Avis raises spending after cut

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No. 2 car-rental player Avis is trying even harder by restoring some of the ad spending it cut last year.

Auto-rental marketers have reduced their vehicle fleets by 20% to 25% in the past nine months, which has allowed them to increase rental rates by roughly 30% since January, said Jon LeSage, VP-research director of industry consultancy Abrams Travel Data Service. "Their fleets are so much smaller so they have more profitable rentals," he said. "The industry is recovering better than airlines and hotels" from the impact of Sept. 11 which curtailed travel.

Amid this backdrop, Avis Rent A Car System expects to spend "significantly more" this year on advertising than 2001, said Scott Deaver, exec VP-marketing, who would not quantify the amount. He said the jump is tied to Avis' new parent, Cendant Corp., which also has hotels under its corporate umbrella. The move is an about-face from last year when Avis dramatically slashed spending in measured media to $9 million from $29 million in 2000, according to Taylor Nelson Sofres' CMR. While ANC Rental Corp.'s Alamo and National brands also spent less, the drops weren't nearly as significant.

shift in strategy

Avis is also altering strategy to go after the leisure traveler. "Leisure is the place we have to grow," said Mr. Deaver. "It's been under-marketed at Avis." Corporate travel, which traditionally accounted for about 75% of Avis' business, "is cyclical and soft," he said, though not as soft as in 2001. Even as business rentals declined, Avis has beefed up its leisure rental business, which now accounts for 40% of its total, up from 25% last year.

The leisure strategy was developed this year after research showed a demand "for the premier leisure business," he said. Citing researcher Brand Keys, he said consumers ranked the Avis brand highly on the strength of its customer concern.

Customer concern is, in fact, highlighted in its national TV spot breaking in September from Interpublic Group of Cos.' McCann-Erickson Worldwide, New York. The :30, to run on national broadcast and cable TV networks, touts the Avis Care Package and carries the marketer's "We try harder" tag.

Avis returned to national TV in May, with three 30-second spots from McCann that ran on national broadcast and cable. Prior to the effort breaking, Avis spent only $1 million in measured media from January through April. During that time, Enterprise Rent-A-Car was the most prolific spender, followed by Ford Motor Co.'s Hertz Corp.

It makes sense for Avis to chase the leisure segment, Mr. LeSage said. "It shows how vulnerable you can be if you rely too heavily on one category." Hertz, Avis and National are the "Big Three" in the corporate segment, while Alamo, Budget, Dollar and Thrifty get more revenue from leisure than business renters. Alamo is the leader in the leisure segment.

While things are improving, not all is rosy in the industry.

National and Alamo parent ANC has been reorganizing under Chapter 11 bankruptcy laws since last fall. ANC, spun off from entrepreneur Wayne Huizenga's AutoNation in 2000, has since hired Dan Ginsberg & Associates, Los Angeles, to handle advertising for both the Alamo and National brands. Alamo will break a new TV campaign in September with a new ad tag. The marketer declined to discuss details.

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