Gearing down

Plummeting car prices are undermining the substantial advertising budgets of UK car companies. The stylish, sophisticated ads created to appeal to UK audiences could soon be replaced by bland pan-European campaigns. How will UK agencies fare i

Expensive, stylish car campaigns – such as Fiat’s “Spirit of the Punto” and Renault’s “Papa and Nicole” series – which have run over the past decade, are to become a thing of the past. Car prices in the UK are about to come crashing down, with some 30 per cent wiped off the price tags of many models.

Advertising costs account for about 15 per cent of the price of most cars sold in the UK, so the lavish and often wasteful campaigns of the past two decades are about to get much cheaper.

We may not quite hit the nadir of US car ads, featuring sleazy, fast-talking salesmen standing on local car lots inviting punters to “come on down” for a test drive. But car manufacturers are about to apply the brakes on the super-charged creativity of auto advertising, on which many UK ad agencies have built their reputations.

“While car manufacturers were making large margins in the UK, they were happy to let offices here have large budgets,” says Nick Mustoe, chief executive of Mustoe Merriman Herring Levy, which advertises Kia. “But now that these margins aren’t as high, the advertising budget is being squeezed.”

Global mergers of car manufacturers, combined with a drop in car sales in the UK, is pushing car advertising to align with Europe. This cuts costs and ensures greater consistency in all lines of communication.

But it could have a devastating effect on the UK ad industry, which creates some &£749m worth of car ads every year. Much of this expenditure is intended to impress car dealerships that the manufacturer is playing its part in marketing.

The arrival of interactive television advertising could also undermine the position of big budget campaigns, as it is a far more effective and direct means of communication than the scatter gun approach of the big car ads.

Gone are the days when the giant US motor companies settled in the UK because of a common language. Ford has already made it clear that it intends to run its Ford of Europe headquarters from Germany, as has General Motors.

The UK car market was the “jewel in the crown” for car manufacturers. As profit margins were so high, UK marketing departments were allocated large budgets – often between &£10m and &£60m.

As companies such as Nissan strive to cut costs and focus on reducing the number of suppliers, from brake-pads to windscreen wipers, it is inevitable that advertising agencies will face the axe.

Every agency wants a car account. The budgets are huge, the creative executions are high profile and are often shot in glamorous locations, offering executives some great trips. Advertising is taken seriously by the management and dealers, and the agencies’ involvement with the business can be traced back to the route of the company’s strategy.

In line with the pan-European functions, advertising agencies are clamouring to win each car company’s advertising on a pan-European or global basis. Local UK agencies are becoming increasingly perturbed about the extent of their involvement in the creative input.

The uncertainty over whether to reduce prices is shaking up the car industry. Not only is it having to cope with a lack of sales, but global car companies are desperate to create one world umbrella brand which consumers will understand.

Mustoe says: “Car advertising used to offer the chance to do good work, but pan-European advertising is bland. It has to be bland to appeal to so many diverse markets.”

Mustoe believes global or European advertising only works in cases such as Coca-Cola, which exports its Americanism, but this is seldom possible with cars. He warns European audiences are set for advertising cliches, such as cars driving through the desert and across lakes.

Two weeks ago, Nissan started to create a more powerful pan-European function. This will eventually be based in Paris alongside its part-owner Renault, with Renault executive Mario Kanavesi heading sales and marketing. UK marketing director Neil Burrows is tipped to take a central role in Europe (MW March 23).

Nissan recently ran a pan-European ad for its Almera. Created in London by TBWA GGT Simons Palmer, the ad has not been received well by the advertising community, which has described it as “appalling” and out of line with the Nissan Primera advertising last year.

With Nissan striving to cut costs and push for consistent advertising campaigns across Europe, TBWA in Paris will be just as likely to pick up pan-European briefs as TBWA London.

Not only is the creative work likely to be insipid, because of the nature of European advertising, but the London office could be relegated to adapting work for the UK market.

“No one will feel good about placing someone else’s ads,” says Mustoe. Who would?”

Toyota commercial director Mike Moran fiercely objects to pan-European ads: “Nobody has successfully made a pan-European advertising campaign. I can only describe the ones I have seen as garbage.”

Moran also points a finger at the European central marketing chiefs who, he says, have large egos to feed: “They have a quest to control centrally, and a misguided belief they can do it better.”

Agencies to blame

Moran thinks advertising agencies must take some blame for the way things are heading: “They are letting the client dictate to them because they are terrified of losing the business. It will back-fire because as a marketer, you can only accept bad advertising for so long.”

Lowe Lintas has managed to keep its grip on Vauxhall’s advertising in the UK. It created the Griff Rhys-Jones advertising campaign, and the car company has bought into the idea to run it across all of its UK advertising for the foreseeable future.

Two years ago, to the chagrin of the then Lowe Howard Spink, General Motors in Europe appointed Rainey Kelly Campbell Roalfe to create a pan-European ad for the Astra. Traditionally regarded as a “hot” agency, the industry leaned forward with more than a mild dose of curiosity to see what Rainey Kelly would produce.

The ads, which showed cars dangled from helicopters, set to trendy music with the tagline “Quality is a right. Not a privilege”, failed to impress and were not greeted with enthusiasm.

One advertising insider says: “Everyone was saying how tedious they were. But that is the cost of having to get the campaign approved by so many markets. If Rainey Kelly couldn’t get it right, who can?”

Fiat, which has run the “Spirit of the Punto” ads for several campaigns in the UK through its agency D’Arcy, ran a pan-European campaign recently which was created by Leo Burnett in Milan.

The campaign was completely out of strategy with D’Arcy’s “Spirit of the Punto” campaign.

D’Arcy board account director Daniel Taylor defends his client: “The move is obviously towards pan-European campaigns, though there are exceptions. Provided we have an involvement in the creative element and maintain a clear brief for positioning the car, then it is not such a problem.” Like most car account directors, Taylor admits the whole issue of pan-European advertising is a sensitive one.

D’Arcy London has now created its first European advertising campaign for the Fiat Brava Trofeo. Coming from an agency which has shown spurts of imagination over the past few years with other Fiat campaigns, this version fares little better than Burnett’s offering.

Skoda, a brand dogged by its Eastern European heritage, recently broke away from the trend for pan-European campaigns by pulling its &£12m UK advertising out of Grey, which has the business in most of Europe, and awarding it to Fallon McElligott.

The agency has just produced its first campaign, which uses a typically UK-oriented apologetic style of advertising, suitable only for our screens. The brand of humour may be lost on other European audiences.

Some observers believe Fallon’s appointment is likely to be temporary. The UK is still a problematic market for the Volkswagen-owned brand and once public opinion begins to turn in Skoda’s direction, the whole European business could be reviewed.

Small fry

A small agency such as Fallon does not stand much chance against the corporate muscle of large global networks, where deals are done at the highest levels. However, its recent acquisition by Publicis may give it extra clout.

Agencies say that moves to integration between dealer advertising, brand ads and direct mail are made more difficult by pan-European demands.

Nick MacElwes, who is in charge of the Peugeot business at Euro RSCG Wnek Gosper, says: “[With a pan-European advertising campaign] there is no core thought which we can take below the line.” MacElwes says individual Peugeot regions have the option of taking pan-European work, and if the local marketing team chooses to do their own thing, this is acceptable.

This, according to most advertising insiders, is something of a temporary luxury, and Peugeot in the UK is likely to take more and more European advertising. Euro RSCG in the UK – along with other UK offices of agencies – will be worrying whether it will lose out in the long term, as its office in Paris stands a good chance of emerging as the lead creative agency.

Ads made to appeal to the multitude of cultural sensibilities in Europe can only be based upon the lowest common denominator. Consumer reaction to this bland advertising will result in perceptions of car brands becoming confused.

Pan-European car advertising will undo much of the work the major marques have invested so heavily in over recent years. Cars are likely to turn into another commodity with few brand values – just like washing machines and fridges. And downgrading UK car ads will make watching TV ads a great deal less entertaining.

Latest from Marketing Week

PLEASE SIGN IN OR REGISTER. IT'S FREE, QUICK AND EASY!

Access Marketing Week’s wealth of insight, analysis and inspiration that will help you develop as a marketer and leader.

Register and receive the best content from the only title 100% dedicated to serving marketers' needs.

We’ll ask you just a few questions about what you do and where you work, so we can make Marketing Week more relevant to you.

Register now

THE BEST CONTENT

Our award winning editorial team and columnists will ask the biggest questions about the biggest issues on everything from strategy through to execution to help you navigate the fast moving modern marketing landscape.

THE BIGGEST ISSUES

From the opportunities and challenges of emerging technology to the need for greater effectiveness, from the challenge of measurement to building a marketing team fit for the future, we will be your guide.

PERSONAL AND PROFESSIONAL DEVELOPMENT

Information, inspiration and advice from the marketing world and beyond that will help you develop as a marketer and as a leader.

Dedicated to developing your skills and helping you achieve marketing excellence. Find guidance on leadership, professional development and the latest industry jobs.

Having problems?

Contact us on +44 (0)20 7292 3711 or email subscriptions@marketingweek.com

If you are looking for our Jobs site, please click here