Competition forces carmakers to hit the gas on ad spending
"They are usually pretty handsome budgets," said Miroslaw Jasiak, account manager responsible for the Renault brand at ad agency Publicis.
Renault, for example, laid out zl. 5.4 million ($1.5 million) for television ads alone in the first eight months of this year, according to research firm AGB Polska, which bases its data on television stations' official price lists.
Even though passenger cars, tires and car-care products constitute less than 10% of all television advertising revenue, they still rank among the five most-often-aired products. Food, cosmetics and detergents also make the list.
According to AGB, carmakers, car part producers and car-care products had spent a combined zl. 66.4 million ($18.44 million) on TV advertising by the end of August.
Public television station TVP1 nabbed the lion's share of that money, attracting 41% of the revenue. Private broadcaster Polsat pulled in 35% and public operator TVP2 accounted for 14%, according to AGB.
"It's nothing but natural growth," said Kang Ro Yoon, advertising director at Centrum Daewoo. "The market grows, so do advertising budgets."
On the back of a 27% hike last year, car sales are up an additional 10% so far in 1998. Almost 330,000 passenger cars were sold in first seven months of this year.
While ad budgets are normally closely held information, advertising executives estimate that a carmaker on average will shell out more than zl. 10 million ($2.78 million) for a full-service account.
And the spending is increasing as competition intensifies. According to AGB, market leaders such as Fiat, Daewoo-FSO, Renault or General Motors generally expanded their advertising budgets by 50-100% over the year. By the end of August, television stations TVP1 and TVP2, Polsat and RTL7 had devoured zl. 10.6 million ($2.94 million) in ad spending from carmaker Fiat and zl. 6.8 million ($1.89 million) from Daewoo-FSO.
"It's an extremely competitive market," Publicis' Jasiak said. "But it is a nice product to work with."
Auto makers are expected to pour even more money into advertising in the next two months to promote new models being released this fall. At least two new brands, the Peugeot 206 and the Ford Focus, will hit the market by the end of October.
Ford intends to spend as much as $1 million on its campaign, said Nick Palmer, managing director of Ford Distribution Poland. The company is hoping to sell 9,000 Focus cars in 1999, he said.
The effects of ad spending are often delayed, executives said, with sales of the promoted model often not kicking in until after the new year. Customers want to buy a new model early enough in the year to prevent its value from eroding dramatically.
"Promotional campaigns in the case of the car industry are usually pretty heavy, but their main objective is to build up brand awareness," said Jacek Paciorek, media manager with Peugeot Polska. "Most of the producers usually expect to sell the advertised model after the new year."
While new models often prompt additional spending, in most cases car makers are simply trying to build brand awareness. The best place to do that, makers said, is on television.
But print media also has its role, they said. Cars and car-related products were the most heavily advertised products in print media, accounting for more than 13% of all print ad revenue last year, according to Agora-Gazeta, the print division of media holding company Agora. Carmakers in 1997 plowed zl. 109 million ($34 million) into print advertising, with the largest advertiser Daewoo spending zl. 9.7 million ($3 million).
"It's just that our clients expect lots of technical information, and the press is the perfect medium for that," Publicis' Jasiak said. "In television you rather build the image, while in print you sell the technical parameters."
Renault, for example, laid out zl. 5.4 million ($1.5 million) for television ads alone in the first eight months of this year, according to research firm AGB Polska, which bases its data on television stations' official price lists.
Even though passenger cars, tires and car-care products constitute less than 10% of all television advertising revenue, they still rank among the five most-often-aired products. Food, cosmetics and detergents also make the list.
According to AGB, carmakers, car part producers and car-care products had spent a combined zl. 66.4 million ($18.44 million) on TV advertising by the end of August.
Public television station TVP1 nabbed the lion's share of that money, attracting 41% of the revenue. Private broadcaster Polsat pulled in 35% and public operator TVP2 accounted for 14%, according to AGB.
"It's nothing but natural growth," said Kang Ro Yoon, advertising director at Centrum Daewoo. "The market grows, so do advertising budgets."
On the back of a 27% hike last year, car sales are up an additional 10% so far in 1998. Almost 330,000 passenger cars were sold in first seven months of this year.
While ad budgets are normally closely held information, advertising executives estimate that a carmaker on average will shell out more than zl. 10 million ($2.78 million) for a full-service account.
And the spending is increasing as competition intensifies. According to AGB, market leaders such as Fiat, Daewoo-FSO, Renault or General Motors generally expanded their advertising budgets by 50-100% over the year. By the end of August, television stations TVP1 and TVP2, Polsat and RTL7 had devoured zl. 10.6 million ($2.94 million) in ad spending from carmaker Fiat and zl. 6.8 million ($1.89 million) from Daewoo-FSO.
"It's an extremely competitive market," Publicis' Jasiak said. "But it is a nice product to work with."
Auto makers are expected to pour even more money into advertising in the next two months to promote new models being released this fall. At least two new brands, the Peugeot 206 and the Ford Focus, will hit the market by the end of October.
Ford intends to spend as much as $1 million on its campaign, said Nick Palmer, managing director of Ford Distribution Poland. The company is hoping to sell 9,000 Focus cars in 1999, he said.
The effects of ad spending are often delayed, executives said, with sales of the promoted model often not kicking in until after the new year. Customers want to buy a new model early enough in the year to prevent its value from eroding dramatically.
"Promotional campaigns in the case of the car industry are usually pretty heavy, but their main objective is to build up brand awareness," said Jacek Paciorek, media manager with Peugeot Polska. "Most of the producers usually expect to sell the advertised model after the new year."
While new models often prompt additional spending, in most cases car makers are simply trying to build brand awareness. The best place to do that, makers said, is on television.
But print media also has its role, they said. Cars and car-related products were the most heavily advertised products in print media, accounting for more than 13% of all print ad revenue last year, according to Agora-Gazeta, the print division of media holding company Agora. Carmakers in 1997 plowed zl. 109 million ($34 million) into print advertising, with the largest advertiser Daewoo spending zl. 9.7 million ($3 million).
"It's just that our clients expect lots of technical information, and the press is the perfect medium for that," Publicis' Jasiak said. "In television you rather build the image, while in print you sell the technical parameters."
