ANA Annual Meeting 2015

Can Audi's 'Progressive Luxury' Positioning Survive Scandal?

Marketing Exec at VW-Owned Brand Avoids Emissions Issue in ANA Talk

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Loren Angelo at the ANA Masters of Marketing Conference
Loren Angelo at the ANA Masters of Marketing Conference Credit: ANA

In a presentation Friday at the Association of National Advertisers conference, Audi of America marketing director Loren Angelo described how the brand grew from a niche player in 2006 to an aggressive challenger of entrenched luxury autos like Mercedes and BMW. Using Super Bowl advertising, Hollywood partnerships and PR stunts, Audi positioned itself as the "progressive luxury choice," he said.

But in his 30-minute presentation in Orlando, Fla. at the Masters of Marketing event, Mr. Angelo did not address the elephant in the room and a potential marketing pitfall for Audi in the coming months: The fact that the Volkswagen-owned brand has been implicated in VW's emissions-rigging scandal. About 2.1 million Audi vehicles sold globally are equipped with the so-called "defeat devices" that can evade emissions testing, Automotive News reported in late September. In the U.S. there are 14,300 A3 compact cars powered by 2.0-liter turbodiesel engines with software implicated in the scandal, according to the report.

In his talk, Mr. Angelo touted Audi innovations such as LED lighting and the use of aluminum materials to reduce weight. But he made no mention of Audi's diesel technology in his presentation and was not asked about the scandal by ANA CEO Bob Liodice in his follow-up question-and-answer session on stage. People in the crowd of roughly 2,700 marketing professionals were definitely interested in the topic.

An ANA app that allows attendees to submit real-time questions listed the following as the fourth-highest voted question: "How will you handle the elephant in the room, with a mortally damaged owner in VW?" Another question that came in was "Do you anticipate a backlash from the VW scandal on the Audi brand?"

Audi's "Truth in Engineering" tagline puts it at risk of looking hypocritical as long as the scandal stays in the news. But the brand might be benefiting from that fact that it does not have VW in its name.

The YouGov BrandIndex, which tracks consumer perception, shows that VW went from a "buzz" score of 11 in mid-September (around the time the scandal broke) to -39 today. But "Audi seems to be minimally impacted so far," according to a YouGov spokesman, with its score moving slightly from 8 in mid-September to 6 now. "That's pretty slow and modest, especially compared with VW," the spokesman said in an email.

An Audi spokeswoman did not return an email for comment.

In his presentation, Mr. Angelo did not directly discuss the "Truth in Engineering" tagline, although it appeared at the end of several ads he showed. Audi's ad agency is Venables, Bell & Partners.

The majority of Mr. Angelo's talk was about how Audi increased its profile in the U.S. in the past several years by adopting the "progressive luxury" position. In 2006, before the brand began implementing the new strategy, "we were the brand that was sold as the value choice," Mr. Angelo said. "And when you are in the luxury market, the value luxury choice is not the solution you want to be."

One problem was that Mercedes and BMW had a long head start in the U.S. and were routinely shown on TV shows and in movies, while millions of the vehicles were on the road, he said. And at country clubs and high-end restaurants, "those cars came in the valet" confirming to potential luxury buyers that "these were the cars that you needed to own," he said.

Thus, Audi began carving out the progressive luxury positioning. That differentiated the brand from what Mr. Angelo described as BMW's "conspicuous luxury" angle and Mercedes "traditional luxury" position, as well as the "practical luxury" positioning of Lexus.

The strategy has been pushed with a combination of big media buys, including Super Bowl ads, as well as scrappy social media efforts and timely print ads. Audi advertised heavily in newspapers such as the New York Times and Washington Post around the time of Barack Obama's inauguration after the 2008 election. Audi "recognized very quickly … that this was a very progressive moment in time," regardless of political leanings, Mr. Angelo said.

Some of the efforts touted Audi's LED lighting technology that is more efficient than incandescent bulbs. The lights also come on faster so rear brake lights are seen more quickly, Mr. Angelo said.

In 2014, Audi used car headlights to broadcast World Cup results to New Yorkers via an LED "Soccer Scoreboard" built across the East River in Brooklyn. The stunt was erected using 28 Audi A8 sedans and 45 shipping containers on an industrial site.

The ad efforts were meant to get Audi into the top three auto choice considerations for luxury buyers, which Mr. Angelo said has been achieved. "Audi is clearly in the game with the top three competitors," he said.

Whether or not it stays there as the emissions scandal plays out is yet to be determined.

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