Audi’s decision to launch a dedicated television channel has been labelled “brave” by one media expert, while others say it could prove to be an expensive experiment and predict other brands will hesitate to follow suit.
The Volkswagen-owned car manufacturer this week became the first company in Europe to unveil a brand- specific entertainment channel, having been granted the first self-promotional licence by Ofcom. Audi Channel will broadcast round the clock on Sky Digital. It has plans to extend the channel to Freeview and cable. Under the terms of the licence, it cannot run any advertising, while sponsorship activity is limited to the Audi brand.
Analysts are sceptical about the value of Audi’s idea. Theresa Wise, media partner at Accenture, says: “This clearly won’t make a return, so it is purely a marketing venture. Even on a digital channel, worthwhile content will cost good money, and I don’t think that will stack up against what else it could be spent on. I suspect Audi won’t find it value for money.”
Tim Brady (pictured), managing director of Zenith Optimedia’s sponsorship division Zenith Alliance, warns that despite the relatively low set-up costs of &£2m, Audi will have to commit considerable funds to succeed. He says: “The problems with feeding a standalone channel are long-term cost, how many people are going to see it and how it will affect them.”
Brady adds that although clients are increasingly interested in advertiser-funded programming and branded content, it is no substitute for conventional advertising. “The 30-second ad will remain king for the foreseeable future. But sponsorship, product placement and advertiser-funded programming all have a growing place,” he concedes.
The launch schedule is split between product-related “infotainment” during the day, and general entertainment-driven material in the evenings and at weekends. Audi is negotiating with Freeview and cable digital services to extend its broadcast capabilities.
Audi head of operations Gary Savage spearheaded the launch in his previous role as marketing director. He says it has cost &£2m to set up – reduced from an estimated &£20m when the idea was first mooted – with Audi committing between &£1m and &£2m more each year to cover running costs. This is on top of the brand’s existing &£20m ad budget.
Savage explains the idea grew out of difficulties in reaching people through traditional advertising, though ads will still be used to drive viewers. “We want to raise our brand image and awareness, and believe this is an important media channel to support our existing marketing mix. We can reach 21 million potential customers’ living rooms, and they can find out anything they want about Audi,” he claims.
Simon Wells, executive producer of Drum Screen, the specialist content production arm of PHD, says: “It has to be more than just a marketing initiative. It is a very brave thing for Audi to do. It’s ahead of the game – maybe in five years, all car companies will have an on-demand TV offering.”
Success, Wells says, will depend on nerves of steel: “It will take time and a lot of money to get right.”. He suggests other car manufacturers and sports brands, such as Nike, will be among those looking to launch dedicated TV channels, but they will watch Audi’s “experiment” before committing.
Savage is bullish about the channel’s prospects: “Often where Audi leads, others follow. We now have to stop thinking just as an advertiser, but also think as a broadcaster.”