video behavioral targeting engine and how to standardize serving platforms, we may miss out on the opportunity presented to us by this potential seismic budget shift. Here are three things that will help online video take a quantum leap forward:

Innovation in premium content: Premium video is tailor-made for automotive advertising. Hulu is poised to have a great 2008 with estimated revenues of $70 million, and it's predicted to triple that in 2009. But Hulu alone can't, and shouldn't, be the premium video destination. There is a huge opportunity here for entertainment properties or a similar aggregator/destination site to gain market share.

Creative leadership: We should hold ourselves to a higher standard than running repurposed TV spots. Develop creative that informs, interests and encourages action. Hot-spot, product-place, and engage the user. The creative side is the most neglected but potentially strongest opportunity in online video today.

Research and analytics: Nothing like the end-to-end platforms built for search and display - which measure factors like reach, frequency and ad effectiveness - exist for video. We need to develop such products to justify higher CPMs and grab dollars from TV.

There you have it: three ideas that will go a long way in helping online video get its fair share of Big 3 2009 advertising dollars and help advance the medium. Ladies and gentlemen, start your engines.

7 comments about "The Auto Bailout And Online Video Advertising".
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  1. Walter Graff from Bluesky Media, December 15, 2008 at 5:26 p.m.

    More proof that the CEO's of American car companies are out of touch. The web is intricate for folks buying cars these days. 94% of people who walk in a dealership know what they want and know what price to expect. They use the web for this research. But since they already know what they want or have a good idea, online video will do little. Pictures, features, prices and comparisons are what is needed, not ridiculous video of cars. Leave that branding to TV where it has the greatest impact.

    Walter Graff
    bluesky-web.com

  2. Morgan Brown, December 15, 2008 at 6:29 p.m.

    I think automakers, along with other consumer brands, will need to go from the "aim for the middle" weak emotional brand appeals of television to the more targeted, action-driven world of online video. They'll get more bang for their buck, they'll be able to track true metrics about consumer action, and they'll be more relevant with consumers who right now are just tivo'ing past their current spots.

    People want to see the cars in action, they want to be told about them. A 360% spinning virtual tour of the car has nothing on a short video clip with the car out on the road with a product manager or, even better, a consumer who recently drove it talking about the pros and cons in an authentic manner.

    Online video is a great opportunity for these big automakers to get back in touch with their customers while cutting down on their marketing budgets.

  3. Roger Sanford from Roger Sanford Groupe, December 15, 2008 at 6:53 p.m.

    I looked to the article for more leadership from Eric Franchi, however, it seems like more of "let's all contribute & boosterism" than hard source. I want to see more development on the themes like best practices in the field or even the importance of "Pre-purposing" vs. re-purposing.

    RSG has long been a proponent of video in its applications for the automotive industry. In the 90's I worked with CKS on the GM site. GM was early to the web and the broadband adoption at the time strained under video, so it was a technology timing thing. Now broadband comes to my iPhone. What a difference in only a decade and a half!

    The news that "Rick Wagoner, said that part of G.M.'s strategy toward a more efficient model would include a "substantial" shift of its $500 million budget to online advertising." is not news. It's only paralleling P&G's move earlier and other major brands.

    The big question is what will the agencies handling GM's account do differently? Does this shift include DOOH and Digital Signage, clearly advertising's big video winner in the next 5 years?

    IMHO, this is an indicator of the overall shift in media to more "measurable and actionable media". What's the buzz? Oh, that it comes from Detroit, home 21st Century innovation. Yawn.

  4. Tyler Willis from Involver, December 15, 2008 at 8:44 p.m.

    Eric,

    Interesting piece, as someone working to execute video marketing campaigns on social networks for large brands -- I'm really bullish about what an innovative campaign can do for a traditional advertiser. You're absolutely right, GM has a big opportunity (as do other large brands.

    I'm bullish because I've seen the early successes, we've helped some traditional advertisers garner big wins in video marketing on social networks. Our B2B campaign for Serena Software won an OMMA award and our campaigns for Chiquita, PUMA, and Nissan have all been successes as well.

    We've also seen a lot of brands moving to this space and trying things that have had either mediocre or bad results. Roger Sanford brought up P&G in his comment, I'd argue they're a great example of a company running numerous experiments that have lacked luster so far. See this NYT article: http://is.gd/bGYY

    We've created premium placements within social networks like Facebook which have seen really great response, but the real key for us has been focusing on persuading the people that react to the videos positively to engage with the brand further and become an evangelist, helping to spread the message.

    I agree with the 3 opportunities you've highlighted, although I think a good understanding of analytics and research is the most important. Movement there will legitimize the industry on a whole and unlock much larger budgets for advancements in the other areas.

    Thanks for writing this and highlighting the opportunity this has opened!

  5. Colin Donald from Futurescape, December 16, 2008 at 5:38 a.m.

    Eric,

    Picking up on your points about the opportunities for innovation in premium content and creative leadership, I'm surprised that no-one has yet pointed to the auto industry's role in backing original online Web shows, such as Roommates on MySpace and KateModern on Bebo. That is where the innovation and creative leadership is already taking place.

    The significance of this was apparent early on in our research of Web show sponsorship in the American and British markets. Ford, encouraged by MindShare and Ogilvy, has been particularly active.

    In the UK, where paid product placement is banned on broadcast television, Ford has moved decisively, funding two programmes that showcase its Ka and Fiesta brands to single young women.

    These include two seasons of the factual programme Bite, in which a team of women presenters tours the UK checking out the latest lifestyle trends, plus the new drama Neon Candy, about a fashionable magazine journalist.

    Both the shows are made by established television production companies and distributed via major online media owners.

    Professional Web series still comprise an emerging sector and the auto industry is ideally placed to support its growth and to reap the rewards of doing so.

  6. Walter Graff from Bluesky Media, December 16, 2008 at 11:56 a.m.

    As one of the most successful local and regional auto advertising resource in the US, I can tell you that there is a lot of naive info here.

    Prosper Technologies developed a new Media Allocation Model that utilizes the SIMM Survey of 17,231 consumers to determine “what” and “which” media forms are most influential to consumers for buying a car, the consumption of the media and pricing of various measured media.

    The results represent the first cross platform, consumer-centric media planning and allocation tool.

    And the results?

    The most influential area of advertising which affected actual purchase is radio at 21.5%. Second is TV at 17.3%. Other at 16.3%. Magazines at 15.6%. Then Outdoor at 14.6%. and at the near bottom of the list is internet at 8.5%.

    As I explained earlier, extensive research shows that people use the internet less to decide on what to buy but rather to find prices, look at cars they already want, and compare models. About the worst thing any car company can do is throw away money on more internet advertising. Of course for you internet folks this spits in the face of what you want to believe.

    Sorry to burst the bubble, but the single best response I get with my auto advertising (measurable) is radio advertising and next to it is TV advertising. We have pulled most internet and all newspaper advertising with ZERO loss to sales. Last year the big three spent between 3% and 7% of their ad spending on internet. While it wouldn't hurt to increase it a bit, the ROI on internet auto advertising is very small.

    Walter Graff

  7. Neil Perry from The Institutes, December 16, 2008 at 12:04 p.m.

    Why is that as soon as someone mentions a big shift of dollars to online, that it is immediately connected to the benefits of ROI tracking and accountability. Online is also a great branding vehicle, and cars doing wild stuff in 10 - 15 seconds can really attract attention.
    But it's not the big production styles that will breakthrough, it's got to be authentic and real, because that's what online users respond to, not glamorous productions with cars on a mountain peak. We need to get real. Have car customers create the ads, as they do at XLNTads or some of those other "crowd source" ad creation companies.

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