While dot-coms wither on the vine, the Internet blossoms. Marketers are taking advantage of the Web's capabilities to aim directly at their target audience. With 60 million U.S. households projected to be online by year end, up 55 percent from 1999, the Web is growing as the information source for Americans, and its cousin, e-mail, is a preferred method for requesting more information.
The result is the fastest-growing direct marketing medium, realizing more than 100 percent sales growth annually for the last five years, according to the Direct Marketing Association. Last year, the association estimates $2.8 billion was spent on interactive marketing - the catchall name for all interactive methods including those online, sent via e-mail or on CD-ROM. A great deal of that money comes from automakers.
Interactive marketing represents about 10 percent of the auto industry's marketing budget, according to the Direct Marketing Association, or an estimated $1 billion to $1.5 billion. Those budgets are projected to grow by double-digit figures annually in the next four to five years.
'Research indicates about 30 percent of consumers prefer to communicate via e-mail,' says Jennifer Beindorf, integrated marketing manager at Lincoln Mercury. 'If we can work one-on-one with them electronically, we are more targeted and will spend less.'
Lights, sound, e-mail
E-mail is gaining momentum as a direct marketing method. Forrester Research estimates more than $6 billion will be spent in this area by 2005.
The Direct Marketing Association reported recently that e-mail to customers and site visitors was the most effective method of interactive marketing, only slightly less effective than catalogs, the top-rated method of offline marketing (see box).
Automakers are following the same course as many other industries, sending e-mails in plain text, rich html and even highly compressed videos that open directly from e-mail.
Among the automakers performing e-mail promotions are:
Infiniti - Series of five e-mails with video direct prospects to the www.TheNewQ.com. - -
Lexus - Inviting prospects to ride and drives.
Lincoln - E-mail with photos and graphics of the Blackwood pickup sent to prospects who have requested information.
Volvo - Companywide e-mail with screen saver promotes www.ReVolvolution.com.
Toyota - Product brochures are sent via e-mail.
Toyota's vice president of marketing, Steve Sturm, sees customer interest in traditional brochures decreasing and interest in e-brochures and Toyota's Web site increasing.
'Many times, customers are learning more from the Web site than they are from a brochure,' Sturm says. 'We have to make sure that those two work in harmony.'
He says Toyota might allow customers to print brochures at their home or in a Toyota dealership.
'If you tell us that you're interested in safety, performance and handling on your Celica, then you can make a brochure that speaks to those features and benefits,' says Sturm, who added that the customized e-brochure will be available the 2002 model year.
Bang for the buck
MindArrow, of Aliso Veijo, Calif., has produced e-brochures for many automakers, including Toyota, Mercedes, Isuzu, Ford and Nissan. Scott Altman, MindArrow's marketing director, says viewership rates for the company's auto brochures have been as high as 51 percent, with click-though rates as high as 34 percent. This response rate compares with direct mail's 1 percent to 2 percent average. Altman says the cost of e-brochures ranges from 5 cents to 25 cents per send, while direct mail ranges from $1 per piece to $2 per piece on average.
Says Steve Sammons, manager of marketing communications at Infiniti, 'I can't say the online promotions are saving us millions of dollars, but it allows us to be more targeted with that money.'
Sweeping the public
The popular sweepstakes promotion is finding a second home online. Like its offline counterpart, marketers use this promotion to collect e-mail addresses so they can market to those interested in the product.
Lexus' sweepstakes for the IS 300 focused on creating a commercial through an online editing bay, with the winning commercial being aired on prime time TV. The company's national interactive marketing manager, Robin Pisz, says nearly 184,000 people participated. Those who created commercials spent one to three hours at the site.
When Toyota used the Internet to market the Prius, it held a contest in which entrants had to write an essay and submit it online to win the use of a Prius for one month. Of the 40,000 people who participated, 2,000 bought Prius models, giving Toyota a 5 percent sell-through rate.
Faced with a dearth of cash, Volvo teamed up with America Online and offered promotions, coupons and a sweepstakes to build interest and create a database of consumers when it launched the S60.
Phil Bienert, head of customer relationship management and e-Business at Volvo Cars North America, says the sweepstakes promotion, which lasted two months, generated 300,000 names and e-mail addresses. The Web site brought 1.5 million visitors.
Calling the promotion a success, Bienert said he had 'never seen anything on this scale.' The cost of the campaign was less than half of a traditional launch.
Testing the waters
Since the interactive direct marketing waters are relatively new in the automotive field, most automotive companies are just conducting tests and are not ready to abandon traditional marketing means. But no one wants to be left in the dust as auto marketers and their agencies gear up to meet the new e-challenge.
With Forrester Research projecting that 68 percent of online consumers will use the Web to research a car purchase this year, it's no surprise that automakers reported to Forrester a 74 percent jump in interactive marketing budgets between 1999 and 2000 and projected a 16 percent increase this year.
'OEMs now have the ability to establish a direct connection with an individual through (interactive) marketing,' says Baba Shetty, a senior analyst at Forrester Research. 'This is a period of great experimentation to determine how to best capture those interested consumers.'