Thursday, January 06, 2005
The Folly of Automotive Advertising Part 2
I wrote at length the other day about why it is so difficult for a car company to get an edge in the business without a great product. To summarize...cars are a long consideration item because they are expensive, stay in the household for a long time and require ongoing service.
It stands to reason that a 30 second commercial will have much less impact on your next buying decision than your previous 3-5 years of ownership correct? In fact, research we conducted over the years showed that the majority of shopping consumers were much more likely to be influenced by a "trusted" friend or informant (a loudmouth, know it all like me, for example) with "inside" information on who has the best products.
Further, if you have had 8 problems with a vehicle, are you really going to buy the same brand again? This then...is the critical calculus in marketshare.
When we were designing the CRM (Customer relationship marketing...shorthand for direct mail, telemarketing, and other forms of direct response) programs for Chrysler there was a small band of philistines that believed that our salvation lay in "gifts" and giveaways. One day, one of the enlightened commented,
Errr....
After a hearty laugh...there was a long silence. And we realized...yes, that's what it really was all about. Because there was no "budget" to "solve" the problem. Just a budget for stuff. I mean...we'd have to actually TALK to the customer...and SOLVE the problem. Talking to customers, one on one, for those of us in the CRM business, is REALLY expensive budgetwise. You don't measure one on one, productive conversations as a CPM (cost per thousand) but rather in a cost per contact.
But...there will always be hundreds of millions of dollars to advertise the new, shiny version. And...hopefully, the reasoning goes...you'll have developed amnesia about the little engine block incident. Strangely, we'll spend millions more trying to figure out why the campaign isn't working as well as we thought.
Next Time...we'll talk about a formula for solving this problem. Unfortunately, this formula has not developed a strong following in the ad community because it doesn't allow us to fly to Palm Springs for 3 weeks to shoot and edit a sexy tv commercial.
It stands to reason that a 30 second commercial will have much less impact on your next buying decision than your previous 3-5 years of ownership correct? In fact, research we conducted over the years showed that the majority of shopping consumers were much more likely to be influenced by a "trusted" friend or informant (a loudmouth, know it all like me, for example) with "inside" information on who has the best products.
Further, if you have had 8 problems with a vehicle, are you really going to buy the same brand again? This then...is the critical calculus in marketshare.
When we were designing the CRM (Customer relationship marketing...shorthand for direct mail, telemarketing, and other forms of direct response) programs for Chrysler there was a small band of philistines that believed that our salvation lay in "gifts" and giveaways. One day, one of the enlightened commented,
"Oh...I get it...so, let's say I have an xyz 4x4. Last week, my engine drops out of the car on the way home in a driving rainstorm. Basically, our CRM system would automate a direct mail with a coupon for a free NASCAR hat. If the bumper falls off, we send you a free jacket!"
Errr....
After a hearty laugh...there was a long silence. And we realized...yes, that's what it really was all about. Because there was no "budget" to "solve" the problem. Just a budget for stuff. I mean...we'd have to actually TALK to the customer...and SOLVE the problem. Talking to customers, one on one, for those of us in the CRM business, is REALLY expensive budgetwise. You don't measure one on one, productive conversations as a CPM (cost per thousand) but rather in a cost per contact.
But...there will always be hundreds of millions of dollars to advertise the new, shiny version. And...hopefully, the reasoning goes...you'll have developed amnesia about the little engine block incident. Strangely, we'll spend millions more trying to figure out why the campaign isn't working as well as we thought.
Next Time...we'll talk about a formula for solving this problem. Unfortunately, this formula has not developed a strong following in the ad community because it doesn't allow us to fly to Palm Springs for 3 weeks to shoot and edit a sexy tv commercial.
