The US auto industry is rebounding from its recent dark days. Consumer engagement and lessons learned were top of the agenda as leading sector communicators joined Steve Barrett in Detroit for this Airfoil-hosted roundtable.
Lisa Vallee Smith, co-CEO, Airfoil
Dave DenHerder, US CEO, Burson-Marsteller
Kate Philipps, VP of comms, Faurecia
Ray Day, group VP of comms, Ford
Nigel Francis, SVP, Automotive Industry Office, Michigan Economic Development Corp.
Jason Vines, consultant, Stratacomm
Julie Hamp, CCO, North America, Toyota
Jim Fisher, director of corporate comms, Visteon Corp.
Tony Cervone, EVP, group comms, Volkswagen
Greg Martin, executive director, comms strategy, GM
The Detroit auto show
Steve Barrett (PRWeek): What industry trends stood out during the 2014 North American International Auto Show? How are those moving the needle for your brands?
Ray Day (Ford): What a difference a few years make, when we were going through the deepest, darkest hours for the economy and our trade. The way we communicate has also changed. We've been monitoring our performance, paying more attention to social and digital. It feels good to be at a show where people are speaking about the future rather than survival.
Greg Martin (GM): When you look at the products, the industry is only at the tip of the sphere for innovation and new technologies, which is something nobody was saying five years ago. Now the auto industry is seen in an entirely new light by a whole new group of media beyond those that cover us daily.
Kate Philipps (Faurecia): Coming from Europe, it's a breath of fresh air. Europe is still at the bottom of the cycle, but the industry in the States is dynamic with a lot of growth and new products. From a communications perspective, this is the first time we had a presence [around] the show.
Nigel Francis (Michigan Economic Development Corp. [MEDC]): The industry in North America is healthy. Sales numbers have rebounded to where they were before the Great Recession. The difference is you don't have to sell product by large incentives.
There were 5,000 journalists at the show, three quarters of a million people walking through it, and $360 million worth of economic impact in southeast Michigan.
The show organizers have done a great job promotionally, but across the industry, particularly in the state, we need a harmonized effort to promote Detroit and Michigan so we can attract talent, technologies, and capital.
Dave DenHerder (Burson-Marsteller) A key observation is the difference in the media covering this year's show. The tough times the industry went through prompted a realization that we must stop talking to ourselves and engage a much broader audience. In terms of technologies, the difference between CES and the modern day auto show is getting very narrow.
Jim Fisher (Visteon): After economic despair, it's great to see our customers doing so well and talking so positively about their products. Moreover, the things getting the most attention no longer depend on the "gee whiz" concept vehicles. There are top-notch production vehicles in all makes and models at this show.
Lisa Vallee-Smith (Airfoil): This is the show's 25th anniversary and it is a brilliant brand halo for Detroit. The competitive spirit is also obvious. It's becoming harder to differentiate not only among the OEM [original equipment manufacturers] brands, but also the supplier brands. Between technology providers, mobile platforms, and such, it's a real scrum of conversions of players around the automotive industry. Everybody wants to be a part of it and this is the place to be.
Tony Cervone (Volkswagen): The industry is getting its mojo back. The investment of all companies into the core product is critical and great for consumers. It's also interesting how luxury brands are taking product down and offering smaller versions of real luxury cars. Small used to mean cheap. No longer.
The entire industry is also tapping into the enlightened interest of a much broader audience. It's actually engaging and conversing, which you couldn't do if people don't care about your industry.
Julie Hamp (Toyota): I was struck to see the first 30 rows at a Lexus press conference being filled by photographers. It almost felt like a concert. Overall, this was a high relationship show. A lot of conversations were beyond facts and sales numbers. It was more about what people truly were thinking about, which are much longer-term discussions.
New comms direction
Barrett (PRWeek): In terms of communications efforts, it's not just journalists. You also have your own teams creating content for you. How has that changed your broader communications structure?
Martin (GM): The lines between marketing and communications, if they exist at all any more, have become very faint. We are more interested in packaging the content and making it ready for the different audiences we speak to, rather than presenting a release or a spec sheet. It's a much different approach than when I first joined this industry.
Hamp (Toyota): According to JD Power research, 58% of consumers in 2005 went online to get information to make a buying decision and visited 4.8 qualified dealerships before making a purchase. In 2012, that number was 98% and they visited one dealership. Having an online strategy for dealerships, as well as OEMs and suppliers, is vital.
There needs to be hyper-collaboration across marketing and communications, but in the end it's all about the consumer, whose biggest concern is, "What kind of value can you bring me?"
Jason Vines (Stratacomm): The auto industry is probably the most transparent retail segment in the market. With edmunds.com, Kelley Blue Book, and so forth, consumers know what a dealer paid for a car and can negotiate based on that. That is a powerful tool. And it's only going to get more transparent.
Cervone (Volkswagen): Communications has forever sought ways to measure the content and coverage we get and its influence on consumers. Now we are looking at it in real time and using it to influence how we are communicating in real time.
The challenge isn't whether it is marketing or communications, but what we are doing with this information and whether or not we are close enough to our customers to talk to them.
DenHerder (Burson): Our research indicates that the auto industry is number one by leaps and bounds in consumers being active online. That's where people get their news, so the more we can educate and have them tell our story, the better off we'll be.
Hamp (Toyota): We talk about liquid content, but really what it means is advocacy. You could say something about your brand, but when other people say it or share something of interest that occurs through an experience, that's the ultimate value.
Francis (MEDC): Our recent research has strongly indicated that a generation from now people will be buying very personalized vehicles. The transaction will be a personal handshake, probably electronic, between the person buying the vehicle and the company making it. And communications will become more important as we drill down to that one-to-one level.
Vallee-Smith (Airfoil): Social media has added a layer of complexity to an already extremely complex industry and communications environment. Marketers should – and hopefully will – turn to their communications brethren and think about these things as decisions are made.
Hamp (Toyota): There are definitely strengths that both communications and marketing bring, but the communications side is usually very heavily relationship-driven. And if you look at all the stakeholder groups communicators deal with, you can easily reach up to 12 or more when you add NGOs, alliance groups, employees, and customers. It needn't be an either-or.
Day (Ford): Respect for the communication function – certainly in auto – has never been higher. This debate on marketing versus communication is archaic. There is a role for both, but if we are really serious about engaging customers long-term, we must start at the ground level and plan everything together.
Fisher (Visteon): Consumer attitudes and approaches have significantly changed. We see as much interest in the kind of activity you can have in the vehicle as in its horsepower. People go through so many experiences in this new digital world and they want to bring those same experiences into the vehicle. We can share that information with automakers and, hopefully, that gets folded into their consumer messaging.
The road ahead
Auto journalist Chuck Tannert spoke to PRWeek editor-in-chief Steve Barrett following the roundtable about the Detroit auto show, future vehicles, and auto companies' evolving comms tactics. Below are some key takeaways:
• The Detroit auto show.
A major trend this year – performance is a value sell. Cars with 300-plus horsepower are back. Companies are actually showing them, not just clay models. Over the last few years, there wasn't this exciting crop of vehicles coming out. But now you saw four or five things that actually could be called sexy.
• Serving the general consumer.
Without preparation and making relationships, I would simply be doing a new product section and not bringing insight to it. My philosophy on bringing information to the general consumer is to make them dangerous on a barstool or at a dinner party.
• Developments in auto companies' comms.
In the last four years, auto company communications with Silicon Valley and other tier ones has opened up. Automakers have realized that it's OK not to do everything. It's OK not to have everything created in house, especially where technology is concerned.
• Cars of the future.
You'll probably see an autopilot by 2020, but nobody knows. The technology to do it is there today. The software is the problem. By 2030, there will be a smarter autopilot because there will be more data. We will probably have driverless vehicles by 2035. Will they be ubiquitous? No. There will not come a day where a switch is thrown and every single car will be driverless.
• Technology's impact on car-purchasing decisions.
It's an issue of cost. There are two camps – those who have money and those who basically are value-oriented. In a recent IHS study, people were asked whether they would like these technologies. More than 90% said they would. However, 0% said they would pay $3,000 or more for those technologies. Zero.
• Homegrown auto production.
In the US, nationalism is prevalent in a certain age and above. My father would only buy American cars, whether they were good or not. For my generation – and certainly the ones following it – it really doesn't matter. Today's generation understands it's a global economy.
Click here for more from Tannert on what journalists need from a car show and his thoughts on CES, which has rapidly grown to be a key showcase for auto brands.
Points of purchase
Steve Barrett (PRWeek): How have your communications efforts adjusted to the fact technology is driving so many car-purchasing decisions?
Martin (GM): The level of expectation among all consumers is much higher than ever. There is a certain level of technology, safety, environmentalism, and connectivity they expect regardless of price point.
Cervone (Volkswagen): There has always been technology advancement in the auto industry. I remember launching V6 engines at 150 horsepower at 20 miles per gallon and we were on top of the world. The pace at which we need to change our products is accelerating. The data we are getting from consumers is critical. As PR pros, we have to embrace that. It's what we've been looking for.
Vines (Stratacomm): I started to laugh when somebody said they were now trying to get into lifestyle media. We have paid agencies billions of dollars over the last two decades to try to get into lifestyle media. We have a much better opportunity now because it's not just metal and tires. Fortunately, this industry is getting its due. PR practitioners must take advantage of it.
Hamp (Toyota): Think about the way people purchase cars now. If someone is not having a very good experience at a certain dealer, they will instinctively tweet about it. If they do that enough, as a car company, you have to look into what kind of customer that is. You very well might find he or she has owned 11 Toyotas. This is a customer you don't want to lose.
If we are able to see a problem and resolve it with that person, it could be the difference between the person making the purchase or not. Of course, that cuts both ways. There is a delicate balance between how much you interact with the consumer because you can and how much they actually want you to.
DenHerder (Burson): More and more, customers are expecting it. Say you get bumped from a flight and you tweet about it, it's not long before they call you up to the counter and fix it. You put things on Twitter, you get results.
Vallee-Smith (Airfoil): The way consumers define technology and innovation is completely different from how the automotive industry has. That is a potential competitive differentiator for auto companies. When it comes to technology preferences with their cars, consumers want it personal and simple – and they expect it to be integrated.
Barrett (PRWeek): What did you learn from the difficult period between 2008 and 2010 that is going to help you move forward and prosper?
Cervone (Volkswagen): The industry must pay attention to all stakeholder audiences. Consistency of engagement with them is not something you can decide at the 11th hour of a crisis. You need a grassroots strategy. You must be able to turn on the supplier network, the dealer network, your local politician, and so on and make sure they understand the impact to their key groups.
Things became so overwhelming so quickly. I don't think we as communicators did an effective job of creating that groundswell of support to say, "Wait a minute. This industry is important enough for people to start paying attention."
Martin (GM): There are a lot of things we didn't do because there is a certain arrogance that has been built up over generations of being with the biggest automakers. Bankruptcy is the greatest control-alt-delete for a company.
Vines (Stratacomm): Leading up to that period, the industry failed to tell its impact story on our economy. The auto industry is ginormous. This country depends on it. It created the middle class in the US, but because companies hate each other so much they couldn't really tell that story. They can't agree on anything. That must stop, and some of it has.
DenHerder (Burson): They must also highlight the fact they are all developing products people want. When people look at the products being produced, they see it's what they have been looking for.
Martin (GM): The industry has fundamentally changed in that we do not reflectively resist and obstruct regulations. There are issues of vital importance to our consumers and we want to be known as an industry that will throw our full force behind innovations that benefit customers.
What spins me up is that you have a pocket of press out there that goes to the predictable sources for certain quotes depending upon the issue. We are changing and there should be new voices speaking.
Fisher (Visteon): You never want to have situations occur that create the crisis, but when they happen it's all about how you deal with it. A lot of the pretenses that were going on between suppliers and automakers had to be put aside. And because there was so much attention focused on us, it created all kinds of media relationships we never had. When the dust cleared, we were better off for it.
Spotlight on the Motor City
Barrett (PRWeek): What is Detroit's role in the industry? How is talent being developed to make sure the next generation will be here to drive the sector forward?
Francis (MEDC): Detroit is the center of the automotive industry – still. Detroit is world class in manufacturing the supply chain management today, which is important because the supply chain will change, as will logistics and the manufacturing processes. And in Detroit and the state, there are a lot of great organizations that deal with those issues.
There is a huge paradigm shift going on in power, electronics, control systems, and software. We don't have that talent base as strong within the state, but Michigan has recovered to a better position to where it was before the Great Recession.
Day (Ford): Right or wrong, Detroit is known as the center for the auto sector. We need to improve its reputation to help lift the industry so that all the companies can thrive. On the resource side, it is a lot easier to attract talent if the reputation of this sector – and this city – is strong.
Vines (Stratacomm): For the last 25 years, Detroit has been code in the mainstream media for "bad auto industry." The city's bankruptcy and the fights that will continue for the next months and years will get more ugly. And as this type of talk continues, young people are leaving the city and state like crazy. However, the industry has a great story to tell about the city and the opportunities it provides. It needs to tell it.
Vallee-Smith (Airfoil): Regarding the brain drain of Detroit, it has gotten better. We have a long way to go to make up for what was lost, but the bleeding has stopped.
Barrett (PRWeek): What are the particular issues of importance for tier-one suppliers in communications efforts?
Philipps (Faurecia): We only have 10 customers in the world, so the role of communications is our employee brand. We need to recruit the right people. We need to make our employees proud to be part of our industry and we can only do that by talking about [car companies'] products we make. And technology for an automotive supplier is what created communications.
We can help auto companies talk about the technologies. And if we are able to more freely talk about the vehicles and technologies and use the different competencies we have, that would be a win-win.
Fisher (Visteon): Customers want to see cars' advanced technology. As such, we changed our communications approach to go right into the consumers' space and show them what we have so we can open a curtain on future technology.
Also, Ford recently did a big ride and drive for media. They invited supplier PR representatives along. We spread the word on that to some extent. It's a great example of current relationship building and communication that probably wouldn't have happened years ago.
Vines (Stratacomm): I recall a particular auto company that basically forbade the suppliers from publicizing anything. I said, "Why? These are your partners." From a communications perspective, suppliers should be just as much partners with car companies as are dealers.
This is so important, especially as we get more technology in our cars. To show the true impact of the auto industry, we need to highlight that it's not just the big-name brands, but it's all of these little suppliers throughout the US.
Vallee-Smith (Airfoil): As we view things post-CES and with the Open Automotive Alliance announcement and the arms race for the mobile platform, this will be a whole new era of supplier communications. A lot of opportunities and some communications basics will need to come into play because they approach communications very competitively.
Cervone (Volkswagen): The auto industry impacts so many stakeholders. There is a consumer piece that has an incredible emotional connection. In terms of young talent, bringing them into this industry at an early stage, they can move through a number of these jobs. Everyone at this table has held numerous jobs in this sector for more than just a month. That has given us all a breadth of communications skills – and there are not many industries where that happens.
Click here for more from this roundtable, including added takeaways from the Detroit Auto Show.