Auto brands walk the tightrope of brand building versus performance marketing

New Delhi: The automotive industry, one of the most prominent contributors to India’s AdEx, is undergoing a transformative shift. Be it age-old champions or innovative young players, the marketing approach of automakers is metamorphosing, where brand building and performance marketing are no longer at odds but two sides of the same coin. 

With a carefully curated approach, influenced by their legacy, consumer base, and business model, every auto brand is either balancing the two worlds or swinging between the two. 

A balanced tug-of-war

“Those who have been investing in brand building have now started investing in performance, and the performance brands are now heavily investing back in brand building,” said Shekhar Banerjee, Chief Client Officer and Office Head, West, North & East, Wavemaker.

Speaking to BestMediaInfo.com, Shekhar, taking a broader view, said, “Every brand that heavily invested in performance eventually reached a saturation point and started investing in brand building. Similarly, all traditionally equity-based brands with strong imagery have begun incorporating performance marketing to prevent losing market share on specific channels closer to the sale.”

According to Wavemaker’s CCO, this trend is happening across all sectors, including automobiles. When asked if this balancing act is indeed a reality in the auto sector, Shekhar expressed his certainty.

Discussing established automakers, Shekhar said, “Once a brand is established, they can focus on addressing gaps in the consumer journey. With consumers conducting extensive research, there’s a risk of losing them near the point of sale. Therefore, investing in performance marketing becomes crucial.” According to Shekhar, brands with strong brand equity maintain their brand-building investments while simultaneously increasing their focus on performance marketing.

Establishing the two ends of the proverbial rope, Shekhar stated, “Performance marketing acts like a daily steroid for your business. It delivers immediate results, and without it, your business can quickly falter. Brand building, on the other hand, focuses on long-term business growth. Strong brands cultivate sustainable and profitable businesses for the future.”

When brand building is concerned, Maruti Suzuki is an undefeated stalwart. For a brand as established as Maruti Suzuki, brand building is a must. Speaking to BestMediaInfo.com on the subject matter, Partho Banerjee, Senior Executive Officer, Marketing & Sales, Maruti Suzuki India, said, “Without brand building, you become a mere commodity. Both brand building and performance marketing are equally crucial. They cannot exist at the expense of each other.” According to Banerjee, brand building is a crucial tool to establish a strong recall. “When it comes to how you will deliver on your brand’s promise to customers, there are different ways to achieve it. But brand building is essential.” 

Maruti Suzuki, albeit gradually, is embracing the digital shift. Banerjee, in a recent interview with BestMediaInfo.com, said, “We are going all into digital. For this auto expo, we are not participating in traditional print advertising. My focus is solely on digital advertising. I believe the future lies in digital marketing, as the entire world is transitioning to digital platforms.”

Mercedes-Benz, in India, is synonymous with luxury and affluence. It is also an established automaker with a rich history in the country. However, for Mercedes-Benz, the marketing mantra differs from Maruti Suzuki.

“Mercedes-Benz has been a globally recognised brand since 1887. It’s a brand that everyone is familiar with. When someone in India considers purchasing a luxury car, Mercedes-Benz is almost always on their list. For us, the brand foundation is strong. The challenge now lies in elevating the brand and further enhancing its appeal,” Amrit Baid, General Manager – Marketing and Customer Experience at Mercedes-Benz India, told BestMediaInfo.com. 

Putting a spotlight on ad spends for the luxury car manufacturer, Baid said, “As far as ad spends are concerned, we spend a lot on experiences, whether it is online experiences or offline experiences. We invest heavily in technology, utilising various digital channels such as websites, applications, and personalised online communication, including social media.”

Baid offered an interesting insight where he spoke elaborately on the importance of consistency when pursuing performance marketing. Unlike Maruti Suzuki, which follows a traditional dealership model, Mercedes operates on a direct-to-consumer sales model. 

“Our unique business model in India involves direct-to-consumer sales. This ensures consistent pricing and offers across the country. Since our communication and pricing are uniform nationwide, performance marketing remains consistent and effective. 

Consumers can trust that the information they receive through our ads is accurate, transparent, and applicable to all customers equally. This consistency reinforces the brand’s image of true luxury and simplifies our marketing efforts, including performance marketing, by eliminating any mistrust or ambiguity in our communication,” he said. 

Highlighting balance in the strategy, Baid noted, “While performance marketing plays a crucial role, it’s essential to maintain a balance with brand building. The optimal approach varies for each brand.” He added, “Shifting from brand building to performance marketing prioritises short-term gains over long-term consumer relationships, potentially impacting brand loyalty. 

This can occur when brands offer inconsistent promotions and benefits, leading to consumer uncertainty. Our direct-to-consumer model mitigates this risk by ensuring consistent pricing and offers across India, minimising the negative impact on brand equity. We further enhance our brand image through curated customer experiences.”

The game of two

A large chunk of the automobile industry is moving on two wheels rather than four. To understand the phenomenon from a two-wheeler manufacturer’s perspective, BestMediaInfo.com spoke to Priyanka Bisen Shah, Head of Digital Marketing, Bajaj Auto. Bajaj Auto has several verticals (Bajaj Motorcycles, Chetak Electric) and key partnerships (KTM, Husqvarna, Triumph) in the motorcycle industry. 

Putting things in perspective, Shah said, “The approach to marketing should align with the brand’s life cycle. For new brands like Triumph, significant branding efforts are crucial to building awareness and generating interest before focusing heavily on lead generation. Established brands like Pulsar can leverage existing brand equity and allocate more resources towards performance marketing.”

Shah pointed out that consumer behaviour has shifted massively. “Online platforms like Amazon and Flipkart have become major sales channels. Consumers conduct extensive research, often influenced by influencers,” Shah noted. 

She added, “Brands are adapting by shifting their focus. Instead of large-scale brand campaigns, they are investing in influencer marketing, leveraging their content to build awareness and generate organic reach. This allows for more targeted and cost-effective marketing efforts.”

Driving the discussion further, Shah highlighted a significant challenge in performance marketing: the prevalence of fraudulent leads. “Even with measures like OTP verification, a substantial portion of leads, often exceeding 20-30%, are invalid or unresponsive. This issue poses a significant challenge for businesses, wasting resources and impacting campaign effectiveness,” Shah said. 

Throwing light on another aspect of performance marketing, Shah noted, “As businesses increasingly invest in digital channels, expectations for return on investment (ROI) naturally rise. This pressure from management and teams drives a constant need to optimise campaigns and attract new customers to sustain growth.”