Honda/Acura Advertising News
American Honda Motor Co., facing a challenging but growing U.S. light-vehicle market, is placing its $700 million U.S. creative and media accounts for the Honda and Acura brands under review.
The automaker has worked with Santa Monica, Calif.-based RPA on creative and U.S. media buying and planning for 26 years, and the agency will participate in the review process, Honda said today.
Honda told Advertising Age, a sister publication of Automotive News, the review is expected to be completed in the first quarter of 2013.
"Both the Honda and Acura brands are rolling out incredibly strong new products. In the face of a changing media landscape and a hyper-competitive marketplace, our challenge is to create dynamic marketing campaigns that connect and engage consumers with our products and our brands," Michael Accavitti, vice president for American Honda's national marketing operations, said in a statement.
"The review we have initiated will lead to a strong, long-term strategic plan for our brands," Accavitti said.
Best November ever
The review comes on the heels of Honda's best November ever in terms of U.S. sales.
American Honda's sales this year are up 24 percent through November, though the results are skewed due to last year's earthquake and tsunami in Japan that reduced Honda and Acura inventories.
The Honda and Acura brands should combine to finish the year with sales of around 1.4 million units in the United States.
But Honda has grander sales aspirations in the U.S. market.
Honda Motor CEO Takanobu Ito wants Honda's North American sales to increase to 2 million in the near term from 1.7 million units presently.
Former American Honda sales boss Dick Colliver had a similar goal for the U.S. sales arm in the early 2000s, and never came close -- sales peaked at 1.55 million units in 2007 before the recession sent industry sales tumbling to a 27-year low.
The Honda brand spent $513.5 million on U.S. measured media in 2011, a 2.9 percent increase from 2010, while Acura spent $193 million, a 1.9 percent increase from 2010, according to the Ad Age Data Center.
American Honda's total U.S. marketing spending was $1.14 billion, Ad Age says. Globally, the company reported ad expenses of $2.46 billion during the year ended March 2011, an increase from $2.12 billion in 2010, but still below the $3.01 billion it spent in 2009.
Part of the Honda family
When he joined Honda last year, Accavitti told Automotive News there was no need to put RPA's business up for review, saying an agency review would be, "completely unproductive and unnecessary."
"RPA is an extension of the Honda family," he said.
As recently as August, he praised RPA's Super Bowl work.
"I am not a fan of airing differences with agencies in the press," he told Automotive News at the time. "If I have an issue with ad agency, I will call them."
"RPA has very capable individuals," he added. "We just needed to have a common understanding of what the objectives were, and they've been able to come up with good creative. Continuous improvement is the name of the game."
RPA, whose roster is dominated by Honda -- its Web site lists only a few other clients, including Intuit, La-Z-Boy and Farmer's Insurance -- referred calls for comment to Honda.
The Honda review could mean a new opportunity for media and creative agencies eager to land the biggest automotive ad account since GM reviewed its multibillion-dollar business last year.
RPA was awarded the account in 1986 from Needham Harper after the "Big Bang" merger with Omnicom's DDB -- Volkswagen's agency at the time -- as part of a rollup with BBDO, the ad agency for Chrysler at the time.
The review does not include Honda's multicultural ad accounts, which are handled by Muse Communications and Orci.
American Honda picked incumbent RPA to remain its advertising agency of record for the Honda brand after a 3-month review while giving Acura's creative business to Boston-based Mullen.
The decision announced Tuesday changes a 26-year relationship between RPA and Honda. RPA has carried the Honda brand since the agency was formed in 1986. It landed the account for Honda's luxury Acura brand in 1999.
MediaVest of New York has won the media-buying account for both brands from RPA, which used to be known as Rubin Postaer and Associates.
As a result, Honda's advertising and marketing relationship moves to more of a hub-and-spoke model with different suppliers for media buying, and for the Honda, Acura, Hispanic and African-American campaigns.
The 4 finalists for the $850 million account were RPA; Mullen; 72andSunny, of Los Angeles; and The Martin Agency of Richmond, Va. The media-buying challengers were PHD Worldwide of London; and Horizon Media of New York.
The Honda brand represents about 70% of American Honda's overall marketing outlays, according to 2011 figures from Advertising Age, a sister publication to Automotive News.
"We are confident that our new team of agencies will create dynamic marketing campaigns that connect and engage consumers with our products and our brands, while achieving an even higher level of efficiency and effectiveness," said Mike Accavitti, American Honda's chief marketing officer.
MediaVest's role as a separate media agency is expected to result in more sophisticated targeting of American Honda's media mix, with a significant improvement in media buying efficiency, the company said.
"Getting smarter about how we communicate was a critical goal of this process and even with the same level of investment we expect to realize more efficient and targeted media plans, which will increase the amount of money we spend on reaching our customers," Accavitti said in a statement.
Honda is in a strong position, product-wise, with recent changes to its 3 top volume nameplates: redesigns of the entire Accord lineup and CR-V crossover occurred last year, as did a 2013 freshening of the Civic compact.
But this also means the Honda brand is entering a fallow period with few major product launches; the agency will have to work to keep retail interest churning.
A strong December helped American Honda's full-year 2012 sales rise by 24% to 1.42 million vehicles -- with the caveat that most of summer 2011 sales were impacted by the Japanese earthquake and tsunami. U.S. sales through February are up 4%.
Honda has grander volume aspirations. The Honda and Acura brands are aiming at their combined 2007 sales record of 1.55 million sales for this year. And Honda Motor CEO Takanobu Ito also has said he wants American Honda to reach 2 million sales in the near term. That is part of Honda's global growth strategy of moving from 4 million to 6 million sales by the 2017 fiscal year.
"This is a really good chance for our business," Honda Motor CEO Takanobu Ito said at a roundtable at the Detroit auto show in January. "We have a lot of momentum. We are at full production for the U.S. market."
Although the 2012 Civic was a flop among automotive journalists, it was a sales smash with dealers as Honda pushed lease deals. Even though Consumer Reports removed the Civic from its "recommended" list, the Civic outsold the Toyota Corolla for the 1st time in recent memory.
But pushing incentives is a rare occurrence for the Honda brand; the 2013 Civic has no deals, and consumers and salesmen will have to return to the old ways.
Honda's next growth spurt should happen in 2014, when a redesigned Fit and a new Fit-based crossover will arrive.
They will be produced at Honda's new Celaya, Mexico, plant. That plant will have a capacity of 200,000 units, which will be split between the U.S., Mexican and Canadian markets.
On the Acura side, the flagship RLX sedan is just reaching market, and RPA will still be in charge of that launch, Accavitti said in a January interview.
However, the MDX crossover -- which is Acura's volume leader -- arrives this summer, and that launch will be part of the transition between RPA and Mullen, Accavitti said.
Honda chose Pittsburgh-based Ketchum Advertising to launch Acura in 1986. Ketchum lost the Acura account to Suissa Miller in 1996, and then it went to RPA in 1999.
Acura's New Ad Agency Targets Buyers from Rivals
Alex Leikikh, the son of Russian immigrants to Minnesota, had key posts at agencies Leo Burnett and Fallon -- working at Fallon on the BMW account -- before being named president of Mullen's headquarters office in Boston.
This year, his team made an emotion-filled pitch to win the Acura business. Leikikh (LAY'-kee), 40, spoke with Staff Reporter Mark Rechtin about life with the new client.
Q: What won the Acura account for you?
A: We wanted to find a way to show the synergy of man and machine that is a driving force within Acura engineering and design, but in a fresh way and with some emotion to it.
What was the "wandering road" theme to your pitch?
The wandering road theme came in respect to Acura's sales for the past 10 years. We were asking to see if we could stop this wandering road of sales ebbs and flows. The product pipeline is coming with great, advanced, high-tech luxurious products that deserve really strong communications support. We should see hockey stick growth.
American Honda also had the Honda brand under review. Did you have a shot at winning the Honda account as well?
We clearly got the sense that both were in play. Somewhere along the way, one of the other agencies asked whether they could pitch just one brand or the other, and Honda's answer was, "No, pitch both." When we did the chemistry-credentials sessions, we had separate conference rooms for Honda and for Acura, with separate teams. We treated them very differently. We obviously swung for both.
What are Acura's strengths?
Wow, this takes me back to Leo Burnett days. I would say great quality, precisely built products, high-tech innovation, luxurious products. People don't know enough about how luxurious they are. Acuras are efficient, really advanced machines. There's a strong product pipeline.
Inconsistent marketing. The product is greater than the marketing created to support it.
To attract people from conquest brands to consider Acura. Right now, Acura does a lot of business trading up from Accord or Pilot. But there is an opportunity in going after BMW, Mercedes, Lexus and Infiniti.
Aggressive, smart targeting and spending on the part of the competition. They have a lot of great products. We have to fight for every eyeball and lean on creativity. We have to embrace the concept of creativity as an economic multiplier.
Is Acura a luxury or a premium brand?
Everyone at Acura believes it's luxury. It just hasn't been pitched that way. It's not so much about performance characteristics. If you look at the kind of people we're trying to attract, it's more about substance than showmanship. If you think about what our competitors are creating, they are creating machines for driving or for status and prestige based on the badge, while some are striving for perfection. We are trying to attract intellectual, grounded, normal people. They don't define themselves by the badge in the driveway. They have more substance than that.
Why hasn't Acura caught on?
You have to give people an emotional trigger or a reason to consider this thing. You have to have a love factor with these vehicles. We have to create a company that society wants to exist. We are going to pull an emotional trigger with the MDX in June and see it evolve over the course of time.
But most Acura buyers come from Honda, Toyota and Nissan, not from other luxury brands. How do you get that conquest buyer?
The good news is that there are a lot of Honda consumers who understand the value the Acura brand provides that will step up into an Acura. But we really need to elevate the luxuriousness and prestige factor to get people who drive Mercedes, BMW, Audi and Lexus to take a look at Acura. The new MDX is an awesome, luxurious, high-tech machine. If you are looking at a Q5 or X5, you are crazy not to look at an MDX.
Whose automotive ad work do you admire?
There isn't a lot of really amazing automotive work right now. I thought the prom spot for Audi was interesting. I admire what they are doing from an advertising perspective in using works like "bravery." I think that's a good word for them. I thought [Toyota's] "swagger wagon" campaign [for the Sienna] was a bold way to talk about a minivan.
I wish we would see more of the BMW Films type of work. It's still the standard for auto advertising and marketing.
There are so many creative minds and financial resources available. I want to see that era of marketing come back to the automotive space.
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