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Pontiac G5 Blazes Trail to Internet-Only Advertising

Has the Big Shift Begun? Web, Direct, CRM Shops Eye Automaker's $20 Billion Spend

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DETROIT (AdAge.com) -- Every one of Pontiac's marketing dollars to introduce its sporty G5 coupe is being spent online.

'Radical experiment'
It's a "radical experiment," said Mark-Hans Richer, Pontiac's marketing director, conceding the effort won't generate as much awareness as TV and other traditional mass media. But it's a calculated risk, because Pontiac is targeting mostly younger men for the niche model. "We know where the bull's-eye is," he added, "so it's easier."

Mr. Richer might be a pioneer, but he's not the only one. A large part of the auto industry seems to be in the toe-dipping phase of a marketing transition that could see it go from a $20 billion traditional advertiser to a leaner, meaner player more dependent on interactive and direct tactics.

20% less in five years
Interactive-buying shop Jumpstart Automotive Media, in fact, estimates that within five years auto marketers will get better ad bang for 20% less. That estimate is seen as over the top by others -- it would mean $4 billion draining out of auto budgets -- but it is, at the least, a good reflection of the enthusiastic interest of interactive agencies.

TV ads are fine for building brand awareness, said Jumpstart CEO Mitch Lowe. "But the car companies are realizing now that what's critically important is to reach in-market intenders." His thinking is that once the data for these intenders is captured, marketers will be able to reach them more efficiently and cheaply than they could with a prime-time blitz.

David Scholes, CEO-President of Targetbase, a CRM agency that handles both Honda and sibling Acura, said the shift has already started. There's been "an astonishing increase in programs" to retain owners, sell them more cars and get more service business for their dealers in the last few years, he said, adding that carmakers are less aggressive about winning over competitive owners than they once were because they have realized that "the ROI of those tactics is less than cross-selling and retention."

Of course Mr. Richer's online push is not as one-to-one as a CRM effort -- indeed some of his banners are targeted at audiences as broad as Yahoo Music's, Google's and MySpace.com's -- but he is looking to use the web to focus on specific audiences he knows are in the market for a car and have the characteristics of likely G5 purchasers.

G5 digital debut costs less
Most importantly, perhaps, Mr. Richer said the G5's digital debut will cost 60% to 70% less than a traditional car launch, although he declined to reveal specific spending. (A launch for a new model such as the G5 typically runs $25 million to $30 million.)

Though the effort started quietly six weeks ago and is scheduled to run through year's end, it looks to be off to a strong start. In August, G5 sales exceeded sales goals by 185%.

Ian Beavis, VP-marketing at Kia, doesn't think Jumpstart's 20% cost- reduction estimate is realistic, mainly because online production costs and ad rates are rising even as online-ad inventory tightens. But he agrees that "we are all seeking superior ROI and customer engagement." Kia has ratcheted up CRM spending this year, thanks to superior off-the-shelf software programs now available that aid database management and predict customer behavior.

Still, car companies must also go after new prospects or buyers of competitive brands, and Kia has done so with its first ride-and-drive this year, taking its Sedona on the road to 19 cities. Mr. Beavis said while such programs are expensive, they are measurable.

Online branding power
The difference is that web and other channels can also deliver the branding experience once the sole domain of TV, print and other measured media. "Toyota is shifting its ad budget from traditional broadcast into direct and CRM programs, but that doesn't mean simply a lot of direct mail and VOD," said an executive close to the automaker. The carmaker wants to use direct and interactive not just for lead generation but to create branded experiences.

The key is making "old" and "new" media work together. Mr. Richer said when the GM brand advertises on TV inviting viewers to Google Pontiac, the nameplate sees an immediate jump in visits. "We have to get to a more sophisticated model to how these mediums interact."

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Matthew Creamer contributed to this report.

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