Media companies that try to gouge the auto marketer during good times are likely to find themselves out in the cold when rates slide, said Mr. Sturm, who was promoted last month from VP-marketing of Toyota Division to VP-general manager, logistics services.
The risk is high for those who would ignore the advice. The automaker spent $706 million in media on its Toyota and Lexus brands in the first 10 months of 2002, according to Taylor Nelson Sofres' CMR.
Mr. Sturm cited unnamed "select cable networks and recent interactive companies" as examples of greed, and said Toyota rewards the loyalty of "only a select few" long-term partners with its media dollars.
The automaker has a track record in this arena. In 2001, the Toyota brand reduced its presence on a broadcast and cable network due to rising rates. While the marketer declined to identify the two cut back, the players were believed to be Viacom's CBS and AOL Time Warner's CNN (AA, April 9, 2001).
The executive spoke last week's at 2003 Automotive News World Congress in Dearborn, Mich.
Also on the panel was George Murphy, senior VP-global brand marketing at Chrysler Group, who said the automaker requires each national ad to show product bragging rights and create vehicle aspiration. "We are trying to dial up the talked-about" factor, he said. "There's plenty of money out there" among auto marketers, said Mr. Murphy. "I just don't think it's being used efficiently."
Mr. Murphy said the Dodge, Jeep and Chrysler regional dealer ad groups spend two times what the automaker does on national advertising even though CMR reports Chrysler Group spent $866 million in measured media from January through October 2002, while its dealer ad associations spent $204 million.
The discrepancy may be due to recent changes. The dealer ad associations had used mostly national creative from Omnicom Group's BBDO Detroit, Troy, Mich. Chrysler mandated that regional ad groups run 25 or 27 seconds of each 30-second national TV spot, with only a few seconds for a retail message. "We were dunderheads on that one," Mr. Murphy said. Now roughly 15 seconds of each spot aim to drive showroom traffic and sales.
Toyota generally uses its national ads for brand and image building, Mr. Sturm said. The minimum cost of a vehicle launch is now $30 million, with the price rising to $80 million to $100 million for core, big-volume model launches. So Toyota counts on its regional dealer groups to advertise smaller-volume models not in launch, he said.
General Motors Corp. takes a different tack, advertising its corporate incentives across its vehicle divisions in national ads (AA, Dec. 2, 2002). GM already said it plans to keep its incentives in 2003.
GM is forcing other automakers to respond to its incentives, said World Congress panel member Peter Schweitzer. While saying he's not critical of GM, the president-CEO of WPP Group's J. Walter Thompson Co. said, "I personally think it's bad for the industry. We are training people to expect incentives."
Finbarr O'Neill, president-CEO of Hyundai Motor America, said he has "no margin for error" on launches since his brand is a small player in the $9 billion auto-advertising arena. "Advertising is overrated at moving the brand. It really is about the product," he said. "Strong product can overcome weak advertising, but strong advertising cannot carry weak product for long."