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At this point in your investing life, you already understand how important an advertising campaign can be to the success of any product. Quite often, superior products can go the way of the dinosaur because of bad marketing decisions. That's why I pay close attention to marketing and management when I research my stocks.
To attract a younger consumer, it takes a different approach -- one that Ford (NYSE: F ) is excelling at. It's been using a different strategy in some of its marketing ploys by creating buzz through bloggers and social media. It's had much more marketing success than Detroit rival General Motors (NYSE: GM ) , and I believe Ford is again a step ahead in communicating to its next generation of buyers.
Will this strategy ultimately flop? Will it give Ford a drastic advantage going forward, or will others simply copy it?
Devil in the details
Ford's Fiesta campaign will be based on unique voices from 100 agents in social-media blogs and other mediums. Ford provides the agents with gas, insurance, cameras, and any other equipment desired to create quality content. Videos will be posted on a Fiesta website and have the potential to be turned into TV ads, while outstanding pictures or articles will be used for print campaigns. It will kick off in May and span the country throughout the entire year. It will also have prominent placement at sporting events, on TV, at music festivals, and, of course, on social-media sites.
I've heard arguments that it could flop, much like the "Steer the Script" Super Bowl ad for Lincoln that took ideas from users. But the two concepts are as different as night and day. The Super Bowl ad took a collection of random ideas, not actual user experience. The key to making an effective marketing campaign, speaking from experience, is to understand the product from consumers' eyes. That's the greatest way to create quality firsthand experiences and selling points. Ford can then take this valuable content and reproduce or polish it with its marketing and ad agency team.
Power to the people
Ford's 2014 Fiesta will be its first completely user-created advertising campaign, a unique twist from the typical automotive strategy. In 2009, Ford used a smaller version of the strategy for the Fiesta that ended up being highly acclaimed and groundbreaking. The original movement had its agents tally an impressive 1 million miles in their Fiestas while creating more than 50,000 pieces of advertising content that generated almost 30 million views. After all was said and done, Ford got 132,000 requests to receive Fiesta information when the car arrived at dealerships, with 83% from shoppers who had never owned a Ford and 30% being younger than 25. Brand loyalty is a huge factor in choosing a vehicle. To see 83% of the total interest from those outside the Ford brand is a very promising statistic that should catch competitors' eyes.
I think what makes this strategy successful is the power that word of mouth has. People are much more inclined to listen to people they trust, and these agents, with large audiences of loyal readers, are in a great position to spread the good word of Ford's Fiesta. Moreover, this is a new era of social networking and media advertising. Connecting to the younger consumer will require new tactics like Ford's campaign. Keith Koeppen, Ford's advertising and media manager, makes a great point regarding this demographic unit:
"Consumers -- Millennials in particular -- like being a part of the brands they feel represent them. ... This demographic is accustomed to creating content about their lives, so it just makes sense to give their creativity a bigger platform with greater scale."
Here's the kicker: The Millennial generation represents much more purchasing power than people may realize -- an estimated $170 billion, with the age group representing 79 million people. That's the largest group since the baby boomers, and it dwarfs the 48 million in Generation X. This segment will soon be primed to outspend any other, and it will take a unique advertising campaign to reach these consumers, who grew up with cell phones and digital media. Ford is in a prime position over its competitors in advertising to this group, which could be a huge boost to its future sales.
Millennials will command a growing share of vehicle purchases in the near future, and the Fiesta attracts more Millennials than any other Ford vehicle. To gain such a following from my generation means that Ford understands how it needs to tell its story differently through social media.
To use social media successfully is to be on the cutting edge of marketing, which is often difficult for companies. Ford continues to stay one step ahead of competitors with its marketing in general, and it looks to keep that advantage as the next generation commands more vehicle sales. It's important to learn from the past and keep an eye on the rearview mirror, but when I look for investments, I want a forward-thinking management, which Ford represents to the fullest. I have full confidence in Ford's future, and I think other investors should as well.
More goes into a successful company than just its marketing campaign. Are there hidden risks with Ford that investors need to know about? To answer that, one of our top equity analysts has compiled a premium research report with in-depth analysis on whether Ford is a buy right now, and why. Simply click here to get instant access to this premium report.