Regardless of whether the Big 3 automakers survive as is, get loans or seek bankruptcy protection, they will need to operate more efficiently. Advertising is a huge portion of their operating costs and therefore is a key place to focus efficiency improvements.

One very basic, yet powerful, way to measure ad effectiveness is by comparing ad dollars spent to the number of in-market shoppers the advertising generates. The result (dollars per shopper) is a uniform way to measure ad spend efficiency across all automakers and across all ad spend types. To assess how the Big 3 are doing on this measure, Compete used its recurring demand measure and, in this case, ad spend data from our sister company, TNS MI. Here’s what we found.

Clearly the domestics are less efficient, spending $192 per shopper vs. $168 per shopper for the other automakers. That means the Big 3 get about 5,200 shoppers for every million ad dollars spent, while the others get about 6,000 shoppers – an efficiency difference of 15%. Next, we looked at results at the brand level.

So what do we see? While Mercury looks to be a clear leader at first blush, the reality is that the brand slashed its ad spend in 2008 and its shopper counts will certainly follow, albeit more gradually (efficiency is great, but if you’re not hitting your sales goals, you simply can’t cover fixed costs). The true successes are those with relatively high spend and low costs per shopper, such as Ford. Those in need of improvement include those with low spend and poor efficiencies, like Hummer.

These results are a good foundation to understand and address the challenges facing the US auto industry. The next step is to add context around things like market conditions. For example, are the off-pace results for Hummer the result of poor advertizing, off-the-mark placement, or simply an impossible hill to climb when gas prices were so high for much of the year? And once that puzzle is solved, the next element is how effectively autos makers convert the demand they generate into sales.

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