Automakers Lagging in Marketing Efficiency

Study: Spending Rises, but Prospects Don't; Niche Brands Get Best ROI

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DETROIT ( -- Despite all the attention paid to ROI today, the key players in the biggest ad category, automotive, appear to be losing ground in the marketing-efficiency stakes. And the brands that spend most efficiently are niche imports: Isuzu, Mini, Scion and Porsche.
The top 37 auto brands last year spent roughly $1 million daily in measure media.
The top 37 auto brands last year spent roughly $1 million daily in measure media.

New study
According to a study released from consultant Compete, the automotive industry spent $192 to reach a single shopper in 2005 -- a dollar more than the prior year -- yet didn't generate any more potential purchasers than it had in 2004.

While a dollar may seem insignificant, it clearly adds up: Compete reports the top 37 auto brands each spent an average of $353 million last year in measured media, including online, or roughly $1 million daily per brand. Compete measures unique, in-market shoppers across 30 independent online channels as well as offline and compares each brand to its measured media spending as compiled by TNS Media Intelligence.

3.4 million shoppers a month
Based upon Compete's estimate of 3.4 million shoppers a month, automakers are shelling out $41 million more to reach the same number of people. Lincoln Merrihew, managing director of the consultant's auto practice, said that rather than generate more shoppers the industry simply redistributed them because of incentives by major players reacting to General Motors Corp.'s employee discount offers begun last summer.

And in fighting over that same pool, the industry sold 16.99 million vehicles in the U.S. last year, only a bit higher than 2004's 16.91 million.

The top four in Compete's analysis-Isuzu, BMW's Mini, Toyota's Scion and Porsche-for example, benefit from having fewer models and marketing programs not measured by TNS. With smaller target audiences they don't necessarily have to use some of the increasingly inefficient mass media on which their bigger brethren depend-or perhaps it's just that with their smaller budgets they've made their marketing money work harder.

Although Isuzu spent the least -- $7 a shopper last year and less than $2 million in measured media -- it also brought in 22,500 shoppers per month last year vs. 35,000 monthly in 2004.

Mark-Hans Richer, marketing director of GM's Pontiac brand, said per-shopper data is a good ad efficiency measurement, but only one way to look at the numbers. Mr. Richer has favored combining new marketing tactics with traditional media for Pontiac, but the former don't show up in TNS data.

Mr. Merrihew, too, believes vehicles sales alone are an incomplete way to measure return on ad investment. "As the industry becomes more tactical, the ability to drive in-market shoppers has become more important," he said.
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