Why Some of the Best Car Commercials Cost Less
When it comes to selling goods and services, the vast majority of businesses rely heavily on advertising. Although other factors—such as perceived quality, overall cost, utility, and a consumer’s need for a particular good or service—can greatly impact whether a business is successful or not, few things have such an immediate and significant effect as advertising.
In fact, the most recent year for which statistics are available show that advertising generated almost $200 billion (that’s with a “b”) in sales in the United States alone. With that kind of cash in play, auto manufacturers and dealers are more than willing to spend money on car commercials.
Yet, for all the money they are able to throw into advertising, it is an interesting phenomenon that some of the most effective commercials cost the least amount of money to produce. In this age of huge CGI effects in movies and a constant trend towards bigger and splashier, it seems that—at least with regard to car commercials—sometimes less is better.
Ad Spend Per Vehicle Sold
Most car manufacturers engage in some form of advertising; however, every major manufacturer except for Hyundai caps the ad spend at under $3,000 per vehicle sold. What’s more, even though Hyundai spends more than twice as much on advertising per vehicle sold, it is not even in the top 10 companies in terms of overall revenue worldwide.
This large discrepancy suggests that there is much more at play in determining whether a vehicle sells or not than the dollar amount spend on advertising. While a full exploration of the various statistics relating to the advertising industry would yield some fascinating conclusions, for purposes of this piece we will focus on the above two factors: ad spend per vehicle sold and overall revenue.
What Makes an Effective Advertisement?
In considering why some car makers spend considerably more per vehicle in advertising, yet fail to crack the lineup of the top companies, it may be helpful to consider the various types of advertising and what sorts of purchases they impact.
Consumers are human beings, which means they are sometimes irrational (at best) when it comes to their purchasing decisions. It follows, then, that the most effective form of automotive advertising would be the big, splashy ads that stir the emotions and seek to push consumers into making a purchase based on feelings.
Certainly, this form of marketing works with other purchases: purchasers of items such as candy, sunscreen, and other simple products—known as “low involvement” products because of the low level of commitment consumers have to them—tend to be much more responsive to emotional appeals than do purchasers of “high involvement” items such as laptop computers, housing, and automobiles.
Essentially, the more money a consumer spends on a product, the more he or she is (usually) involved with it. At the same time, the more involved the consumer is with the product, the less he or she will respond to emotional appeals. For “high involvement” purchases, advertising produces better results when it emphasizes concrete benefits of the product.
Given that a car is often among the three most expensive items a consumer will ever purchase (a house and a college education being the other two), it stands to reason that effective advertisements will be those that are up front about the benefits of a given car. Advertisements that inform consumers of the benefits of a car, in addition to being more effective, tend to be less expensive to produce than emotional, flashy advertisements that require intensive scripting, filming, and special effects.
Getting the Most Out of Advertising Dollars
Were car companies given an unlimited advertising budget, it may make sense to purchase advertisements that hit across the spectrum. Advertisements that relay the benefits of a particular auto as well as appealing to the consumer’s emotions would probably produce the best results.
However, advertising budgets are not unlimited, with the major car companies searching for ways to maximize efficiency and minimize costs. It is telling that Toyota—the largest car company in the world in terms of revenue—spent roughly 50% less on advertising during the first half of 2014 than did GM. This suggests that the company is being selective with its advertising, only spending ad dollars where they will bring in the most revenue.
Car companies should take advantage of marketing research and consider the fact that a car purchase is generally considered to be a “high involvement” transaction. Given this, the best way to reach consumers may be to cut back on the flashy effects-laden advertising and just give consumers a straightforward presentation of the vehicle’s features and benefits. While some consumers will always be drawn to emotional appeals, the data suggests that lower-cost, more straightforward advertisements will produce a higher return on investment than flashier advertisements.