Media audit agency Billets recently looked at UK motoring brands and claimed that BMW get the best value from its advertising. Their report stated that over the first 8 months of 2008, BMW spent an average of £22 on advertising for each new car registration compared with £114 for Ford, £389 for Renault, £1,600 for Lexus & £2,745 or Cadillac.
Can we accept these figures?
The calculations were based on ad spend which is not necessarily the same as marketing spend. e.g. marketing spend in other areas such as direct marketing, events, show rooms etc would not have been included and may impact the above results. It is not clear whether internet marketing spend was included or whether the figures were just based on conventional advertising spend such as TV, press, outdoor posters & radio.
What about phasing?
The study ignored effects due to phasing. When I was at Asda I did an econometric study that proved that Asda's TV advertising gave an immediate (but short term) uplift in stores sales in the week of advertising. i.e. if people liked the ad, we attracted more people to the store and sales went up. However, non-adverting factors such as store location, product range, product quality, product availability, prices and in-store experience determined whether they came back the following week.
Most people change their car every 3 to 4 years. If you have a 1 year old car and see a great ad on TV, you are unlikely to change your car the next day unless you are on a premier league salary. So great car ads are likely to have a longer carry over effect. BMW are claimed to have benefited from higher advertising spend in previous years. It may be that Cadillac will see a carry over effect and benefit next year, but in their case I doubt it.
What other factors might influence sales?
Advertising will be a key influence on attracting target prospects to the showroom (or website). Whether those prospects convert to customers will depend on a range of factors, such as: the appearance of the showroom; the quality of the sales staff; pricing; trade-in value; brochures / website quality; finance deals; lead-times and of course how well the car meets the prospects rational and emotional requirements.
Are BMW that good?
In each sector, BMW's have a significantly higher price point than Renault yet according to the figures above, Renault spend 17 times more on advertising per sale. BMW consistently deliver industry leading profit margins.
Undoubtedly, BMW have a formidable track record of great advertising over many years. But BMW's long term success is due to much more than advertising. They have a great marketing strategy (Ultimate Driving Machine) that is consistently delivered at every customer touch point. This marketing strategy drives everything they do and enables them to deliver consistently superior cars that are the most benchmarked vehicles in the industry.
Good marketers know how far they can stretch their brand & BMW have successfully stretched their brand (without compromise) from a small 1 series to the luxury 7 series. In contrast, VW produce good small and mid size cars but can't stretch their brand to sell £40,000 plus Phaetons without heavy discounts. It may be a very good car but, for some the VW badge does not communicate the right message.
Good marketers also know their limits and BMW were wise to keep the Mini as the Mini rather than a BMW 0. However, they did add their engineering expertise. They also knew when to quit after committing the 'ultimate blunder' with the purchase of Rover. For an excellent insight to BMW and their marketing take a look at David Kiley's Driven.
So, despite some reservations about the methodology used in the Billets survey, if a full econometric study was carried out I wouldn't be surprised if BMW still achieved the highest marketing ROI.
Peter Hawtin is an internet marketing specialist with Brand New Way, a UK web marketing agency which helps companies to attract and retain valuable customers online.
