USA: GM shifting ad spend away from traditional media - report
General Motors will devote more of its marketing budget this year to relationship marketing, such as sponsorships and the Internet, and less to traditional media while continuing to spend heavily on incentives, Automotive News reported.
Traditional media, primarily TV and print, now account for about 60% of the company's marketing budget, excluding incentives, compared with up to 75% five years ago, GM's general manager of vehicle brand marketing and corporate advertising, John Middlebrook, told Automotive News.
But when you add incentive spending, "money spent for traditional marketing certainly is in the minority," Middlebrook told the motor industry newspaper.
According to Automotive News, Middlebrook would not say how much GM will spend on incentives in 2003, only saying that the company will remain competitive.
Automotive News said that the effectiveness of traditional mass media is expensive and difficult to measure, so car makers continue to seek cheaper, more targeted ways of reaching customers. For example, thanks to log-on requirements, companies have a much better idea of who visits their internet site compared with those who pay attention to a network TV commercial or a magazine advertisement, the newspaper noted.
"Traditional marketing has been coming down as we increase Internet," Middlebrook told Automotive News. "And as diversity spending goes up, which it's going to quite a bit, that takes you sometimes into different (marketing) channels. We're doing more with CRM (customer relationship marketing) and direct mail. Traditional marketing will continue to go down."
The newspaper said that Toyota Division's marketing chief plans a similar shift.
"In the future, you're going to see an absolute explosion in models, even more so than we've seen today," Toyota's vice president of marketing Jim Lentz told Automotive News. "As a result, that's probably going to change the way we have to advertise cars. We're going to have to spend more money on marketing and less on advertising."
According to Automotive News, Lentz estimates that Toyota Division spends about 80% of its US marketing budget on traditional advertising compared with about 25% at Toyota's new Scion Division, which is targeted at younger buyers.
The newspaper said that the industry’s largest spender, GM, spent 11.1% less on magazine advertising for the first nine months of 2002, compared with the same period in 2001.
Automotive News said GM also is shifting money, including from broadcast network TV, into network cable TV and from mass magazines to ‘vertical’ titles, magazines typically are read by a targeted audience, such as those who read Bicycling magazine, compared with the broad reach of People magazine.