The debate is endless and far from cohesive: How will automakers spend money to reach the customer in the coming millennium?
Arguments range from direct mail being a dead duck to the Internet reigning supreme. Shrugs longtime media forecaster Robert Coen, senior vice president at McCann-Erickson Worldwide: 'Anybody who thinks they know what will happen is out of it.'
A clear theme is emerging. Automakers will try to cozy up to customers in many different ways as they seek to build one-on-one relationships. The result could be a significant shift in how automakers spend their marketing dollars.
Robert Mancini, executive director of Ford Motor Media, warns that if budgets don't increase, the Internet is likely to steal money from traditional media such as TV and newspapers.
Jim Julow, general manager of Dodge, says Dodge already has shifted 25 to 30 percent of its marketing dollars from traditional media to special events.
It's a never-ending battle.
'We're grappling with what is the right blend,' of marketing, says Phil Guarascio, vice president of advertising at GM. 'Nobody knows; very few have a clue - but we'd better figure it out pretty soon.'
One thing on which everyone does seem to agree is that automakers will continue to outspend all other mass producers. They'll also be more demanding about getting a return on those marketing dollars.
But Louis Schultz, vice chairman of Chevrolet advertising agency Campbell-Ewald, says the only way to really measure is if carmakers fund the necessary research on how to reach customers one-on-one.
'Most clients won't invest in databases to do that,' Schultz says. 'Instead, they spend money to give everybody the same message.'
Automakers accounted for nearly 10 percent of measured media spending last year, up from 9 percent in 1994. Total 1998 ad spending figures are not yet available, but projections of partial-year figures from Competitive Media Reporting in New York suggest automakers spent nearly $7 billion in measured ad spending last year, up about 36 percent from 1994. An estimated $5.5 billion went to network TV, national spot TV and magazines. Newspapers and network cable TV picked up most of the remaining scraps. The Internet claimed a paltry $30 million in 1998, compared with about $22 million in 1997.
As media buyers like to emphasize, automotive advertisers spend most of their money buying media, not creating commercials. And considering its high cost of entry, network TV is the filet mignon of those buys. Why do automakers spend so much on a mass medium such as network TV when they say the trend is to get more 'touchy-feely' through media that take them closer to their customers?
The question causes considerable chatter in the industry. Some say a major change is imminent. But when? So far, automakers haven't taken much action. Their spending on network TV soared to more than $2 billion in 1997 and is expected to be about the same for 1998 when the totals are final, up 40 percent from 1994.
The biggest overall percentage increases have been in network cable TV, syndicated TV and national spot radio. But total dollars in those media still are meager, ranging from a low of about $60 million in spot radio to nearly $500 million in cable.
Though TV and magazines have dominated for most of this decade, their day may soon be over.
Says Campbell-Ewald's Schultz: 'Network TV is on life support, and so are magazines,' he declares. 'Their rates are ludicrous, and we are not getting a good return. It will no longer be good enough to just put a message before the consumer.'
It's not just cost, says Dave Martin, CEO of PentaCom, the media buyer for Chrysler, Plymouth, Dodge and Jeep products. He predicts less will be spent on traditional media because 'we just have more options to deal with.'
The new options
The Internet is shaking things up the most. Nothing has so puzzled and enthralled media buyers since cable hit the scene in the early 1980s. Automakers drool over some of the Internet statistics:
The average age of browsers is 39.
Most are college-educated and work as professionals.
More than 35 percent of the people who use the Web use it every day.
According to some estimates, 15 percent to 25 percent of all vehicle transactions were preceded by shopping activity on the Net.
More importantly, automakers are becoming convinced that e-mail via the Internet offers the best solution yet for communicating with customers one-to-one.
'I think that in the not-too-distant future a considerable amount of any manufacturer's budget is going to be spent on interactive,' says Mike Slagter, corporate marketing manager for Lexus Division. 'We just have to figure out how to do it, and do it effectively.'
Does that mean less money for other media? That is a question with which many media buyers are grappling. But forecaster Coen has a historical viewpoint. 'People will probably use the Internet for shopping,' Coen says, 'and if you look at the past, as personal selling shrinks, the need for mass communication increases. So it may call for more advertising just to let people know where to look for your stuff on the Net.'
Regardless of the medium, automakers still have a big problem. According to Joe Cronin, vice chairman of Saatchi & Saatchi worldwide, ad agency for Toyota Motor Sales U.S.A. Inc., people aren't paying attention. During 1965, 60 percent of people questioned could not recall an ad; that percentage grew to 84 percent in 1990, and it is still growing today. He wonders how the industry can move into the 'new media' if it hasn't figured out the old ones.