Few industries are tougher or more competitive than the automotive industry. With intense competition between both domestic and offshore manufacturers, right across the price range, it’s not hard to understand why marketing can be the difference between a great year and disaster. While TV has long delivered strong results for the industry, in recent times, measurability and accountability have become the catch-cries – in boardrooms, in marketing departments, and even in agencies. In this environment, direct marketing has come to the fore.

Direct marketing is accountable marketing and many companies loyal to TV, print or radio are now moving more of their spend into direct channels. Though vehicle manufacturers and retailers have used direct marketing and particularly direct mail in the past, many are now paying more attention to the medium and using advanced data collection and customer management techniques to acquire new customers and up-sell to existing ones. With motor vehicles a big-ticket item by any measure, an effective direct campaign can quickly pay for itself and generate strong results.

“Automotive has been a pioneer in the development of direct marketing, most notably in the luxury segment,” says Clint Bratton, head of direct and database marketing, The Mark Agency, Sydney. Bratton has experience working on accounts including BMW, Mini, Audi and Lexus across the New Zealand and Australian markets.

“In recent years, direct marketing has grown in importance and is now employed by all automotive brands as a key part of their communications mix,” adds Bratton. “This growth has been driven by demonstrable results, access to deeper third-party data and online engagement, which has decreased the cost of data capture while also dramatically increasing the quality of data collection.”

According to Andy Pontin, CEO of Clemenger Proximity, which manages the Mitsubishi direct account, direct marketing is critical to the automotive industry for three key reasons:

  1. The value of the purchase – cars are expensive and thereby justify a greater marketing investment.
  2. The purchase cycle is long – with an average of around one purchase every four years. Relationship marketing is therefore critical in maintaining contact between customer and brand through that long cycle.
  3. It’s a complicated purchase decision – buyers research in depth, generally short-list brands and models, and often take multiple test drives. Direct marketing is the perfect medium to provide the depth of information buyers are seeking.

Room for improvement
Despite this, Pontin claims that direct in the automotive sector has traditionally been fairly poorly executed. “It hasn’t been great because of the triangular relationship between the consumer, the dealer and the manufacturer. As a result, the data held is often poor quality, and there’s an ongoing debate about who ‘owns’ the customer – the dealer or the manufacturer?”

Mike Chuter, founding partner at Cubed Communications, agrees, adding that it’s the same challenge automotive companies have been troubled by for years. “The manufacturer sells its products via the dealers who believe that they own the customers,” he says. “In addition to this, often dealers within the same dealership network are actually competing for the same customers. For example, once a prospect has settled on his choice of Holden model, he can then shop around further among Holden dealers to see who will give him the best deal.

“Having said all this, manufacturers are placing a great deal of faith, and rightly so, in maintaining an ongoing dialogue with customers with a view to retaining their business,” notes Chuter. “This might not just be with the traditional direct mail, it also includes myriad customer touch points such as newsletters, e-newsletters, and custom published magazines as well as various events. Automotive organisations are now also offering financial and after-sales products – data accuracy and direct marketing is critical to selling these.”

The online space has also provided manufacturers and resellers with amazing scope to run creative, innovative campaigns and a great channel to collect qualified data and target interested consumers. Run in conjunction with direct mail, SMS, TV or print campaigns, online is providing a great portal to talk with potential buyers.

“What’s changed in the automotive industry in recent years is the sophistication of the direct marketing programs, and the media used,” says Pontin. “Online is becoming a key channel as it enables buyers to research at their own pace and in privacy, and enables manufacturers to better showcase their vehicles via moving images, virtual tours and ‘create-your-own car’ applications.”

Chris Johnston, senior account director, Clemenger Proximity agrees. “Online is now acknowledged as a key source of consumer information,” he says. “Manufacturers see two advantages here. Firstly, it allows them to bypass the dealer and send consumers to a dealership simply to ‘broker a deal’. It also allows them to show moving footage and provide a more engaging interaction with their products.

At the end of the day, the key to successful direct marketing is quality data – something many marketers are only starting to come to terms with. The most ingenious campaign will fail if it doesn’t reach the right people at the right time and quality data makes all the difference.

“Customer data is crucial to any sector and particularly automotive,” says Alan Quin, cross media DM specialist at Digital Logic. “Many consumers are brand loyal to automotive companies and significant future sales will come from their current customers. This means that automotive companies have the name and address of most of their future customers, so communicating with them directly is a very sensible strategy. Timing is also critical,” adds Quin, “therefore communication frequency could be initially light, but heavier when customers are likely to be coming into the market again, which is maybe every three to five years in the automotive sector.”

Capturing the moment
Ensuring campaigns are executed at exactly the right time is particularly important in this industry. With cars an infrequent purchase, a manufacturer or dealer may miss out on a lucrative sale if they do not ensure they are hitting consumers at exactly the right moment in their buying cycle.

“With customers replacing their car every few years, it’s important to maintain communication in the intervening period to ensure they stay in the consideration set,” says Tess Doughty, managing director, Rapp Collins Melbourne. “As a high-ticket, often personal and emotive purchase – a car being said to reflect your personality and lifestyle – buyers need to be convinced that they’re getting exactly what they want for their money; that it matches their lifestyle.”

Douglas Smith is general manager – marketing at Audi and is in a strong position to offer some perspective on automotive marketing from the client side. As Smith explains, data is critical for Audi’s DM. “We collect customer data to maintain accurate records of vehicle ownership, to record customer-dealer relationships, to invite customers to events, to mail our customer magazine and to keep customers updated on new products via DM and eDM initiatives.”

A brand in the hand
Direct mail has been used to great effect in the automotive industry. Powered by a database of quality information, targeted and personalised direct mail continues to produce strong results for manufacturers and dealers. “Direct mail remains a major channel and an effective tool for several reasons,” confirms Alan Quin. “The touch and feel physical aspects of mail appeal to many people and you are not restricted with air time or space to get the important detail across to potential customers. It’s not an invasive channel as consumers can control how and when they want to read their mail.”

Clint Bratton elaborates saying that direct mail, along with dealer interactions, is the cornerstone of an automotive marketer’s CRM effort. “No other medium allows a brand to engage with all five senses,” he states. “Nothing else says ‘we value you’ like a tangible package delivered in the mail. Direct mail engages people to look in more detail. It warms them to a sales call or gets them to proactively go online or direct into the showroom.

“More and more we are seeing direct mail supplemented with online marketing,” says Bratton. “The digital experience is highly interactive, measurable and allows collection of more personal data to start a dialogue.”
Digital is also a strong consideration for Stuart Jaffray, client services director at Simon Richards (which manages the Mercedes direct account), though he focuses on the importance of integrating the two mediums of digital and direct mail to achieve the best results. “Mail is the primary channel, but a great emphasis is also being placed on digital. In terms of the most effective choice, it depends on the objective,” says Jaffray. “If we are driving a customer to a website for more information, then email is the logical choice. But where the call to action is dealer visitation, a personalised mail pack will nearly always outperform other direct channels. Having said that, using email as a follow-up to a DM pack will usually lift response rates.”

With online having a huge impact on marketing spend, and with consumers faced with myriad media channels, it’s never been more important to integrate direct mail campaigns with other channels. “It’s a pretty big ask for a single mail pack to introduce me to the brand, announce the vehicle, explain what’s special about it, showcase what it looks like and how it handles, provide full pricing and specs, and show me how to buy,” declares Pontin. “It’s just not going to happen.”

“You need to use the right medium for the right task,” he advises. “Emotive media such as TV and radio build desire, informative media like print and online provide the persuasive reasons to buy, and responsive media like mail and phone generate that face-to-face opportunity. Like all good marketing, building your campaign around an understanding of the customer’s purchase process will get better results.”