It's not often that a whole industry gets called out by one of its own. But that happened recently at the Automotive News marketing seminar in Los Angeles, where
Nissan's North America marketing vice president, Jan Thompson, questioned the courage of her colleagues.
"Our business is happy to take a less risky approach to marketing," she said. "We're having a hard time figuring out the right way to send the right message to the right person at the right time."
Thompson backed up her tough talk with Nissan's move from television to online channels. In fact, she mentioned CBS, NBC, ABC, Fox, Google, and Yahoo in the same breath –- and with the same definition of effectiveness.
While many companies in all industries talk a good game about reallocating their advertising funds to capture the opportunities in interactive media, very few companies have pulled the trigger. Only 5 percent of all U.S. ad dollars are spent on interactive channels. Thompson is not the only one to question the courage and willingness to execute new programs in this area. Forrester Research released a report in May that showed that most marketers -- 72 percent in the case of blogs and mobile media -- were curious about these new tactics, but too cautious to execute.
Engage for the relationship As the critical fourth-quarter selling season approaches, a new three-part process is emerging for executing programs that reallocate marketing dollars: awareness; engagement; relationship building. Awareness is the bulk of current ad campaigns, but experts now say spending on awareness needs to take a cut in favor of more customer-centric engagement and relationship-building activities.
Engagement is the piece of the process that allows consumers to respond, participate, and interact with a campaign's elements. Loyalty programs can be part of engagement. Relationship building is the new raft of advanced interactive media that allows consumers to stay in touch and extend their interactions: mobile marketing, experiential marketing, email, blogs, and RSS feeds.
"Marketers need to look at the whole thing, the whole chain of interactions," says Mark Taylor, CIO of AME, Wunderman's new relationship marketing division. "We've worked with clients that have done this and totally reallocated their budgets. If you look at how you want to demonstrate results from your advertising and marketing, the reallocation will almost take care of itself."
Over the past 20 years, for example, auto advertising has skyrocketed 1,378 percent, according to NADA, while new vehicle sales during that time are up only 17 percent. According to Nissan's Thompson, in 2005 the auto industry spent $4,000 per vehicle sold on marketing and incentives. She says customer data analysis has taught Nissan to move a large but unspecified amount of its budget online to interactive media, gaming, mobile marketing, blogs, and search. She says Nissan now spends only $950 in media advertising per vehicle sold.
A study from Atlanta-based MediaTrac shows that automotive dealers spend between $400 and $500 per month to drive foot traffic. Almost all of this comes from the awareness part of the marketing equation. Almost no money goes toward such customer retention tactics as accessory sales, special events, service, parts, and other benefits. MediaTrac research also shows that 70 percent of customers who have their vehicle serviced at a dealer would buy their next car from that dealer, yet little if any money is spent on maintaining relationships.
"Research is very important here," says Laura Betterly, CEO of InTouch Marketing. "It simplifies the reallocation question. You must find out what customers are responding to and then complement that with what's going on in the rest of your industry. A lot of companies just don't do that. They're not creating the warm and fuzzy stuff that engages customers."