Despite Economy, Auto Shows Remain Crucial Marketing Stage
March 06, 2009

By Dale Buss

Nissan just announced that it plans to stay away from the North American International Auto Show in Detroit next year, as the company did this year. It also plans to skip other major U.S. shows and dozens of smaller ones scattered across the country, as well as the Frankfurt exhibition this September.

But as auto company executives, suppliers and the global news media gathered in Geneva last week for one of the most prestigious regular shows, Nissan appears to be alone in its strategy of making draconian cuts in its annual exhibition budget to help get costs under control in this severe sales environment.

In fact, most other automakers -- even badly damaged Chrysler -- so far are making it a point to stick with their expensive investments in auto-show participation.

Several auto company executives told AutoObserver that, while they're slashing marketing expenditures in many other areas, their outlays for auto shows are remaining roughly constant either in terms of absolute expenditures or as a share of the company's overall marketing budgets.

All About the Funnel

The reason is that so many auto-show-goers are so low in the purchase-consideration funnel that most automakers want to take every measure to lure  them.

"It's a great opportunity for people to see products in a no-pressure environment and walk just 15 feet away to a competitive product if they want to," said Kurt Antonius, assistant vice president and shows director for American Honda. "If you're really low in that funnel, then it's certainly easier than driving all over town."

The way Toyota sees it, "People are paying money to come and see you" at the show, noted Keith Dahl, national marketing manager. "So auto shows haven't taken a disproportionate adjustment in our budgets."

Added Younghee Wong, Audi's manager of experiential marketing: "Shows are a great way to get in-market customers. We're continuing our efforts just as in years past to reach consumers in a non-pressure situation" outside dealerships.

And if not all show attendees are those "engaged in the funnel," as John Felice, Ford's general marketing manager, put it, "then they really love cars, and that's why they come." Shows actually are gaining in importance for his company in this tough sales environment because Ford is launching seven new products this year, trying to build on its recent market-share momentum.

"From a marketing-strategy standpoint, they play an important role in reaching customers now, considering where we are with our brand and the stories we need to tell," Felice said.

No Better Environment

Attendance is down by double-digits at many metro-area shows around the United States. And most OEMs are finding ways to trim expenditures on exhibitions even if they're not pulling out of them altogether.

But they remain devoted to the venue. That's because, depending on whose figures you listen to, anywhere from one-third to one-half of visitors at the typical auto show intend to buy a new vehicle within the next year. Very few, if any, other marketing and promotion outlets come close in that regard.

"You can't find any other element of the marketing mix that is so strong in terms of self-selection," said Phil Bockhorn, Chrysler's senior manager of shows and events.

Between 60 percent and 70 percent of attendees at auto shows in each of 19 major cities last year indicated that the event "had an influence" on which make or model of vehicle they "ultimately would purchase," according to research by Adstrategies Inc., an Easton, Maryland, agency.

The average consideration lift for vehicles featured at the Detroit show in January was 32 percent, according to new research by Edmunds.com, parent of AutoObserver.com. That meant traffic to the New Vehicle Detail Pages of featured vehicles on Edmunds.com was 32 percent higher during the show than prior to the show, on average, according to David Tompkins, executive director of industry analysis for Santa Monica, California-based Edmunds. (Lifts did vary considerably, he noted -- up to as high as 449 percent for one vehicle.)

"Consideration lifts were highest for launches, followed by concepts, re-launches, vehicle 'refreshes,' and line extensions," Dr. Tompkins said.

More Comparison Shopping

"Auto shows have always served two purposes," explained Mark Schienberg, president of the Greater New York Automobile Dealers Association, which sponsors the annual New York International Auto Show.

"They help consumers make the decision that they want to buy a car. And [going to a show] helps them decide on what model vehicle they're probably going to buy. Because of today's economic climate, that's more important for the industry than ever."

And Chrysler's Bockhorn said new research demonstrates that auto-show-goers are more discerning than even two or three years ago. "People are actively shopping up to twice as many makes at the shows as they used to," he said.

Toyota's Dahl noted that "auto shows are still a very important component of our marketing. They're a great opportunity for us to begin a dialogue with our customers, and in that regard they're an important bridge to dealers. And of course they help us showcase our new products and services."

New York, New York

Of course, some auto shows are more equal than others.

For example, GM decided it no longer would attend the Tokyo auto show beginning this year, instead focusing its Asian presence at shows in Shanghai and Beijing. "We don't honestly see it as relevant anymore," said company spokesman Scott Fosgard. Japan "is a closed market, and it has been for a long time. It's not where the media go. It's been supplanted by the Shanghai and Beijing shows."

While the Detroit show is staged in the market that has become a locus of the global recession, the North American International Auto Show remains a singular focus for national and international automotive media and, thus, an important exhibition for nearly all OEMs.

New York has some unique things going for it as well. For example, it's the only major U.S. exhibition in which Nissan has committed to participate over the next year or so, presumably in part because of the import maker's large East Coast market.

For similar reasons, Mercedes-Benz makes the New York show its biggest stage. The Gotham exhibition gives the iconic German brand unparalleled access to its target consumers, so the company's floor space is larger than at any other show.

"New York is a very important event for us, with the market and the audience it reaches, so we put big resources behind it," said Lisa Holladay, manager of brand-experience marketing for Mercedes-Benz USA.

Beer Budget

Still, OEMs are trimming costs as much as possible while trying to maintain their overall presence at shows. Minimalist displays at the Detroit show by GM, Chrysler and other automakers were among the first manifestations of this clear new tendency.

"There's a shift in focus from display hardware to an actual focus on the vehicles," said Chrysler's Bockhorn. "More and more, the cars really are the stars."

In New York, where the public show runs April 10 to 19, GM plans to rent a small turntable locally for its display rather than bring its own larger one, just as it did at the Chicago auto show last month. And, said the company's Fosgard, GM has been streamlining news conferences and other activities surrounding product announcements at shows.

"There's less Broadway in trying to wow media and break through the clutter," he said.

Ford is "not investing in all-new signage or changing hardware as much," acknowledged the company's Felice. And Honda, Antonius said, is "changing a little bit of lighting here or there or taking less complex displays and spotlights -- if that will save us some money, we're considering those kinds of moves.

Shows Step It Up

Nevertheless, automakers aren't giving ground on all at their most important activity at NYIAS and other shows: highlighting their product lines to the public.
 
Thus, while some OEMs are paring numbers of product specialists who show off the vehicles and answer consumers' questions, they're making more sure than ever that they know their stuff. American Honda, for instance, now requires a full week of training for someone who wants to demonstrate vehicles at a major show.

Meanwhile, the shows themselves are under more pressure not only to cut costs -- because most of them are sponsored by local dealer organizations that are now hard-pressed for resources -- but also to help OEMs stretch their investments, and to make sure that show-goers have the best and most helpful visits possible.

Thus, the Milwaukee show that just closed had a used-car section for the first time, where more than a dozen local dealers displayed previously owned wares. That makes sense, given how many auto sales that might have been new vehicles now are turning into used-car transactions. Computer terminals were available so shoppers could look online at the dealers' used-car inventories.

And in New York, recent innovations include a Members' Express Club that charges more for show tickets but provides benefits such as early admission and year-round discounts to parking ramps, spas, theaters and other venues around the city; larger entranceways, improved signage and ticket-discharging kiosks to shorten admission lines at the Jacob Javits Convention Center; and stepped-up sales of discounted tickets in bulk to manufacturers and dealers who can distribute them to their customers -- such as those just coming off leases.

Photo by Edmunds.com

The Geneva Motor Show, which held its press days last week and just opened to the public, was quieter than usual. 

Posted by Michelle Krebs at 8:10 AM under Analysis , Chrysler , Companies , Featured , Ford , GM , Toyota | Comments (2) | digg this | Seed Newsvine

Technorati Tags: audi, autoshows, beijingautoshow, chrysler, detroitautoshow, ford, frankfurtautoshow, genevamotorshow, honda, mercedesbenz, newyorkautoshow, nissan, northamericaninternationalautoshow, shanghaiautoshow, tokyoautoshow, toyota