The More They Learn, the More Automakers Eye Internet
March 02, 2008

By Dale Buss

Automakers will always do brand building via traditional advertising media such as TV, radio, outdoor and print. But in an ever-toughening marketplace, they’re more and more intent on obtaining solid sales leads and on buttressing relationships with existing customers — so they’re putting their marketing resources into the channels that best deliver on those goals.

That’s the main reason the Internet will be vacuuming up a much bigger share of vehicle-advertising dollars in the U.S. market in 2008.

Another factor: growing disappointment with traditional broadcast-TV advertising. Debacles, including the recently concluded writers' strike and record-low ratings for the Feb. 24 Oscars telecast, are making television less attractive by the day as a marketing vehicle.

Also contributing to automakers’ confidence in digital media is they’re finally figuring out how to get the most bang for their bucks from the fast-improving creative and technological capabilities of Internet and mobile advertising. They’re already far removed from the days of just throwing up thousands of banner ads on the most popular Web pages, posting static photos of new vehicles — and hoping some of the impressions stuck on the peripatetic eyeballs of Internet visitors.

The auto industry’s bullishness about online advertising in the new year is striking because it represents a major lurch forward, not simply the next increment in a gradual increase.

“Our marketing approach from this point forward begins and ends with the Internet,” Joel Ewanick, Hyundai of America’s vice president of marketing, told AutoObserver. “We’re going to drive our business that way. Now, in my mind, even a TV ad to be successful today has to result in someone eventually getting on their computer and going to our Web site.”

Marketing executives of automakers with long histories in traditional advertising outlets also are drastically raising their bets on digital media. “We have to be more efficient with our marketing dollars,” said Christine MacKenzie, Chrysler’s executive director of multi-brand marketing and agency relations. Auto-sales rates are “going down and budgets are getting tighter and tighter. So one way to do that is to look very carefully at returns” on marketing investments.

Online’s Rising Market Share
Of course, the inexorable shift toward digital has been going on for some time now. General Motors, for example, has been shifting a larger portion of its spending to digital for five years, with the biggest transfer occurring in 2006.

And overall, automakers and their local dealers have increased Internet advertising expenditures fourfold since 2002, according to TNS Media Intelligence — to $739 million last year from $175 million five years ago; and those figures don’t include Internet-search advertising, a burgeoning outlet. Meanwhile, TV and cable advertising spending by automakers climbed only to $10.1 billion last year from $9.1 billion in 2002, according to TNS.

What’s new is most automakers’ huge planned acceleration in their migration to digital media for 2008, the beginning of major experimentation with advertising on mobile devices, and a growing frustration on the part of MacKenzie and her counterparts about the shortcomings of traditional media.

Online global spending will grow to 13 percent of all auto advertising by 2011, predicts advertising researcher Kelsey Group from 5 percent in 2007. And at least for 2008, Kelsey believes digital’s share will come directly out of traditional advertising, because the Princeton, N.J.–based concern calls for flat overall automotive advertising this year.

Auto-marketing executives explain their growing interest in digital by citing some of the strong — and strengthening — characteristics of Internet advertising.

For MacKenzie, measurability of results is crucial. “You can measure what you’re doing in impressions and visits, all the way through to how many sales you make,” she said. “There’s also the matter of getting a better look at the shopping funnel: Not only can you measure how many sales you get from the Internet, but what level of engagement you’re getting (with consumers), and from that you can correlate awareness and consideration. All those measurements become a reality instead of a guesstimate.”

The Internet’s increasing capability to engage consumers attracts Betsy Lazar, GM’s executive director of advertising and media operations. One aspect of that is “sight, sound and motion that used to be available only in TV and cinema,” she said.

GM also is capitalizing on another growing aspect of digital engagement: sharing more information with consumers on the home pages of advertising sites rather than requiring them to click through to the automaker’s own Web pages.

Chevrolet has demonstrated this, for example, during its huge online campaign for the new Malibu sedan over the last few months. Its banner ads have been able to present Malibu equipment options and competitive comparisons on the spot.

“Keeping consumers where they are and offering them rich content — rather than having to take them to another destination — coincides with consumer preferences,” Lazar said.

By luring and often identifying “handraisers,” online advertising also enables automakers to engage real prospects and interact with them over time through tactics including e-mail marketing and advertising on automotive-interest Web sites.

Ford has been taking advantage of all these facets of digital engagement by offering “360 degree” videos of some of its vehicles within banner advertisements on Yahoo. “We’ve had enormous interactivity” by consumers with these ads for models including Lincoln MKX and MKZ, said Ted Cannis, Ford’s director of marketing communications. “And there’s been a huge amount of traffic to our Web site from that. We don’t know specifically who they are, but we do (know) by group aggregate.”

The Giant Digital Crucible
Automakers are dedicating vastly more resources than just a year ago to understanding the Internet, experimenting with new online-marketing initiatives, learning from their experiences within a few weeks or months — and then applying those lessons to the next wave.

Ford, for example, last year expanded its digital-marketing team and installed new software to help analyze the results of its Internet campaigns, track visitors and sales leads, issue brochures and other marketing materials, and survey online interactors.

“Until then, we were blind as to what we were doing,” said Cannis, who indicated the overhaul cost a few million dollars but declined to specify the amount. “There’s a whole wealth of information we didn’t have before.”

Among experiments launched by Ford’s more robust digital infrastructure was an infiltration of technophile and automotive blogging communities on behalf of Sync, the new voice-interactive electronics system introduced last fall on many highly contended models. The effort included production of 15- and 30-second “webisodes,” which Ford posted on MySpace.com.

In 2008, Cannis said, “We’ll be upping the ante on what worked with that so we can experiment more in the rich space of social media.”

Toyota has been focusing on harnessing Internet marketing differently depending on the model it is advertising. In targeting potential buyers of Yaris, its youth-oriented subcompact, for example, the company has provided plenty of content layers so interested consumers “can drill down and do a deep dive,” said Gregg Benkendorfer, Toyota’s national media and digital manager.

But when it introduced the Tundra heavy-duty pickup truck about a year ago, Toyota kept its Web site and connected advertising simple and, often, just one click deep. “These customers are very practical in nature,” Benkendorfer said. “They use the Internet, but they’re very purposeful about it — like people who use the cell phone mainly as a phone.”

And so when it launched new online ads for the Highlander SUV — whose customers are similar demographically and psychographically to Tundra’s — Toyota made sure the one click would be more satisfying. It allowed banner-ad viewers to change the color of the depicted Highlander and get 360-degree views. “It got people engaged in the product,” Benkendorfer said. “The time spent with those banner ads for Highlander was in minutes rather than seconds.”

In Search of Optimization
Every automaker — like every other major brand marketer — also is trying to figure out how to make the most of search-engine optimization.

“We’re looking to how can we optimize (SEO) and changing our mix to accommodate that,” said Chrysler’s MacKenzie. That effort includes “looking very carefully at (SEO) and the right words to buy and the right channels to buy from … to make sure SEO is not only efficient but effective.”

One SEO priority for Toyota is to try to make sure search engines’ “organic” results turn up and list its models and Web sites — not just ads Toyota buys to accompany those results. About 30 percent of search requesters click on ads, but 70 percent click on the actual search results, Benkendorfer said. “So we want to make sure our content gets indexed by the search-engine ‘spider’ and gets served up,” he said.

At the same time, Toyota wants to reach the many search requesters who write down or print out information without actually clicking on a Web address. This behavior might conclude as many as one-quarter of searches, Benkendorfer said. “Our game is still about generating leads for dealers, so this is important,” he said. “We might try to do more things to close the loop with an online metric, such as a ‘click-to-call’ feature” that persuades the visitor to convert the search result to an offline action.

Online gaming is serving up more advertising opportunities to the auto industry as well. Ford has been advertising heavily on male-oriented games and lately also has been achieving its engagement goals on Sims2, an online game popular with women. Players can download a Focus exclusive to Sims2 and “drive” it in the game: It had uploaded 80,000 virtual units of Focus to Sims2 players by late December.

Getting Social
Gaming advertising also gives automakers a foothold in increasingly important social media. Pontiac, for instance, tried a major affiliation in 2007 with Second Life, the site where players assume identities and interact through them in a virtual community. The GM division worked with Leo Burnett, a traditional ad agency, and Campfire, a New York–based interactive marketing outfit, to create Motorati Island, where players could design the Pontiacs of their dreams.

“Building the ‘community’ is a major goal of the residents of Second Life, so rather than simply attempt to force-fit a more traditional marketing approach into the Second Life world, we chose to embrace that same goal by creating a unique location that appealed to automotive enthusiasts and then actively promote that part of the community,” said Pontiac spokesman Jim Hopson.

Steve Wax, a Campfire partner, said Motorati Island served Pontiac’s emphasis on “affordable performance” by catering to “gearheads who are really concerned about the design of cars.” About 60,000 people participated in the virtual community in some way, he said.

“People got a chance to ‘drive’ and ‘modify’ a Solstice without spending $25,000 to do it,” Wax said. “Part of the program was to get people to design fun versions of Solstice: cowboy cars, tanks, all kinds of wild and crazy Solstices. It gave them an engagement with the product that was very direct and affordable.”

Though nobody expects Pontiac to design a Solstice that looks like an M-1 tank, Wax conceded, Motorati Island also fed Pontiac information on “cues to where consumers think design should go, which was eye-opening and enlightening to them.”

Hopson said Pontiac’s “brand was enhanced” by Motorati Island, “but only because we provided the community with something that they themselves valued. Our exposure increased not because we plastered the Pontiac brand everywhere in hopes of saturation, but because we treated the Second Life community very much like we would treat the real world.”

Yet, Pontiac planned to end its participation in Motorati Island early this year. “We know there is more to learn in other areas,” Hopson said. “It has been a wonderful learning experience, (but) it was always seen as an experiment in 24/7 online marketing.”

Creative License
All automakers are seeking tighter integration between traditional-media advertising and their online efforts. But success in the attempt is more important to Hyundai than to the rest because it is the newest major mainstream brand in the U.S. market and still has fewer marketing resources than the others, Ewanick said.

That’s why he was mostly pleased with Hyundai’s “Duh!” campaign, which began as a sales promotion last summer — offering consumers deals that were “no brainers” to accept — and then was extended in November. The campaign combined TV, newspaper and radio ads with a strong Internet platform. Hyundai figured out how to get online visitors to click deeper into the intriguing content it provided around the Duh! theme. “We gave them a choice to go configure their own vehicle, or get a quote,” Ewanick said. “But they could also linger on the page and make up songs around the theme and send them to someone else.”

Hyundai got the average visitor to stay on the Duh! site for 3-1/2 minutes last summer and, in November, for 6-1/2 minutes. “Those numbers are phenomenal,” he said. “But that was because we pushed the envelope trying to create attention.”

Just as important, Duh! provided a highly successful instance of media integration — even though Ewanick said the theme was debated internally because some feared its brusque tone could confuse or offend some consumers. (And Ewanick has expressed his disappointment with some of the creative aspects of the winter-holiday extension of the campaign.)

“It all looked like it came from the same place, so it drew people in,” Ewanick said. “In a banner ad, that little phrase made an enormous difference in the clickthrough rate because we built off other pieces of communication that we had been layering out there at the same time.”

Toyota’s Benkendorfer believes successful integration of traditional and Internet marketing will become even more important to whether either type truly succeeds in the future. “It’s a combination of sow and harvest,” he said. “You’ll still see a balanced media mix.”

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