The car brand says it has sold more cars as the result of laser-targeted TV campaigns
Volvo luxury vehicle
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Volvo
Specifically, over the past year-plus, Volvo and its media buying partners, Mindshare and the advanced TV ad specialist group Modi Media, have been running TV ads specifically aimed at about 12 million households. These households have members that are likely to be buying cars in the next few months, based on data from companies like Experian and Acxiom, as well as registration data from the Department of Motor Vehicles, Volvo and its agencies say.
Besides employing this digital-style targeting, Volvo and its partners say they’ve been able to track whether the specific households that get exposed to these ads go out and actually buy cars.
The carmaker won’t say how many cars it has sold as the result of this tactic but, throughout this effort, Volvo and its partners have run test and control groups to gauge the effectiveness of the targeted ads. According to Bodil Eriksson, executive vice president, marketing, brand & communications at Volvo Cars North America, the addressable TV efforts have demonstrated a 22% lift in sales in the markets the campaign is running.
Thus, as this campaign has progressed, Volvo has pumped more money into addressable TV and taken ad budgets from national TV. The brand now expects to spend “several million dollars” on addressable TV--the industry term for delivering TV ads to specific American households based on their demographics and shopping preferences--this year, or about half of its TV ad budget, Ms. Eriksson said.
“You always have this constant argument at a company like ours, ‘does marketing work or not?’ and it’s really tiring,” she said. “This [tactic] works so well for us. So we’ve taken down our TV spending a lot as it’s gotten too expensive for us.”
Instead, Volvo is funneling more ad budgets to the four pay-TV providers--Cablevision, Dish Network, AT&T and Comcast Corp.--that are able to provide the level of targeting and precision it needs. The brand is now able to reach prospective consumers in markets covering roughly half of the country, said Tobias Wolf, managing director, client leadership at Mindshare.
Of course, for years, marketers have dreamed of being able to deliver ads to TV consumers with the same targeting precision they can with online advertising, but to date those efforts have been limited in scope. And while a future in which everybody gets the right ad at the right time is still probably a ways away, Volvo’s recent efforts in addressable TV could provide a window onto how TV advertising might evolve in the near term, particularly during a time that the business is under fire from the growth of ad skipping and ad-free binge watching.
To be sure, Volvo’s media shift hardly represents a sea change in media buying. The advertiser spent $66.5 million in media last year, according to Kantar Media, not much considering that auto brands collectively shelled out $11 billion in media. And by Ms. Eriksson’s admission, Volvo’s media budget pales compared to other car giants. “We are so small,” she said. “We have a .3% market share. So even if we double sales we would still be really tiny. We’re never going to be able to outspend everybody. So we have to think differently, and have to really understand who is likely to like what we do and embrace. The beauty today is we actually have technology that will support this.”
To get this level of targeting, Modi Media uses data from Experian, which has collected information on 700 million registered cars in the U.S. Experian has identified a segment of consumers who were 15 times more likely to be in the market for a new car based on factors such as the timing of their last lease and the kind of cars they’ve purchased in the past, according to Mike Bologna, president Modi Media.
Then, they matched that data up with car registration data from the Department of Motor Vehicles to find people that have purchased or leased luxury cars and--based on historical car shopping patterns--may be soon due to buy or lease a new one.
Then, that list of consumers is anonymously matched up with subscriber data from the four different pay-TV companies. These TV companies are then able to deliver ads to those households—while other households receive different ads.
“It’s not ‘we think they are watching this,’” said Mr. Wolf. “It’s, ‘we know they are watching this.’”
Or as Mr. Bologna put it, the set-top boxes only serves an ad when those households are watching TV, so there’s little chance of ad skipping or other waste, said Mr. Bologna. “It’s like online advertising.”
Only unlike online advertising, there are no cookies tracking people on their computers to see if they end up making purchases after clicking on ads. Instead, Modi and Mindshare turn again to partners like Experian to piece together how many people saw the ads and then purchased new cars during the campaign. They say so far the efforts have delivered a return in sales that is five times larger than what Volvo spent on media.
That’s what has Volvo and its partners bullish on addressable TV’s potential to move out of the testing stage.
“This stuff is real, and now it’s scalable,” said Mr. Wolf. “And we can figure out how many cars we sold on the back end.”
So does that mean that Volvo is about to lead a revolution in precision TV advertising? Well, the recent blitz from fantasy sports betting companies says that advertisers blasting messages on TV far and wide is alive and well. And as Mr. Bologna acknowledges, what Volvo is doing is not easy. He estimates that currently, agencies need to spend 10 times as many man hours executing such an addressable TV buy compared to a national TV campaign. [The process of] simply compiling all the data from the various partners involved and putting it all into useable formats is primitive compared to digital ad buying tools, he said. “There is nothing automated about addressability,” he said.
Mr. Bologna said that the completion of Charter Communications’ acquisition of Time Warner Cable has the potential to expand the number of homes where such advanced TV advertising can happen. But after that “there’s a lot of infrastructure needed,” he said. “We’re pretty far away from this becoming” possible in every TV household.
Still, for the right brand, it’s worth it. “This is going to be an ongoing part of our plans,” said Ms. Eriksson. “We’re well beyond tests.”
Write to Mike Shields at mike.shields@wsj.com
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