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It has been established that good advertising is key to good sales. OEM’s must agree because ten of them landed on the “100 LEADING NATIONAL ADVERTISERS” as ranked by Ad Age a few days ago(June 2011.)
A few quick facts:
Do you agree with your OEM’s advertising break out? What stands out to you?
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Ralph – I do not possess your good fortune and have the ear of the every top OEM executive in the industry, you tell me why ;).
What I can tell you that there was an article not too long ago published in Bloomberg Businessweek that touted Ford as spending 25% of their marketing on Digital and Social Media. It might be fair to add that according to J.D. Power, about “9% of spending this year by automakers will be digital, but that will rise to about 12% by 2012.” With these two stats and some fuzzy math I come up with 37% online ad spend for Ford!
I have an idea, you call Fords CMO Jim Farley and ask him to validate the 40% claim.
In the mean time I will just have to sit back and watch him on YouTube talk about Social Media and the Customer Experience.
What's amazing to me is how much GM spends on print -- $655 million, more than 30%. Hard to imagine they're getting much bang for their buck there.
Interesting that Nissan is making such a a big online push. I wonder if this is working for them, and how much is co-op with dealers. Our Austin SEO services company has a dealer client (not Nissan); and there's not much OEM support or coordination for online marketing.
The fact about any marketing media, be it TV, print, digital, social, experiential, sponsorship, etc. is ROI. If you can't show positive ROI in either 1) awareness, 2) equity, or 3) sales or sales opportunities, you shouldn't be doing it...period. In a world of 1 to 5% ROS as is the case with many OEMs and most dealerships, every dollar spent on marketing needs to generate a significant positive ROI in at least one of those three areas or you need to do something else with that spend. At Ford and Hyundai, we spent a lot of time putting together marketing/advertising campaigns and strategies that yielded the most bang-for-the-buck...you simply can't afford to do otherwise. This is why the media mix is what it is...you have to go with what works to achieve your sales and branding objectives.
Part of the issue is that an ROI calculation usually involves reach and share-of-voice. For example, there are about 172 million registered users on Facebook in the U.S. (a number that has actually declined over the past couple months), so you could argue that every business needs to be on Facebook (which is total nonsense at the moment). However, I could just as easily argue that there are well over 300 million people in the U.S. that watch TV, so you should ditch Facebook and go with TV given the choice. If TV didn't work, dealers wouldn't be running those (ridiculous) used car infomercials every Saturday and Sunday morning here in SoCal.
But reaching people is only part of the problem...share-of-voice is equally important. Trying to reach a specific audience in Facebook is arguably as challenging as reaching a specific audience via TV for several reasons. There is so much competing content in either space that your share-of-voice is very limited (not to mention the fact that social media is SOCIAL, hence why it still does not generate a positive ROI for a vast majority of businesses...IBM's 2011 study on the subject is the most recent example of this). At least with TV, with enough money, I can get a message out and connect (albeit one-way) with a customer...I can't exactly do that via a social media avenue like Facebook and crowd everyone else out to get my message out there.
Digital marketing, though, is a totally different story, and leverages Web 2.0 in a manner useful to a business. Why? Because you can absolutely show a positive ROI here, whether it is via SEO/SEM, websites, microsites, CRM, e-mail, mobile apps, etc., hence why this space continues to grow in terms of its share of total ad spending.
Generally speaking, across all industries (automotive and non-automotive), roughly half of all marketing/advertising dollars are spent on traditional media, with the other half spent on digital marketing (and about 5% of the digital spending goes to social media, meaning social media represents about 2 to 3% of the total marketing and advertising dollars spent).
The reality is that most marketing and sales execs aren't stupid...they will go with what yields the best ROI to maximize 1) brand awareness, 2) brand equity, and 3) sales, and will spend accordingly to get that done according to plan. TV, radio, and print (including direct mail) STILL yield positive ROI's and will be a sizeable chunk of marketing/advertising budgets for many years to come. Digital marketing spending will continue to rise as companies continue pursuing strategies for SEO/SEM, websites, microsites, CRM, e-mail, mobile apps, etc. And social media will continue to be a relatively tiny player until someone figures out how to get "social" out of "social media" and make it a viable commercial medium (i.e. positive ROI) for a majority of companies.
Excellent points. There's no reason to do marketing without ROI, although sometimes it's hard to measure.
But social marketing has demonstrated ROI in many cases. This is particularly true when a new product category, concept or technology (e.g., crossover SUV, Smart Car, Zip Car, ABS, electric car, active steering) is being introduced.
Social media marketing gives consumers a chance to discuss the new concept/product/technology and ask questions in an open forum with manufacturers and dealers. This helps them to get comfortable with all aspects of ownership before making a purchase decision.
Daymond thanks for sharing. Really surprised about GM's spend in print and TV. They seem to be well outside the range of the others. Would really like to see the information they are using to drive their decisions. On the overall spend on TV, I am not surprised. TV is a major driver on action, including search.
I can only speculate on what drove GM’s financial decision making process in 2010, but in an effort to be politically correct, I will refrain. Did you notice the 74.9% increase in the Chrysler Group overall spend from 2009 to 2010?
On another note, and the original purpose of me scraping the data….. of the almost $11.5B total spent in 2010 by the top ten OEM’s, about $809 M was allocated to Digital (7%). Bottom line is that the 7% figure for Digital is off from what most of the industry experts report.