Last-chance saloon for small-screen car ads?

The £400m-plus a year spent on TV ads for cars could be put to better use elsewhere, says a new report. John Stones gauges the industry’s response

It is difficult to watch television without being bombarded with messages from car advertisers. But a recent report suggests that the millions of pounds spent on these plush ads could be money down the drain.

Only 18 per cent of consumers say TV advertising influences their choice of car, according to a recent Cap Gemini Ernst & Young study, which involved questioning 3,500 people worldwide.

The Cap Gemini report states: “Vehicle manufacturers are wasting money focusing primarily on broad-based marketing/advertising efforts.” Its authors recommend targeted direct marketing, which their research suggests would be more effective.

They got a surprising endorsement last week from General Motors chairman Bob Lutz. While making it clear that GM will not abandon TV advertising, Lutz said: “I’d argue that, in a lot of ways, magazines are a more powerful medium than TV.”

However, Cap Gemini’s findings have been derided by senior car marketers in the UK.

Car manufacturers constitute the highest-spending category when it comes to TV advertising in the UK – between them, they have spent £416m in the past 12 months, according to Nielsen Media Research.

Among the manufacturers, TV budgets generally reflect market share. Ford, according to the Society of Motor Manufacturers and Traders (SMMT), has 21.55 per cent of the UK market by volume. It also has the highest TV spend, at just under £92m over the past 12 months (Nielsen).

Some brands do punch above their weight. For instance, Toyota spends more than £60m on TV advertising, a similar amount to Vauxhall, despite the fact it has only six per cent of the market compared to Vauxhall’s 18 per cent (SMMT).

Toyota GB marketing director Matt Harrison says TV advertising is an essential part of the marque’s aggressive expansion plan: “We have a huge amount of brand building to do and TV advertising is the best way to do it.” By doubling the amount it has spent on TV over the past couple of years, he says Toyota has increased brand awareness by 25 per cent. Harrison adds that, while the bean-counters require rigorous analysis of other marketing activity, he is under little pressure when it comes to his TV budget.

However, not all car manufacturers are prepared to give their unwavering support to TV advertising. MG Rover radically scaled back its above-the-line activity earlier this year with the intention of making better use of its limited budget, though the move was seen by competitors as a sign of the company’s financial difficulties (MW July 3).

Yet for other manufacturers, such as Ford, TV advertising is essential. Paul Jackson, who as chief executive of Ogilvy & Mather has responsibility for Ford’s advertising, says the car manufacturer has a very sophisticated model to evaluate the return on its considerable investment in TV advertising. The model tracks perceptions of the brand rather than immediate sales.

Jackson describes Cap Gemini’s findings as “not a particularly great observation, and overly simplistic”. The report, he says, fails to understand the automotive purchasing cycle, which in the UK takes on average three years.

What TV advertising does, he adds, is slowly shift the well-developed and deeply entrenched perceptions that consumers have about car brands. He points to Skoda’s recent campaigns in the UK as a particularly effective example of how TV advertising can change the way a brand is perceived.

Renault national advertising manager Jonathan Wignall is also sceptical about Cap Gemini’s research. He points out that people often claim they are not swayed by advertising, but they can reel off a list of ads they remember in focus groups.

Media agencies likewise pour scorn on the report. Carat interactive media director Keith Rattray says Carat’s own recently commissioned research proves the effectiveness of TV car advertising. He says: “For certain high-ticket items, such as cars, TV advertising plays a pivotal role.”

Many point to the increasing homogeneity of modern cars, where differences are created by marketing rather than product, as an argument for the importance of advertising. Neil Christie, who looks after the Citroën account at Euro RSCG Wnek Gosper Partners, says: “Product differentiation is being eroded. The differences are purely based on brand and market perception, and TV is a powerful tool for establishing that.”

Despite Lutz’s comments, Parveen Batish, general manager of marketing for GM-owned Saab, has increased the amount he spends on TV this year by 43 per cent, to £25m. Batish freely admits that Saab does not have a massive market share, but he says there is nothing like TV advertising to get consumers to reconsider the Saab brand. He accepts, however, that for certain brands, TV advertising might not be a necessity. For instance Mercedes, despite being ranked ninth in terms of market share (SMMT) comes in at 20th in the TV spending stakes.

Batish says that when Saab is on TV, the number of people visiting Saab dealerships goes up. “TV has a huge motivational effect on our dealers,” he says. He thinks Cap Gemini’s suggestion that car manufacturers should focus on more targeted below-the-line activity is simplistic, adding that a direct mailing is only effective if a consumer is prepared to consider the brand in the first place.

Even if, despite their faith in TV, car marketers are eventually forced by the fragmentation of viewing to re-evaluate their marketing tools, it looks as though broad-brush car advertising is set fair for the time being.

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