The Engine Behind the Automotive Industry1 Oct, 2008 By: Jacqueline Renfrow Response
Driving customers from the Internet to the dealership, direct response marketing is steering the industry through tough times.
We're all familiar with the car commercials on TV: a stress-free driver, the vehicle winding through country roads, a demonstration of the car's agility and performance. But selling a car in 2008 takes a lot more than just nationwide television branding. It takes direct response marketing on a national and a local level.
It also takes a multi-channel, long-term marketing campaign that follows the customer from initial research on the Internet to purchase in a local dealership. Last year, auto manufacturers spent about $8 billion on direct response marketing, which returned $77.8 billion in sales, according to a report by the Direct Marketing Association (DMA). That investment is expected to rise to $9.8 billion by 2012, yielding more than $108 billion in sales.
Tequila was integral in launching the Nissan Rogue using a multi-channel marketing campaign that included mobile content and viral video. The goal was to invite prospective buyers to engage with the brand in order to convert them into consumers.
A Big Ticket Purchase
Marketing in the automotive industry is not like creating DR for housewares, entertainment or fitness products because of the large price point of the products. "It's much easier to persuade a consumer to purchase a health-and-beauty product for $9.99 than it is a $30,000 vehicle," says Mike Sheldon, president of Deutsch Los Angeles, a multi-disciplinary marketing and communications agency (part of the Interpublic Group of Companies). "Many consumers see their vehicle as an extension of themselves. The trick is to tap into that emotion and pay it off with relevant product attributes they are looking for — gas mileage, safety, etc."
Automotive retailers accounted for the highest marketing ROI of any U.S. industry in 2007. Who spent the most on DR in 2007? American manufacturers Ford, Chrysler and Dodge sent out the most direct mailings for the third quarter, while the top foreign direct mail campaigns were attributed to Toyota, Mercedes-Benz and Honda.
After a home, an automobile is generally the second largest purchase a person makes. Therefore, most consumers spend a lot of time researching cars before buying one. That is where the Internet has stepped up and become a powerful tool.
"Consumers are coming into the dealership armed with the knowledge to negotiate the best price and to purchase the best vehicle for their particular situation," says Peter Koeppel, founder and president of Koeppel Direct, a Dallas-based direct response media-buying agency.
According to a study by J.D. Power and Associates, in 2007, 70 percent of new vehicle buyers used the Internet to help them shop, up from 68 percent in 2006. More than twice as many late-model used-vehicle buyers find the car they purchase through the Internet than through newspapers and magazine classified ads combined. The only industry where people do more online research before purchasing is real estate.