Ford Division officials informed dealers of an increase at their annual meeting in Las Vegas earlier this month, according to several attendees. One dealer who attended said Ford plans to double ad expenditures, bulking up national TV, print and newspaper buys. The automaker also plans to devote more media spending to big-event TV programs such as sports, said an executive familar with Ford's plans.
Ford, the country's fourth largest brand, was supported with $356 million in measured media in the first half of 2002 vs. $312 million the same period a year ago, according to Taylor Nelson Sofres' CMR.
The juiced-up ad budget comes as Ford, with few all-new 2003 models, fights its way back to profitability. The brand is recovering from the Bridgestone-Firestone tire debacle and publicized product recalls for quality glitches. It's also been outmatched by a blizzard of incentives from rivals General Motors Corp. and DaimlerChrysler's Chrysler Group.
Amid all that, Ford Division is trying to stabilize market share, which Automotive News said fell to 17.7% at the end of September vs. the 19.1% the same period a year ago. "They have to do it in a hurricane. The wind is blowing from GM," said Jim Sanfilippo, exec VP of Omnicom Group's auto consultancy AMCI. "Increasing advertising spending is a strategy to sustain or grow market share at a period when Ford is vulnerable."
Last week, the world's second largest automaker announced a $326 million global net loss for the third quarter on revenues of $39.6 billion, 9% higher than the year-ago period. Ford's North American auto operation's loss of $50 million in the third quarter was an improvement over its $849 million loss a year ago. Allan Gilmour, VP-chairman and chief financial officer, predicted a slight profit in the fourth quarter and full profit for the year of 40 cents per share.
Nick Scheele, president-chief operating officer, said Ford "is on track" to meet its earlier-announced goal of $7 billion in profits by the middle of the decade. While conceding "we clearly had significant problems with quality," he added the automaker's quality is improving in all areas and "we've got the discipline back into product development."
Richard Stoddart, who oversees advertising as marketing communications manager at Ford Division, declined to comment on his ad budget. But he said the marketer is readying new, fourth-quarter TV commercials from WPP Group's J. Walter Thompson, Detroit, for the Focus small-car line and its trucks.
Ford Division was the nation's best-selling nameplate through September, with sales of 2.38 million vehicles vs. 2.45 million the same year-ago period, according to Automotive News. Sales of the Explorer, totally redone for the 2002 model year, rose to 328,036 units through September vs. 303,455 units a year ago.
Mr. Scheele said Ford's average incentive cost is $1,957 vs. $2,200 for GM and $2,500 for Chrysler.
Ford's F-Series pickup has kept its longstanding hold as the nation's best-selling vehicle, car or truck.
But the current F-150 pickup is older than its leading competitors and won't be replaced until at least the next model year, said Mr. Sanfilippo. "The Explorer has saved their bacon," he said. "Their business case is going to get significantly better with each new product launch."
In Vegas, Ford showed dealers the all-new Freestyle SUV, due next fall as a 2004 model. Also due in a year is the 500 sedan, with the new pickup and Mustang in roughly 18 months.