Madison Ave Insights

The New Auto Industry: Friend of the Environment and Tech Star

Posted in Digital, Environmental, Marketing, Technology

Back in October, I talked here on Madison Ave Insights about the FTC’s just-released Green Guides and what they would mean for marketers moving forward. The FTC moved against unfounded and overused “environmentally friendly” and “green” claims in marketing for a range of products. The standards as established challenge the use of unqualified general environmental benefit claims and asks advertisers to scientifically prove specific green claims.

One industry with a focus on the environment that needs to adapt to both the demands of the marketplace and the restrictions of the regulators is the automotive industry. At the North American International Auto Show in Detroit in January, consumers saw the latest model introductions from the automobile industry – domestic and foreign – that presented consumers with each company’s take on the best options for price, performance, versatility, fuel economy and being green.

So what’s next for the auto industry in terms of the future – both the future of the environmental and continued explosion of digital?

The Way I See It

  • Automakers see a double edge sword – a marketing and sales benefit from better fuel economy, but at a higher cost to engineer and build vehicles that consumers will want and can afford. They are facing new regulations requiring them to increase fleet-wide average fuel use to 54.5 miles per gallon by 2025.
  • I see the cycle of government pushing the industry and the industry reacting to the push to be a dangerous paradigm in the current political climate. I see the need for industry to move forward independent of government prodding by satisfying consumer demand with products that are innovative and revolutionary.
  • I see automakers, both current and new, pushing forward with battery-powered, electric cars and pushing the envelope with new retail standards and business strategy. I see electric cars as being a true “environmental” automobile.
  • I see the automotive industry continuing its comeback and becoming even more important as major advertisers.
  • I see the need for breathtaking creative, brilliant strategy and greater use of digital, social media and mobile.

The Way The Industry Sees It

I sat down with Joel Ewanick, President and Managing Director of Global Auto Systems. Currently Joel is involved in several projects most noteworthy is as Special Advisor to the CEO of Fisker. Until last summer, Joel was the Vice President and Global Chief Marketing Officer of General Motors and prior to that Joel was Vice President of Marketing for Hyundai Motor America. In addition, he is best known for being the guy behind Hyundai Assurance. I asked Joel to discuss what’s next for environmental marketing and how the auto industry is evolving with the times.

Q
Why is having an environmental strategy to the automotive sector important?  How does an automotive company present a credible environmental position?
A
Having an “environmental strategy” cannot be skin deep, it needs to run through the organization like blood through your veins and become a part of the company DNA. It needs to be a total commitment. If a company does not embrace an environmental position, it will be seen as a marketing gimmick – the “sexy” subject of the day, it’s pandering to the consumers. Eventually the consumer sees through it and calls it what it is, “greenwashing.” If a company genuinely cares about the environment, it should demonstrate it in products, offerings, and actions. It starts in the board room, from the top! A commitment from the companies’ executive management, if not – the accounting for such a commitment will eventually derail the programs. It doesn’t happen overnight – it takes time, research, and constant development – from raw material sourcing, to manufacturing, through the sales process, ownership and full circle to the recycling of the automobile at the end of its life. It all needs to be taken into account. As in any industry, there are leaders and there are followers, those who embrace a true commitment to certain technologies no matter the time and cost because it’s the right thing to do. They will reap rewards in decades to come. Fuel Cell technology is a perfect case. Some companies are demonstrating a total commitment to the technology and are in it for the long haul; while others have started but then backed off because the return on investment may be a decade away. These companies are not dedicated or committed, they will be followers.
Q
The auto industry has new fuel efficiency standards to meet.  Do you think this regulation will change the current “fuel economy” advertising strategies?  Will the fuel efficiency standards make the importance of fuel economy claims less powerful?
A
What will make the claims powerful is the cost of gasoline.  If we continue to experience significant increases in gas prices, like here in California, where gas is at $4.15 to $4.25, consumers will continue to flock to more fuel efficient brands, like Hyundai. If prices stabilize, it will still be important, but it will likely over time become another given, a commoditized feature in all automobiles, like safety.  Volvo and Mercedes Benz owned safety, but through legislation, all cars are basically safe.  It is now a given.  Eventually this could happen with MPG as new technologies emerge.  In the end consumers will look for value, and gasoline, for the foreseeable future, is part of that value equation.

Q
There’s no doubt that consumers have changed in the new smartphone age.  How have automakers evolved to meet consumer expectations and try to be one step ahead of their wants and needs?  How is marketing strategy changing with this?

A
If auto companies have not totally adjusted to the smartphone age they are losing customers.  This is seen in emerging markets around the world that embraced the smartphone technology even faster than in North America. All information needs to be presented in mobile-friendly applications, it is mandatory. More importantly companies need to continue to find interesting ways to use mobile platforms; we are only scratching the surface. The “Chevy Game Day App” for the 2012 Super Bowl was a big success in engaging consumers on Super Bowl Sunday; it allowed consumers to compete for prices and special offers throughout the game. It is only the beginning.
Q
In Detroit in January, some companies introduced new apps that will allow drivers to use their smartphones while driving without actually touching their mobile devices.  Automakers also highlighted apps at the Consumer Electronics Association this year.  It is interesting that the auto industry is moving to be a digital innovator.  From a marketing standpoint, what are the benefits of this and how is this going to continue to evolve?
A
This is a major safety issue for all of us, as distraction from our phones is a “disease” that kills and ruins lives. The temptation to reach for the phone is overwhelming and it competes with drunk driving as one of the biggest issues facing us today. We need to move to “Eyes-Free, Hands-Free” as soon as possible through the total integration of the mobile phone into the automobile. Apple is really close with the use of Siri. Once Siri is fully developed, it should be able to operate with voice – a function that now requires the driver to take his or her eyes off the road to grab a phone or push an icon. Apple has fully integrated the iPhone into the Chevy Spark and that is only the beginning. It is feasible to do this for all cars going forward and it is even possible to retrofit older cars. It is also possible to disable the phone from operating without voice commands while driving as an additional safety feature. This needs to be a collaboration between phone companies and auto companies, with the phone developers taking the lead. In the end, this may be one the biggest advancements in automotive safety in history.
Q
How do you, as an expert in auto marketing and advertising, balance the needs to nourish and cherish a brand while at the same time fight in the rough and tumble of retail advertising that is ever more local?
A
Building a brand and retailing cars are not mutually exclusive. For years marketers have presented retail campaigns that had no connection to brand building campaigns. This has never made sense.  Look today at “retail” campaigns from Hyundai, Honda, Chevy, and Ford – these campaigns are effectively selling cars today, making claims against competitors, but at the same time reinforcing the brand position. This proves that it is possible to blend the two strategies effectively. It is possible to be very aggressive, but at the same time continue to position the car on the brand essence.
Q
What’s the coolest object in your office right now?
A
My 1995 Porsche Dura Ace Prototype Road Bike hanging on the wall.