In an effort to reach target audiences, automotive marketers are blending network, cable and spot (local) TV in much the same way they buy magazine ad space.
'You can't buy all broad-reach magazines without buying lifestyle books to complement it,' says Paul Sellers, director of marketing communications at Hyundai Motor America. 'And you can't buy network TV to get that broad reach of people without also buying cable and spot TV so that you can talk to the people to whom you specifically want to broaden your product.'
How much of each kind of TV marketers use depends on their:
Broadcast TV traditionally has attracted the most automotive advertising dollars. But as automakers have tried to target more geographically and demographically, spot TV has edged ahead. Spot TV overtook broadcast in automotive ad dollars last year, $2.4 billion compared with $2.3 billion, according to Competitive Media Reporting. Since 1997, automotive buys on spot TV have spiked 41 percent, compared with a 4.5 percent hike for broadcast.
And through the first quarter of this year, local TV stations and the three biggest broadcast networks - ABC, CBS and NBC - were running neck and neck in automotive advertising spending: an estimated $212 million for broadcast and $206 million for spot. The big six cable networks - ESPN, Discovery, A&E, MTV, CNN and TBS - lagged for the first quarter, with an estimated $37 million in automotive advertising dollars. Automotive buys on cable were up 45.5 percent from 1997 to 1999, but cable stations took a 14 percent sales decline from 1998 to 1999, generating $633 million in automotive sales.
DaimlerChrysler sets the pace
DaimlerChrysler was the biggest automotive spender on spot TV last year, shelling out $679 million, a 31 percent increase from 1998, according to Competitive Media Reporting. The company spent $282 million on broadcast and $80 million on cable. And through the first quarter of this year, six of the top 10 brands advertising on spot were members of the DaimlerChrysler family.
'We're always going to be on network because our dealers expect to see us on TV building the brands,' says Bud Liebler, senior vice president of global brand marketing at DaimlerChrysler. But Liebler adds, 'To do different advertising in different markets, the best way to get there is through spot TV.'
Mercedes-Benz, a member of the DaimlerChrysler family, is a good example of a spot TV client. Scott Keogh, department manager for communications planning and brand development at Mercedes, says spot gives his company more value.
'We look at how many people in a market buy luxury cars,' Keogh says. 'Break the cost out (of spot TV) by cost per sale, as opposed to cost per total population, and that's why you'll see us (advertising) heavy in markets that perform very well for us and our competitors.'
Mercedes-Benz spent $38 million advertising its cars and trucks on spot TV last year compared with $22 million on broadcast and $11 million on cable.
In fact, of the major automakers advertising on TV, only General Motors, Ford Motor Co. and Mitsubishi Motor Sales of America Inc. spent substantially more on broadcast than spot last year. GM was the top spender on broadcast at $792 million, but its spending was up only 2 percent.
Only one automaker, American Suzuki Motor Corp., spent most of its TV budget on cable, at $5.8 million, according to Competitive Media Reporting. But cable is getting a close look from some automakers. GM, the largest spender on cable, increased its spending from 1998 to 1999 by 16.6 percent to $218 million.
'We use cable because it gets into specific interest groups,' says John Middlebrook, vice president of advertising and brand marketing at GM. 'We're trying to own the outdoors so you'll see Chevrolet on fishing and hunting kinds of programs.'
Although Lincoln Mercury spent more on broadcast and spot than cable last year, due to the rollout of its Lincoln LS, marketers there have begun a strategic move to make cable TV its primary broadcast medium.
'We actually have a pretty consistent spend on cable,' says Deborah Wahl, Lincoln Mercury's marketing communications manager, adding that Lincoln uses cable TV networks such as the Discovery Channel and the Learning Channel to reach luxury car buyers.
'We're going to continue that strategy, outthinking our competitors rather than outspending them,' Wahl says, 'but we still get big pops on networks with events and specials.'
And at Lexus, which uses mainly broadcast TV, Mike Slagter, head of corporate sales and dealer management, says 'the percentage of the mix that we will spend on cable this year is larger than ever, and it will continue to grow.'
Even more competition
The mix promises to get more muddled as more local cable stations band together in markets to form what are called interconnects. With interconnects, creative copy can be split, allowing local cable companies to hone in more specifically in a region than spot TV.
'You can actually target down to a neighborhood,' with interconnect capability, says Kevin Mayer, Hyundai's national advertising director.
Interconnects compete against spot TV, but still are almost invisible to automakers. Boston-based National Cable Communications set up an automotive team as part of its interconnect in Detroit last year in an effort to snare automotive dollars. Marc Bodner, general sales manager for National Cable Communications' Detroit office, says automakers dedicate only about 10 percent of their total spot TV budgets to local cable stations, 'but that's up from 1 percent to 5 percent five years ago,' he says.
As media conglomerates grow, they are offering packages that include broadcast TV, cable TV and print media. Already, sales teams are pitching ABC Sports, ESPN and ESPN The Magazine together. Both networks and the magazine are owned by Disney.
Hyundai sponsors the NBA on TNT, which is a Time Warner cable TV network.
'We back that up with ad pages in Sports Illustrated,' Mayer says. 'They brought packages back to use with CNN and Time magazine.' All the media are owned by Time Warner, which is being purchased by the Internet's America Online.