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Thursday, June 01, 2006

 

Nissan "Gets It"

Interesting article by Jean Halliday of Ad Age. Excerpts below

DETROIT (AdAge.com) -- Jan Thompson, VP-marketing of Nissan North America, today scolded the U.S. auto industry for resorting to "a less risky approach to marketing," leading to a big disparity in where automakers spend their ad dollars and consumers invest their time.

Auto advertising soared in the past 20 years by 1,378% while new-vehicle sales increased by only 17%, Ms. Thompson said. The industry-wide marketing cost per new vehicle sold increased from $50 to $1,000 in the past two decades. When incentives are added, which she said totaled roughly $51 billion last year, automakers are spending around $4,000 in marketing and incentive costs for each vehicle sold.

Nissan North America spent $1.02 billion in U.S. measured media last year, according to TNS Media Intelligence. The automaker spent $950 in measured media per new Nissan and Infiniti sold, based on the automaker's 1.07 million units it said it sold in 2005, an Advertising Age analysis reveals.

Jan was shocked at the $17 billion ad spending figure, most of which goes into traditional media.

Time for me to vent...

Forgive me for being annoyed, but Nissan was and is just as guilty of over-investing in "traditional" media. I see a lot of Nissan dealer association and national advertising on traditional media. I'm still glad Jan is pushing Nissan hard on interactive.

As far as the increase in $/sale goes...it's an arms race. Practiced by the ad agencies...to absolute perfection. The imports simply copied the traditional ad practices of Ford, GM and Chrysler. Agencies made a nice living telling clients that to launch a vehicle line properly required at least $50 million - $100 million to, "get above the noise level."

Automotive Interactive History

A short history lesson in automotive interactive from someone who has lived it for over 10 years. It wasn't Nissan who paved the road to interactive bliss. Actually, it was Ford and GM, who aggressively pursued online consumers and attempted to sponsor e-commerce companies as early as 1999-2000, while Nissan was in a deep, corporate slumber, ending with the hiring of Carlos Ghosn. It was Ford and GM who created, respectively, forddirect.com and the now dead GMBuypower.com to help consumers connect directly with its dealerbody. We can be critical of their executions if we like, but they did it. Further, both Ford and GM were aggressive in pursuing 3rd party car shopping sites to advertise, conquest import shoppers, gather data and leads.

I remember meeting with an august body of "import" marketing execs recently and getting quizzical looks when we discussed the subject of engaging with on-line consumers in real time. Gosh...why would we actually talk to consumers when we can...buy lots of banner ads on really risky sites like...Google...and Yahoo...and slyly run banner ads past consumer visages, softly illuminated by the warm glow of their flat panel displays. At only $1,000/sale? Who cares about cost/sale? What's the incrementality?

I'll never forget the meeting I had with yet another set of "import" agency folks who complained that it cost them $250/lead conversion when they bought banner advertising that drove people to their brand site. I replied, "how about you buy the leads directly from us for 1/10th the price. Because...we're really good at that." Didn't happen. Something about the need to, "brand" the experience.

Nothing Risky About New Media Brands

What's creative/risky about Google, Yahoo or AOL (ok, I'll throw in MSN too)? Google, Yahoo and AOL have 50 million unique visitors or more each day. How is that...risky? 70% of car buyers use the Internet to shop (By the way, 100% of car buyers also watch way too much TV and yack on their cell phones while driving). There's plenty of internet investment by car companies. The problem is that they aren't always creative about finding new avenues to use the internet...aside from Google, Yahoo and AOL. Spending money there is easy. Call local ad rep/SEM "expert" who arrives in shiny new company car. Demand a creative way to sponsor new vehicle launch. Ad rep takes order for banners, RSS and yada yada and creates insertion order. Just like buying TV ads. Media buyers/planners carefully watch click throughs to make sure they aren't spending more than $1,000/unit sold...which btw, is the single dumbest ad measurement in the history of ad measurements. Nissan, Ford or GM would sell 70% of its cars with zero advertising. 3rd party ad sites, bloggers and news outlets trumpet the arrival of new cars and trucks with amazing impact. Advertising influences, at best, 30% of sales.

The risk in advertising on Google evaporated when their IPO went through the roof and Bill Gates began fearing them. Further, how would you spend $17 billion on the Internet. Can't be done...there's not enough, "inventory." I've heard media planners complain, "all the good inventory is gone." Huh? I wish I had that problem. A lot of money...and nowwhere to spend it. Ahh...maybe I should go back into the agency biz...

The Truth (in best Jack Nicholson's voice)? The Truth? There's no risk in those online "brands." I'd say there's more risk in being on Television. We talk to thousands of consumers/day and it never ceases to amaze me how few of them recall even one ad for the car they are shopping.

For those who need ad "inventory"...let me make a suggestion. Here's my phone #: 248-232-7979.

Call me. I'll get you inventory.

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