 |
Sponsorships such as Buick’s ties with the PGA
Tour have built traditions that resonate with consumers. |
The U.S. autoindustry expects to have cut 130,000 jobs by the end of the year. All of theBig Three have excess inventory. Ford and GM had a combined $10 billion inlosses through three quarters, and Chrysler suffered a tough third quarter.
With challengeslike that, one might expect to find the Big Three in the middle of radicalchanges in sports marketing.
If you lookclosely, you will see an increased emphasis on grassroots activation such asproduct sampling, on Internet-based promotion, and on non-mainstream sports.These are all departures for an industry that traditionally has lived onmajor-property deals, big media buys and a laissez-faire approach to thegrassroots.
You’ll findautomakers exploring new ways to spread their dollars around, but you won’tfind major cuts in marketing budgets. Detroit can’t afford that.
“Generally when sales are weak, the automakerstend to advertise more, if anything,” said Joseph Amaturo, an analyst whocovers the auto industry for Calyon Securities USA. “The auto business is amature business and intensely competitive. It would be hard to pull back.”
“I thought what we’d see is a mass exodus,” said Tim Humes, vice president and director of the Buick account at Momentum, Detroit. “About a year and a half ago, when some big [sponsorship] renewals came up, you thought that was going to be one of the first things to go. But everyone sort of dug in a little bit.”
And they’re still digging in, at all of the Big Three. That’s especially significant given that the auto category accounts for just over $1 billion in annual sports sponsorship spending, more than double the next-highest category, which is alcohol.
U.S. market share |  | | Through Oct. 31, Honda, Nissan and Toyota had sold 3.4 million cars in the United States, a jump of 3.6 percent over the first 10 months of 2005, according to a SportsBusiness Journal analysis of Ward’s AutoInfoBank data. In contrast, domestic sales by the Big Three automakers fell 6.4 percent, to 8.4 million. The Big 3 now combine for 61.1 percent of cars sold in the United States, down from 64 percent through the same period last year. | |
“The annual budget discussion regarding marketing funds usually deals with allocation, not total amount. What I mean by that is we generally have a constant amount of money year-to-year; it’s really more about the focus and where the money should shift,” said Steve Tihanyi, general director, GM sampling portfolio.
“Our spend is the same, but sports has probably grown as a share of DaimlerChrysler media,” said Jay Kuhnie, director of Jeep communication, who was echoed by Jeff Hartley, Chrysler event marketing manager. Chrysler itself will spend $1 billion on media this half of 2006 — twice what it spent during the first two quarters.
Ford marketing executives and public relations people did not return calls for comment, and representatives at its ad agencies declined comment on the company’s sports strategy. But the company’s director of racing technology was recently asked by reporters if Ford’s lackluster Nextel Cup year would mean a dip in support from Detroit.
The Ford director, Dan Davis, replied: “The support of management at Ford has been incredibly strong. All the way up and down the management chain, they believe that racing helps sell product. I believe it. They believe that it’s extremely important that we win and that we’re competitive and demonstrate to the public that we know what we’re doing on the racetrack. As marketing programs go, this is a very high priority and has continued that way. We’re hurting, for sure, but there’s no pressure to pull back on motorsports.”
In fact, the pressure the carmakers feel is to stay in sports — for numerous reasons. One is that the companies rise and fall on the fortunes of their new-product launches, and promoting those against the din of competitors’ cars requires big programs and big ad spends.
“Automotive will always use a lot of mass media,” said Steve Knill, president of Radiate’s music and entertainment division, which has DaimlerChrysler as a client. “You have to see the vehicles to imagine yourself in them, to feel something emotionally. And the dealers by and large really believe there’s a correlation between TV presence and selling cars.”
| Major sports sponsorships of the Big Three automakers |  DaimlerChrysler
U.S. headquarters:Auburn Hills, Mich.
Market cap: $59.5 billion*
Leagues: NASCAR; NASCAR Dodge Weekly Series; National Lacrosse League; National Thoroughbred Racing Association; PRCA and Xtreme Bulls Tour; American Hockey League; Atlantic Coast Conference
Teams:7 NBA teams; 6 MLB; 4 NFL; 1 NHL; NASCAR Nextel Cup Series No. 9 car; 5 minor league baseball teams; 4 college athletic programs
Events: 2 Nextel Cup Series races; 1 Craftsman Truck Series race
Naming rights:Dodge Arena in
Hidalgo, Texas
General Motors
Headquarters:Detroit
Market cap:$16.53 billion*
Leagues:MLB; NFL; NASCAR; Indy Racing League; U.S. Olympic Committee; NCAA; Pac-10; PGA Tour; Champions Tour
Teams:11 MLB; 1 NFL; 1 NHL; University of Southern California athletics
Events:USGA U.S. Open; X Games
Naming rights:General Motors Place in Vancouver; Chevrolet Centre in Youngstown, Ohio; General Motors Centre in Oshawa, Ontario Ford
Headquarters:Dearborn, Mich.
Market cap:$15.36 billion*
Leagues:NASCAR, Professional Bull Riders, Champ Car
Teams:8 NBA; 4 NFL; 3 MLB; 2 minor league baseball teams
Events: 2 Nextel Cup races; 3 Craftsman Truck Series races; 1 Busch Series race; PGA Ford Championship at Doral; Champions Tour Ford Senior Players Championship
Naming rights:Ford Field in Detroit; Ford Center in Oklahoma City; Ford Arena in Beaumont, Texas * Through Nov. 30
Sources: SportsBusiness Journal, Yahoo! | |
Another is the power of tradition — Cadillac and the NFL, Chevy and MLB teams and baseball in general, Chrysler and Buick with the PGA Tour (and Tiger Woods, in the case of Buick). These relationships now have resonances that would be nearly impossible to achieve with major new properties — at least during the time spans envisioned by marketers in their planning.
This reality frustrates some properties. “The [agencies] representing the auto manufacturers are just not quick to react,” said the marketing chief of one major property. “They’re not looking to take on new properties. I’d say they would like to be more aggressive, but they just can’t, given the atmosphere in that category.”
Take a test drive
And what is this atmosphere? You could argue it’s now created by the import carmakers, which have matched gains in U.S. marketshare with gains in sponsorship assets. Toyota, now the No. 2 automaker in U.S. sales, has added naming rights to its portfolio in the past few years, with the Toyota Center in Houston and Toyota Park in Chicago (for the MLS Fire).
Even more aggressively, Toyota will enter NASCAR’s Nextel Cup next year amid much concern about how much it’s willing to spend for success in that venue. It has experience already, from its successful Craftsman Truck involvement, and U.S. automakers have seen how Honda outspent and outperformed the competition in becoming IndyCar’s sole engine supplier.
Positioning like this threatens to exacerbate the perception issues the U.S. automakers grapple with. Tihanyi describes how GM’s research has identified “perception” as the sticking point in the car-buying process for its potential customers. Shoppers assume the imports are better built, which makes it harder for GM products to get past the second and third of five steps in the purchase “funnel:” awareness, opinion, consideration, shopping and buying.
“People don’t really give us a free pass on consideration that Toyota or Honda or BMW get, and there’s a misconception on our product’s quality that’s carried over from a decade or two ago,” Tihanyi said. “So for us it’s very important to get people to see how good our products are.”
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As part of its emphasis on sampling, GM opened “The
Drive” in Las Vegas to give consumers the opportunity
to put the company’s vehicles to the test. |
Thus, Tihanyi changed jobs and titles this summer, from director of marketing alliances and entertainment to general director, sampling portfolio, a concept originated at the vice-president level. His job is to get potential customers into GM vehicles, and much of the sampling now takes place outside of dealerships.
Earlier this year GM opened “The Drive” in Las Vegas, a few blocks from the Strip. The 11-acre “autotainment” park that has a racecourse for driving GM automobiles, a 4x4 course, and an off-road area.
This supplements GM’s longer-running Auto Show In Motion program, which now attracts up to 12,000 potential customers over a four-day weekend in numerous locations each year including sports venues such as Invesco Field in Denver and Nassau Coliseum in New York. Each Show offers 150 cars to test — including from GM’s competitors. “What we see is that consideration went up 200 percent on average for GM products across the board, and for [the competition], consideration for some of the stuff that you think is rock-solid actually went down,” Tihanyi said.
GM might be the only automaker with a titled sampling guru, but the other automakers are ratcheting up the sampling, too. This year Chrysler had sampling opportunities at all of its sponsored golf events.
“We weren’t doing test drives at all those events before, but now there’s a staff on site that will get people in cars and have a course set up, to test drive in a non-confrontational situation,” said Hartley.
Chrysler has added swing-analysis booths, as well, to capture qualified names for follow-up pitches. This is part of another trend — doing data-capture where signage and hospitality used to seem sufficient.
In other ways, automakers are pushing for more integration into the properties’ entertainment assets. Ford appears to be beefing up its efforts behind its truck line in sports, at the same time it has radically cut its car-related golf involvement. With the Professional Bull Riders, “Ford certainly has come to us with some additional requests and some changes in their primary marketing initiatives, and one is to get more involvement from ‘hand-raisers,’ people who are specifically interested in Ford truck purchases,” said Sean Gleason, PBR chief operating officer.
This season a “Battle for the Bull” was initiated, with Web and on-site promotion, that involved a fantasy-style contest to pick top bulls and riders throughout the season, with the winner having part ownership in the bull named Super Duty and a chance to work as a stock contractor at the ring next season.
In addition, PBR got much more aggressive in its profile in pre-event arena videos and signage, with a huge replica Ford grille replacing standard signage this year.
Beefing up online
The Internet has become an automatic part of almost every part of the car-sales process. Several experts said interactive online picture and price generators and extensive product details — not to mention tools for negotiating with dealers — have replaced the ritual of reading the inky car ads over the morning coffee and kicking the tires that afternoon.
“Our data shows that 70 percent of new car buyers, and over 50 percent of used car buyers, use the Web to research and gather information on products,” Tihanyi said. “Over a quarter of these buyers state the Internet has a significant impact on their purchase decision.”
And it’s made influencers out of an unlikely group — young people. “If my kid has done research online about cars for the family, I don’t have time to doubt him, even though we’re talking about a $40,000 investment here,” said a consultant to a large metropolitan dealer group. “I know my parents never would have listened to me like that, but kids have become such big influencers.”
 |
Cadillac, a Super Bowl sponsor, lets the game’s
MVP pick out a new car from its lineup. |
That’s part of the reason various brands continue to ramp up their involvement in outdoor or alternative sports. Tihanyi said GM is looking into extreme sports beyond Saturn’s X Games deal, and sports with “a much hipper, cooler feel to them,” like beach volleyball, where AVP Pro Beach Volleyball lost title sponsor Nissan in 2005.
Jeep has grown its own King of the Mountain ski and snowboard racing series in the past few years to include a summer version and Jeep Terrain Park Challenge and National Championship, outgrowths of terrain park snowboarding — manmade skills courses that are popping up at ski resorts nationwide.
The brand has also added the Jeep World of Adventure Sports on NBC — a kind of alternative-sports “Wide World” — and Kuhnie said the automaker is happy with the ratings.
This kind of broadening of assets is common now, and it helps explain how automakers who have dropped signature deals — such as Ford, Chrysler and Buick not renewing five of their combined eight PGA Tour entitlements for 2007 (including Ford’s only deal and its endorsement of Phil Mickelson) — are keeping their spending levels up.
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Chrysler is beefing up its Chrysler Club Championship
program to include 120,000 players. |
Chrysler only has the venerable Bob Hope Chrysler Classic on the PGA Tour now (it had three entitlements in the deal that ended this season), but it added a founding sponsorship of the LPGA’s Ginn Clubs & Resorts Open in Orlando last year; it’s beefing up its amateur Chrysler Club Championship program to include 120,000 players in 2007, a 50 percent increase; and it will have a big presence at the annual PGA Merchandise Show this winter. “Golf is a perfect demo for Chrysler. Basically we just reapportioned how we approach golf,” said Chrysler’s Hartley.
GM could say the same thing about the NFL. Where Cadillac dominated its activation in past years — despite the league’s broad demographics — this season the deal has been restructured to allow GMC to be the official truck of the regular season and of Sunday Night and Monday Night games; Chevy is running the Super Bowl College Ad Challenge promotion, to supply one amateur-made Chevy ad for the Super Bowl; and Hummer sponsored the NFL draft in April. Cadillac will retain its Super Bowl and Pro Bowl involvement.
The programs come with more intense activation across all media, according to Peter Murray, NFL vice president, partnership marketing and corporate sales. Murray wouldn’t specify, but he seemed to imply the broadened deal cost GM more. “With 20 corporate partners to date, to have fewer partnerships but more meaningful programs … we believe that’s a model that works for the league,” he said.
If GM ponied up for broadened rights, they’re not alone in this marketplace. It’s a sign of the complementary passions for cars and sports in this country and of the effectiveness of sports sponsorship in selling cars.
Noah Liberman is a writer in Chicago.
Auto deals with sports properties
Dodge’s 25-year corporate partnership with the Professional Rodeo Cowboys Association is one of the auto industry’s longest sports sponsorships, and GM has supported the U.S. Olympic teams since the Los Angeles Games. However, many of the auto industry’s recent sponsorship deals with sports properties have been forged by foreign car makers.
| 1982 | DaimlerChrysler | PRCA and Xtreme Bulls Tour |
| 1984 | General Motors | USOC |
| 1984 | General Motors | PGA Tour and Champions Tour |
| 1995 | General Motors | X Games |
| 1996 | Mercedes Benz | ATP |
| 1996 | General Motors | IRL |
| 1996 | Honda | MLS |
| 1998 | Ford | NASCAR |
| 1998 | General Motors | NCAA |
| 2000 | Ford | PBR |
| 2001 | General Motors | NFL |
| 2002 | DaimlerChrysler | NASCAR |
| 2002 | Ford | Champ Car |
| 2002 | Hyundai | FIFA |
| 2003 | General Motors | NASCAR |
| 2003 | Porsche | WTA |
| 2003 | Toyota | NASCAR |
| 2005 | General Motors | MLB |
| 2005 | Toyota | NBA |
| 2005 | Toyota | WNBA |
