Mercedes-Benz India aims to shift 90% of ad spends to digital by 2024

Santosh Iyer, VP – sales and marketing, Mercedes-Benz India, discusses the launch of the ‘are you AMG-ready’ campaign in the country, why it's making television-like spending on Instagram, sales projections for the year, the brand’s new retail model and more…

Feb 21, 2022 05:32:00 AM | Article | Raahil Chopra

Mercedes-AMG has rolled out its ‘are you AMG-ready’ campaign in India. 
 

The brand campaign has been conceptualised by Rankin (London) and is launching in India almost nine months after the global launch. The campaign is set to be launched only on Instagram in India. 

In a conversation with Campaign India, Santosh Iyer, VP – sales and marketing, Mercedes-Benz India, explained that the same isn't being done to cut down costs, but to get sharper targeting, as the brand aims to make television-like spending on the social media channel.
 
 
Edited excerpts:
 
The idea behind launching the AMG campaign only on Instagram in India?
 
The overall luxury category is on a steady growth path, but the performance category is showing great growth. 
 
For many customers, an entry into the luxury segment is through a Mercedes-Benz vehicle and then an AMG or Maybach. 
 
With this campaign, we want to tell customers that they can straight away jump into the performance segment and own an AMG. 
 
Now, when we look into the profile of AMG customers, they are always on social media. This does also apply to other customer groups, but more so for the AMG target audience. We see a lot of existing AMG owners take to social media to post about experiences like weekend drives. 
 
The second point is, we used to follow a little bit of 'spray and pray' with television, where we used to take our content and run it on television channels. We realised that we weren’t getting feedback on the content. On Instagram, we get interaction and engagement. It allows for more activity as we can take the customer through to our store and showcase other things too. 
 
We are investing exactly the same amount of money on Instagram, that we would on television for this campaign. It’s not a cost exercise, it’s about getting the targeted reach.  
 
On Instagram, we have different ways of reaching out to the audience. Our channel has 1.3 million followers. Then, we have our current customer base of AMG and we expect them to post, repost and interact with our campaign. And finally, we’ll have a set of influencers, and not just from the traditional automotive segment, but also looking at those from the health and fitness segments, among others. 
 
Influencers are an interesting space now. With ASCI’s ruling of influencers having to label posts clearly to showcase it’s an ad, do you think followers will stop taking them and the products they showcase seriously?
 
That’s the fairest thing to happen. Our policies don’t allow any paid content to be posted without a disclaimer and this was even before ASCI’s policy came in. 
 
The reason for using influencers is not for credibility, but to use their reach. With Instagram replacing television for this campaign, we are looking at influencers like how we viewed channels. 
 
This clearly shows the focus for Mercedes-Benz is on digital now. How are your spends now divided by medium? 
 
When I speak about digital, it’s not just Instagram. We include search, programmatic, display and others. Last year, our digital share was 35% of our overall share. This year we are looking at 55% of our overall marketing spends on digital. So, for the first time, digital will be the main driver on the overall spends. The target is to take that number to 90% in the next two years.
 
And this is being done without reducing the overall pot of the marketing spends?
 
Yes. The efficiencies that digital allows us is way better. We can have more targeted spending through channels like Instagram.
 
2021 saw a 42% growth but was lesser than the 15,000 units you've sold in previous years. What's the 2022 target? Do you think you'll see pre-pandemic numbers?
 
If I look at the demand side, it's very strong. There's a waiting period of three to four months for most of our products. This is something that was never heard of earlier. The challenge will be to get the supplies in the right mix at the right time. What we can’t predict is any other pandemic related shutdowns. We are targeting a very strong double-digit growth for sure and we should be closer to the number of units we sold in 2018.
 
You've also moved to a direct-to-consumer sales model. Could you explain this model and how your showroom partners have responded to the same?
 
In the traditional model, we sold the car to the dealer and the dealer sold it to the customer. In the new model, we are selling the car directly to the customer and the dealer has become an agent. The agent’s role is to help with test drives and ensure documentation. In principle, the quotation to the invoice, everything comes from a central system of Mercedes-Benz. Here, the most critical aspect is the omnichannel journey. 
 
There’s not a single OEM in India who can say that I can offer the same price online and offline, but in our case, we have the same price exactly at the retail level and online. 
 
So, customers can start the journey online and complete it offline or vice-versa as everything remains the same. The idea is to offer a seamless shopping experience. The online experience also shows the exact availability of the car and which month it will be delivered. 
 
Showrooms are happy with this too. In cities like Mumbai and New Delhi which have more than one showroom, customers used to indulge in cross-shopping. This meant that they were only negotiating discounts with the partners. Today, we offer discounts but they are standard. The efficiency has increased as the overall closure time has come down significantly. The model is also low-risk for them and they just need to focus on customer experience. 
 
You mentioned briefly that the AMG customer is looking for performance and more tuned in on digital than the traditional Mercedes-Benz customer. What are the other differences? 
 
The age bracket for the AMG customer is right now 30-35 years of age. That’s quite young. They want to drive the AMG machines because the beauty of it is that it is not only meant for the race track. It can be used for daily commute to the office too. 
 
We are also seeing a younger audience show up which is from the 20-25 year bracket. They are working on start-ups and much more on channels like Instagram. They don’t want to graduate slowly in the automobile journey and are wanting to start with a luxury brand. They interact with the AMG page a lot more than the traditional Mercedes-Benz page. We are interacting with them a lot more through this campaign because we believe that even if they don’t purchase in the next 12 months, they are preparing to buy in the next 24 months.
 
What are the top-of-mind challenges in the auto industry?
 
The first challenge is the demand-supply mismatch, which all OEMs are grappling with. Some are impacted more than others. 
 
Then comes the transformation the industry is going through in terms of products. The transition from ICE to electric is another challenge.
 
Finally, the change from physical to digital retail. All the efforts have been on physical retail in the past. We are now looking at digital and the auto industry has to be mature enough to get more-and-more consumers to buy online. It’s high time for this. Today, 20% of our purchases come online (booking amount paid online). This was unthinkable two years back. We invested and believed in it. Customers are demanding it and we have to follow the digital transformation.