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.
The Price of Fuel
There is no denying that the automotive industry has been hit hard by the economic downturn. Dealers are forced to cut back on advertising due to weak sales and manufacturers are forced to offer incentives, such as General Motors' (GM) recent offer featuring the GM employee discount for all customers. But even incentives are falling short of success, says Koeppel, perhaps because of the difficulty people are having in getting credit and financing.
Emphasis has moved away from new vehicles and leasing plans, except with some of the more upscale manufacturers like Mercedes, BMW and Infiniti. Instead, marketing campaigns are focused around fuel-efficiency or free-gas incentives. Also, many dealers are increasing the advertisement of their repair services and used car inventory.
"The industry is trying to highlight the fuel-efficient segment of their product lines. However, the reality is that many of the manufacturers did not anticipate the rapid increase in gas prices and are stuck with a large inventory of gas-guzzling SUVs, trucks and other large vehicles," adds Koeppel.
As a result, he predicts the prices for new smaller cars will begin to rise in the next year to make up for the money lost on larger model sales. "The average profit on an SUV is about $10,000, while the profit on a Ford Focus today is only about $100," he says.
DR has become an effective tool for cost-effective automotive marketing. "CMOs are under pressure to show an ROI from their marketing programs. They have seen how everything can be measured online and now they are looking for that same type of measurement from their offline media and DR can provide those metrics," says Koeppel.
Chuck Tilton is the senior product marketing manager at The Cobalt Group, a company that provides Web site services, search engine optimization (SEO), lead management and E-mail marketing, and back-end data management to car dealerships. Tilton says his automotive clients are also focusing more marketing campaigns on the finance or parts and services departments at dealerships, since that is what consumers are hunting for on search engines these days.
"Sometimes better than a new vehicle is an E-mail campaign once a consumer has purchased; the program maintains a relationship through E-mails. Dealers can't get them to buy another vehicle, but they love the maintenance business," says Tilton.
Deutsch's focus this year for automotive marketing is doing more with less. Sheldon spoke of Deutsch's recent "Rethink" campaign for Saturn, which has proved successful not only for the carmaker's Vue model, but for other Saturn models. The campaign focuses on fuel-efficiency, affordability and all other consumer touch points.
"The Saturn Vue compact crossover, or the five-star crash safety rating of the Saturn Aura midsize sedan — those attributes have become less top-of-the-mind in today's $4-a-gallon market," says Sheldon. "Now consumers want to know miles-per-gallon (MPG) first, everything else second."
Beyond SUVs and other larger-model vehicles, another sector of the automotive industry that has been hit hard this year by the cost of fuel is the rental car business. Third quarter is a notoriously critical time for car rentals, when most families are on summer vacations. However, Rainey Talbot, executive director, national advertising and express programs for Dollar Thrifty Auto Group, says that both personal and business car rental numbers are significantly down in 2008. As a result, the company has made some marketing budget reductions and is trying new ways to increase its ROI.
"Earlier in the summer, we made some choices to cut back on keyword spending online, and it had a bad outcome for us. We immediately saw real reductions in Web site rentals, so we quickly turned that back on," says Talbot.
Dollar Thrifty Auto Group has recently upped its E-mail campaigns. While already sending out E-mails to opt-ins in the database once a month, the company went to twice a month and the communication was well received. Increased print mailings also showed an increase in Web site traffic and reservations. These print and electronic mailers usually push the best rental deals or specials at a specific time, which can be booked immediately.
Talbot refers to car rentals as an afterthought industry. It's the third decision you make on a trip, after a plane ticket and a hotel. And now companies are starting to compete with taxicabs for supplying transportation. "We try to focus on leisure, the experience," says Talbot, "where it is about what the car rental will do for you — a value proposition."