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Wednesday, March 19, 2008 

Vol. 4 No. 4

Two Recent News Reports that Tell a Very Interesting Tale
Both Automotive Manufacturers and Retailers are Moving to New Online Media…in a Big Way

So I recently read two news stories, one in an automotive industry trade magazine about a week ago, and one from an advertising trade magazine two days ago. They both seem to give quantitative proof to what had been indicated, that is, that automotive marketing is moving online Web 2.0 in a big way, and dealer ratings, video and social media will garner the lion’s share of the growth.

So clear are these messages, I reprinted each article in its entirety.

The first is a synopsis of research study data of a report by The Kelsey Group, as reported in AutoRemarketing on March 10th. As compared to this year v. last year, 59% of the dealers polled said they would use video on their Web sites v. 33% last year, 43% said they would use online customer ratings and reviews v. 29% last year, and, finally, the largest jump of all, 33% said they will use social networking sites v. 15% last year.

Also, 59% said they would increase online spending v. only 17% said they would do so for traditional media (while 46% will decrease traditional media, and only 8% will decrease online spending).

It paints a pretty clear picture where dealer’s heads are at these days…and where retailers go, the manufacturer follows – or is it the other way around, I’m not sure…

Take a look at the second article, about General Motors in Advertising Age

The country's third-largest advertiser is getting ready to shift fully half of its $3 billion budget into digital and one-to-one marketing within the next three years.”

And, “GM's Brent Dewar, VP-field sales, service and parts in North America, told Ad Age last December that the marketer will try to persuade its regional dealer ad groups "to shift their focus to digital vs. spot TV" starting this spring after the dealer co-ops, which spend some $500 million annually, are revamped.”

So while I’m not smart enough to figure out what is “cause” and what is “effect,” the direction the automotive world is turning, at least in terms of marketing and promotion, that is, getting people in cars, is pretty clear, at least for the near term.

Now I don’t know how all this specifically will effect fleet and remarketing, let alone how far and how fast the greater automotive world will actually move in this direction, but changes are clearly on the horizon, and hopefully we will do something to move move it forward in this emerging frontier…

As Seen in AutoRemarketing
Dealers Shift Toward Online Technology, Marketing
March 10, 2008

PRINCETON, N.J. — More and more dealers plan to start using Web 2.0 technology in their advertising campaigns, and most intend to increase spending on Internet marketing in the next year, according to a recent study.

A survey from The Kelsey Group indicated that 59 percent of dealers said they would utilize Internet video on their Web sites in the next 12 months, versus the 33 percent who already use the technology. Additionally, the number of dealers who implement online customer ratings and reviews is expected to rise from 29 percent to 43 percent, officials indicated.Meanwhile, 33 percent of respondents indicated they will use social networking sites, an increase from 15 percent."

These findings point to a significant disruption in the auto dealer advertising space," explained Neal Polachek, chief executive officer of The Kelsey Group. "There are valuable opportunities for traditional and new media companies that tune into dealers' adoption of Web 2.0 technologies and align with dealers' online media-buying intentions," Polachek added.

Dealers are also shifting the manner in which they advertise. Sixty-two percent of respondents claimed they plan to boost online media spending in the next 12 months. Only 17 percent said they will do the same for traditional media.Likewise, only 8 percent of dealers intend to cut online spending, while 46 percent will decrease traditional media spending.

The Kelsey Group gathered information for the study through an online survey in February. The next study is scheduled for the fall.For more information, visit http://www.kelseygroup.com/.

As Seen in Advertising Age
GM Roars Forward Into Digital Ad Channels
Changes at Dedicated Media Shop Lay Groundwork for Auto Giant to Shift Spending to Encompass Multiple Online Channels
Jean Halliday Published: March 17, 2008

The country's third-largest advertiser is getting ready to shift fully half of its $3 billion budget into digital and one-to-one marketing within the next three years. And as GM goes, so goes the entire automotive industry -- the leading advertising category that pumped some $9.42 billion into the ad economy last year.

The goal is to go well beyond the banner -- GM spent $197 million in online ads last year, according to TNS Media Intelligence -- to encompass gaming, search, mobile and a broad array of interactive applications, according to several executives close to the automaker. In the last few years GM has shifted several hundred million dollars from TV and print to digital and one-to-one, and that trend will accelerate, said the executives.

The clearest sign yet of the automaker's plans came in the last couple of weeks with changes at its dedicated media agency GM Planworks. First Dennis Donlin, longtime general manager and president of the agency, left and was replaced a few days later by Ken Taylor. But Mr. Taylor, who was previously exec VP-group client leader at sibling Starcom USA, Chicago, has been tasked not just with leading the agency's efforts on behalf of GM, but also with reintegrating Planworks into Starcom MediaVest Group.

'No offices will close'Laura Desmond, CEO of Starcom MediaVest Group for the Americas, declined to comment on specifics of the move, but said, "As GM has streamlined and got more agile, it seemed only appropriate to move from a siloed business approach to a more flexible, nimble approach that'd allow them to access all our centers of excellence." She denied this meant a total disbandment of Planworks, noting that no offices would close.

The idea, according to Ms. Desmond and Betsy Lazar, GM's director-advertising and media operations (who was speaking to Automotive News), is to break down walls at Planworks -- until now a self-contained business unit for GM -- and allow it to share the resources of the entire SMG Group. That means GM will be able, for example, to tap the expertise of MediaVest's branded-entertainment division, run by Brian Terkelson. It'll also be able to take advantage of SMG's buying and planning clout, and tap MediaVest and Starcom's top researchers. Importantly, it will also allow Digitas and SMG to work closely together on digital planning and execution.

SMG will work with GM, much like the way it works with Procter & Gamble or Coca-Cola, bringing a range of resources to bear.

Mark LaNeve, VP-vehicle sales, service and marketing for GM in North America, declined to talk numbers, but said, "Like all major marketers, we've moved into digital media in a big way," adding, "but the other media types are still very important and will still be a big part of our mix."

Online product researchBut a pattern is developing among automakers whereby TV and print are deployed for launches in order to raise awareness, while more of the continuous branding and sales activity shifts online -- as automakers and many of their dealers accept that the purchase process increasingly begins, and sometimes even effectively ends, on the internet.

At a time when a slowing economy is taking a toll on advertising, the prospect of billions of dollars fleeing TV, print, newspaper, radio and outdoor is unwelcome, to say the least.

The worse news for traditional media: GM's Brent Dewar, VP-field sales, service and parts in North America, told Ad Age last December that the marketer will try to persuade its regional dealer ad groups "to shift their focus to digital vs. spot TV" starting this spring after the dealer co-ops, which spend some $500 million annually, are revamped.

Hyundai Motor America is doubling its online ad spending this year over 2007, according to VP-Marketing Joel Ewanick, who declined to offer specific figures. "Online is getting to the point where it may be more important than the 30-second TV spot."

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