Late last year, Chris Perry, marketing communication director at Hyundai Motor America, got a call he’d been waiting years to receive. A rep in Hyundai’s media-buying agency reported that an exclusive multiyear advertising sponsorship for the Academy Awards broadcast was up for grabs. Hyundai, which once ran ads reminding consumers its name rhymed with “Sunday,” was eager to boost its profile among U.S. car buyers, so Perry and his team leapt into action.
Less than two months before the February broadcast, Hyundai signed a deal to be the show’s exclusive automotive sponsor for the next three years, giving the automaker a high-visibility opportunity to build brand awareness in a hurry. It also provided a terrific platform to introduce consumers to its innovative Assurance plan, whereby Hyundai promises to buy back cars from its customers if they lose their job or become unable to work.
It’s an ad deal that wouldn’t have happened in a robust economy. Facing double-digit sales declines and the possibility of bankruptcy, longtime Oscar sponsor General Motors pulled out of the broadcast at the last minute, leaving ABC scrambling for a replacement. Beauty manufacturer L’Oreal also dropped out this year, and American Express, traditionally one of the biggest advertisers at the Oscars, purchased only one TV spot, making ABC increasingly desperate for advertisers, and willing to negotiate prices.
Hyundai’s Genesis
The eight Oscar ads that Hyundai ultimately aired are part of a bold advertising and marketing initiative that’s helped boost the South Korean company’s fortunes during one of the worst sales slumps automakers have ever seen. While Hyundai’s sales through the first seven months of 2009 were down close to 10 percent compared with the same period last year, that performance bucks the trend of an industrywide decline of 30 percent, according to Todd Turner, president of Car Concepts, a brand-image and auto-research consultancy in Thousand Oaks, Calif. And Hyundai is one of the few car companies that has lured customers away from other brands.
Through August of this year its market share has risen more than a full percentage point, making the company the seventh-largest seller of cars in the United States. At a time when General Motors and Chrysler are paring down to a mere handful of models, Hyundai will introduce three new ones in 2010 and four in 2011, a risky move in today’s economy. To continue to generate sales for those cars, Hyundai needs to evolve its image beyond the Assurance plan and keep its brand foremost in the minds of consumers. That will be no small chore if other automakers start to increase their advertising.
Joel Ewanick, vice president of marketing for Hyundai Motor America, says Hyundai needs to take the risks associated with going big and bold now because the recession has presented the company with an unprecedented opportunity. “The last time a company like Hyundai could build brand and steal market share was almost 40 years ago,” says Ewanick. “And before that, you had to go back to 1930, when General Motors stole the leadership position away from Ford.”
Chris Perry won’t divulge what sort of price reductions Hyundai was able to negotiate for the Oscars, but Turner from Car Concepts says the company likely saved somewhere on the order of 30 percent. Rather than spend less, however, Hyundai decided to buy more. Hyundai ran two ads during the Super Bowl, sponsored a pre-game kickoff show, and last November signed a deal with Fox to have its cars featured on the network’s top rated show 24. It took over that spot from Ford, which, like GM, has scaled back on advertising.
“Hyundai has been very effective in getting their marketing message out there,” Turner says. “They’ve given people confidence in the brand and made it a respectable brand. That’s something they didn’t have before.”
And Hyundai’s advertising moves may pay off for years to come. According to a McGraw-Hill study of 600 companies from 1980 to 1985, companies that spend as much or more on advertising during recessions perform better in the long run than those that don’t.
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