Research, econometrics hone auto's direct touch

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Automakers of all sizes have increased their use of media research and measurement in recent years.

"Increasingly, more and more boards are asking for returns on investment" for their ad dollars, including non-auto marketers, says Catrina McAuliffe, director of brand planning at Interpublic Group of Cos.' Carmichael Lynch, the Minneapolis agency that handles Porsche Cars North America. Sophisticated modeling "comes out of a scientific formula that says if you spend money in a certain way, you can understand the power of what that money bought you."

Depending on the variants of the model, marketers also can better predict how best to place ad dollars to lift sales or brand awareness.

BIG WITH CAYENNE

Kevin Nicholls is a believer in one model-econometrics-that helped Porsche significantly increase the response rate to a direct mailer introducing its first sport-utility vehicle, the Cayenne. "We were able to target people who were more like our existing buyers and the most likely to buy the Cayenne," says the manager of marketing communications at Porsche.

The Cayenne's first direct mailer a year ago went to some 70,000 owners of competitive, high-end SUVs and upscale sedans. The response rates for the first and subsequent Cayenne mailings have been between 8% and 9%, or three to five times better than the automaker had gotten in the past. Mr. Nicholls attributes half the responses to the vehicle and the rest to the improved targeting. Few hand-raisers, who will get a total of six mailers before the SUV goes on sale next spring, have opted out.

Econometrics "enabled us to better target direct mail materials and get the best value," he says.

Porsche spent $5 million in measured media through July 2002 and $10 million last year, reports Taylor Nelson Sofres' CMR. The upscale sports car marketer spends about 45% of its ad budget on TV, Mr. Nicholls says.

Other tracking methods are also employed. Porsche's media buyer, Omnicom Group's PHD, New York, does post-buy quantitative tracking to determine how many households it reaches via both TV and print. Porsche also contracts out annual surveys for qualitative research to learn the most effective media. The automaker uses the info when plotting the subsequent year's media plan. Mr. Nicholls says he learned high-tech titles in the aftermath of the dot-com bomb were not as relevant to Porsche's target audience, so more buys were shifted into broader business magazines.

The Chicago-based consultancy Porsche hired in early 2001 to plan the original Cayenne mailing was named Econometrics, but the term is used more generally by media researchers to describe a sophisticated algorithm for predictive modeling. Jeff Scott, president of Interpublic's Campbell-Ewald, Warren, Mich., says that unlike demographics, econometrics takes into consideration the amount of discretionary income a consumer has and how they spend it. "It's much more predictive," he says, "because it's based on real spending patterns."

MAKING A FIT

Campbell-Ewald, which handles General Motors Corp.'s Chevrolet, uses econometrics for its financial services and auto marketers. Not many companies offer this sort of expertise, which is mainly used for direct marketing, Mr. Scott says.

Porsche has since switched to consultancy R.L. Polk & Co. for econometrics work. Polk helped prepare a mailing list of some 70,000 for the Boxster sports car earlier this year. The conversion rate of recipients to actual sales was more than 1.5%, "which in terms of sales is a fantastic response rate," Mr. Nicholls says.

At GM, media planning was consolidated in 2000 from 17 separate agencies to Publicis Groupe's dedicated General Motors Planworks, Detroit. Since then, the auto giant has more than doubled the number of people dedicated to proprietary media research and tripled spending, says Michael Browner, executive director-media and marketing operations at GM. He says the moves show how valuable media research is, and contends, "It hasn't been where it needed to be."

With research reviewed monthly, GM has "made dramatic changes in what we buy and what we schedule and what we invest in," Mr. Browner says, declining to discuss specifics.

The carmaker has even met with several undisclosed non-auto marketers that have asked for information about GM's research approach. Mr. Browner doesn't reveal proprietary data, but he has broader discussions about the carmaker's general approaches and the kinds of topics it considers. As he notes: "A lot of research is done for the wrong reasons."

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