After bottoming out this year, new car and light truck sales are expected to jump 32% over the next two. TV stations can grab a large share of the marketing dollars associated with the surge, but they need to understand the new economic realities and auto marketing trends. This column and an upcoming MFM regional seminar should help.
I don’t have to tell you how important automobile advertising is to our businesses. You are still coping with the aftermath of this year’s $1.6 billion cut in dollars spent in tellling consumers why one car is better for them than another.
But there are a number of reasons to be optimistic about the future for auto advertising. As Mediaweek reported, GM is now saying it will boost its media spend in 2010 in a bid to buttress its four remaining brands.
However, ad strategies are shifting, and getting auto manufacturers and dealers to spend those dollars on television advertising is going to involve a lot more than order-taking.
J.D. Power & Associates, among others, is providing the auto industry with highly sophisticated market data that makes it much easier to anticipate which marketing strategies will be the most effective at moving showroom cars off the lot.
Knowing how important these dollars are to media, MFM is including a presentation from Gene Cameron, vice president, auto marketing/media solutions at J.D. Power as part of our Nov. 17 regional seminar, Media Outlook 2010.
The seminar is being held at the McGraw Hill Building in New York and will be moderated by Broadcasting & Cable’s Claire Atkinson, who has also followed the television advertising developments for the New York Times and Advertising Age.
The seminar takes place just a few weeks after auto makers will have outlined their ad campaigns for 2010. Our intention is to help you connect the dots between the auto industry’s plans for 2010 and increasing your stations’ auto advertising revenue in the months ahead.
Cameron was one of the presenters at J.D. Power’s recent annual review of the leading issues in automotive marketing and media. That presentation serves as a good preview of what he will be covering at our regional seminar.
Here are the main points:
1) New economic realities.
The new economic realities for consumers affecting the auto market include stricter credit standards, a 9.7 percent nationwide unemployment rate and a 19 percent drop in retail sales.
On the plus side, more than 690,000 vehicles were traded in and purchased through the Cash for Clunkers program and used-vehicle prices have been rising.
The J. D. Power market analysis also showed that automakers and dealers have been dealing with new economic realities since the 2001 market downturn. The decade’s best year for cars was its first, with 17.3 million new cars sold in 2000. The auto market had yet to regain the declines of 2001 and 2002 when it encountered the 2008 downturn, which was marked by a low of 13 million cars sold.
New car and truck sales are projected to bottom out this year, with 10.2 million sales, and climb 32 percent over next two years, with sales of 11.5 million in 2010 and 13.7 in 2011.
2) Demographic targeting can miss the mark
With respect to media analysis, J. D. Power & Associates found that targeting by age is not the most-effective way to get to the audience that automakers and dealers want to reach. For example, the U.S. Census reported that that there are 243 million U.S. citizens age 15 and older and nearly 87 million adults in the 35-54 year-old category. With new vehicle buyers representing only 4 percent of the total population, buying a demographic is highly inefficient.
The J. D. Power report goes on to cite CBS researcher David Poltrack agreeing with the premise. “Age and sex data have no relationship to the value of a medium to an advertiser,” Poltrack told the Advertising Research Foundation’s 2009 Audience Measurement Conference earlier this year. “Purchase behavior is needed to describe value.”
3) The importance of consideration
Additionally, automotive marketers will sharpen their focus on getting prospective customers to consider their models. In a recessionary market, automotive marketers have focused on converting in-market shoppers, according to the analysis. As the market restructures, it is critical to focus on consideration and model awareness to increase sales, the report recommends.
The value of consideration is backed up by data suggesting that even a small improvement in brand consideration can translate into big gains in vehicle sales. A 2 percent increase in consideration lifts the number of shoppers from 213,000 to 230,000 and creates 6,000 additional sales.
Of particular interest to media companies is the recommendation for auto marketers to get on the consideration list before shopping starts. A key element in that strategy is to drive Web traffic. Only 22 percent of that traffic is coming from paid searches today, according to the analysis.
The Internet impacts automotive shopping more than ever, with automotive Internet usage among new-vehicle buyers increasing from 54 percent in 2000 to 76 percent in 2009. Moreover, almost 9 in 10 automotive Internet users (AIUs) will visit at least one auto manufacturer site and a third-party site before buying. In addition, the research found that almost half of AIU’s will visit a dealer site.
Timing is also important. Buyers complete a third of their OEM and third-party site research activity in the same month they will make their purchase.
4) Social media is essential for buzz
The analysis also found that the dramatic increase in social networking sites is decreasing blog visitations. This will drive auto marketers to look for strategies that optimize the role of social media in generating positive recommendations from consumers about their makes and models.
This is especially important when it comes to reaching the individuals who frequently post comments or reviews online. Not surprisingly, these buyers are more likely to write about their new vehicles than the average new vehicle driver. Message boards also represent another huge source of conversations where auto marketers benefit from visibility.
5) Target marketing begins with targeted media
Finally, the report makes a very good case for each make and model focusing on the advertising medium that is widely used by its likeliest purchasers.
For example, compact premium utility vehicle drivers are more active online than a typical new vehicle driver. And while targeted males for these models read business, men’s interest and tech magazines, females may be reached through drama, entertainment and home improvement TV networks.
6) Great ad sales opportunities for 2010
J.D. Power anticipates that the volume of redesigns and new entries will require more effective target marketing next year. There are 18 major redesigns planned for 2010, as well as nine new entries scheduled for the first half of the year, followed by another 14 new entries scheduled for the second half.
However, it’s clear that attracting those dollars to the industry’s TV networks and stations will require targeting our messages as well. We will need to demonstrate the link between a particular show and the likeliest buyers for a particular make or model. Increasing the auto marketers’ consideration for our medium can be achieved by showing exactly how we can increase the buyer’s consideration of their makes and models through driving our viewers to their Web sites and lots.
We plan to provide even more of the tools to help you to demonstrate that outcome at our Media Outlook 2010 seminar in New York. More information about the seminar and other programs and services offered by our association may be found on MFM’s Web site.
MFM’s mission continues to be to provide tools and products to help the media industry’s financial professionals. Giving you insights into what to expect in 2010 including how to attract more advertising dollars is just one of the ways we fulfill that mission.
Mary Collins is the president and CEO of the Media Financial Management Association, a professional society addressing the diverse needs of the industry’s financial and business professionals. Her column appears here every other Friday.