Issue: Allstate tests dynamic ad serving to television sets with Video-On-Demand
Commentary by: David Vinjamuri

Just a few years ago, the advertising model was simple.  Marketers engaged advertising agencies to create 60,30 or 15 second spots for television, print ads and radio spots.  We dabbled in small volume projects like outdoor advertising and had special groups to place banner ads on the Internet and explore new media.  But we could all be certain that the only way to get on Friends or E.R. was to buy time from the television network.

Suddenly, life is a lot more confusing.  Lost, 24, Heroes and the other big cultural series can be found in multiple places.  We can watch them live, record them on our DVRs, stream them on the Internet from network websites, purchase individual episodes on iTunes (at least until NBC yanks its shows as it promises to do soon) or watch them on video-on-demand.  And increasingly our marketing budget is moving away from the simple :30 second spot that we grew up with.

It’s good news that forward-looking marketers like Allstate are trying to make sense of this mess by exploring new advertising options as they emerge.  Brian Steinberg at Advertising Age reports this week that Allstate and its agency Ogilvy have been testing dynamically inserting ads into video on demand shows in the St. Louis market.  The agency has chosen to use direct response ads, because they offer the best chance for measurement (because they ask the consumer to take a specific action which can be measured in addition to overall viewership).  Not surprisingly, Allstate has found that shorter spots work better, and more entertaining ones are more effective as well.

What’s more important is that marketers like Allstate are actively engaging with new media opportunities and trying to understand how they work.  Video on demand is a significant opportunity because it allows the cable provider to dynamically insert ad units which could eventually be targeted to a home based on viewership patterns.  Much like the opportunity of digital video recorders, few marketers have really scratched the surface of this technology.  It is not surprising, given the rapid development of the media model and the bewildering number of options available to marketers.  But this creates opportunity, and daring marketers have a unique chance to create new forms of advertising with modest investments of money and larger investments of time and creativity.

Brand: Sprint

Execution: Online Game
Target: NFL Fans
Rating: ***
Reviewer: David Vinjamuri

Description:
This is the online extension of an advertising campaign we will review separately.  Manning’s Mind is an online NFL trivia game which pits you against Indianapolis Colts’ Quarterback Peyton Manning.  The game is structured using trivia questions to determine the outcome of basic football plays.  Players can choose different difficulty level questions which correspond to different yard gains.  They then have a few seconds to hit a buzzer before Manning answers the question for them and wins the play.  There is a leaderboard and the ability to issue challenges to friends.  This promotion supports NFL Mobile service on Sprint.

What Works:
Manning’s Mind is a well-executed online game which is easy to understand, playable and engaging (if you like football trivia.)  It hits Sprint’s target pretty closely by weeding out casual fans pretty quickly with very difficult trivia questions.  The ‘high concept’ of matching Peyton’s mind against your own is a good premise for the game.  This will make a good time-killer for bored office workers.

What Doesn’t:
This game lacks the ‘gotta-have-it’ immediacy of such online classics as Subservient Chicken.  The brand linkage is not strong.  Peyton Manning is a bigger brand in football than Sprint, and it’s easy to miss the Sprint logo above his shoulder on the website.  The connection to the NFL Mobile service is very soft - there is no offer to hook the game user into the service.  We would have expected at the very least to see top online players rewarded with free NFL Mobile as well as a trial offer of some sort.   To this advertising blog, Manning’s Mind looks like another example of solid online properties being wasted because of a lack of strong brand linkage.

Branding Bottom Line:
Sprint’s Marketing Department should have tapped Manning’s Mind.

Brand: The Simpsons (News Corp)
Execution: Event Marketing
Target: Simpsons Fans
Rating: *****
Reviewer: David

Description:
Eleven 7-Eleven stores nationwide have been transformed into Kwik-E-Mart, the (formerly) fictional fast food mart featured weekly on The Simpsons, a U.S. animated satire that has had a 20 year run and is about to spawn its first movie (The Simpsons Movie) this week.  The stores now sell products seen only on the show like KrustyO’s cereal, BuZz Cola and Krusty Burgers and employees are dressed in bright green outfits familiar to Simpsons fans from the character Apu who works at the Kwik-E-Mart on the show.

What Works:
This promotion (also written up in the Wall Street Journal, Advertising Age and others) is a brilliant reversal of the classic product placement strategy, where real life products are placed into fictional environments.  By placing these brands - which Simpsons brand enthusiasts have developed a real affection for over the past generation - into a real retail environment, The Simpsons has created a brilliant brand experience that allows users to temporarily step inside the world of the Simpsons.

7-Eleven also benefits from this promotion by suddenly becoming a leading-edge marketer and finding a way to make a few of its stores fun and relevant.  The investment for this promotion is relatively modest, as only 11 stores were affected by the redressing - however the Simpsons products like KrustyO’s cereals are being sold in all of the 7-Eleven Stores nationwide, offering 7-Eleven the potential for turning this small promotion into a big profit center.  As Bob Garfield notes, this self-mockery represented a real risk for 7-Eleven, and they are to be commended for it.

For NewsCorp, the buzz and publicity created by this promotion has been fantastic and well-timed.  It is a nice diversion from the normal business of movie promotion which has grown tired from overuse.

Although this may be the first example of fictional products making their debut in the real world, car makers have for years been using racing video games on the PS2 and XBox as a way to concept test the interest in cars aimed at enthusiasts.  Several car models including the Mitsubishi Lancer Evolution were brought to the U.S. market based on interest generated by placement in video games.  In a world where thousands of people make real income in artificial environments (second life) and teenagers spend as much time immersed in the fictional world as the real, we can expect that there are huge opportunities to realize the appeal of fictional brands.

What Doesn’t:
Nearly flawlessly executed, we still think 7-Eleven could have made a more dramatic gesture by moving the promotion out to more retail locations - perhaps 111.

Branding Bottom Line:
7-Eleven is suddenly cool again.  And we remember to TiVo the Simpsons.

Brand: HBO (Time Warner)
Execution: Web Video Environment
Target: Web Influentials
Rating: ****
Reviewer: David Vinjamuri

Description:
This deceptively simple montage reveals a complex series of interconnected plots.  The website shows an apartment building.  Any of the apartments can be clicked on to reveal what’s going on inside.  The viewer can also zoom in or move forward in time.  As the viewer becomes more familiar with the environment it becomes clear that there are other buildings in the city that can be located and clicked on.  The plots are by turns odd, creepy (a ghost floats through the building at one point, a mortician photographs the dead), amusing and unexpected.  In addition to the website, Voyeur video can be found on HBO on demand, there is a blog and other ‘artifacts’ are rumored to be around the web.

What Works:
The old maxim in writing is “Show, don’t tell.”  Advertising is the living rebuttal of this line of thinking.  We are endlessly telling consumers what our products can do and depending on the strength of the brand and persuasiveness of our arguments to do the work.  When we demonstrate the products in an ad, we call that ’showing’ but its really still ‘telling’ since it is a contrived situation.

HBO confronts the problem of maintaining its leadership in cutting-edge television content as the Sopranos goes offline.  The post-Sopranos, post-Sex in the City network needs to burnish its reputation as an innovator in order to keep viewers tuning in to new series like “John from Cincinatti” and attract professional talent.

HBO Voyeur is an intriguing way of showing HBO’s ability rather than telling about it.  This advertising blog is calling it a ‘Web Video Environment’ simply because we don’t really have a name for what it is.  No other advertiser has done anything quite like this.

This is effective advertising for HBO because it is both innovative and well executed.  The web environment works seemlessly, and it is easy to get lost inside the web of interconnected plots.  The explicit voyeurism of the site points out what we know but don’t say about television itself - it is serial voyeurism.  Part of the appeal of all good television drama is seeing inside someone’s life without having them know we’re watching.

What Doesn’t:
The site only runs well with a very high speed connection.  Not recommended for hotel-room wi-fi, for instance.  We would like to see somewhat deeper plotlines and the ability to tune in dialogue rather than tunes.  This site is an exceptionally good way to waste three or four hours - if, say, you’re reviewing it.

Branding Bottom Line:
Reminds us why we love HBO.  Now if we could only see the Voyeur version of “The Office” …

Brand: Hillary Clinton
Execution: Viral Video
Target: Democratic Primary Voters
Rating: ****
Reviewer: David Vinjamuri

Description:
In a sendup of the series finale for the HBO hit ‘The Sopranos’, Hillary Clinton walks into a diner in New Jersey as the Journey song “Don’t Stop Believing” plays in the background. She sits down in a booth and browses a menu. She flips through the songs on a jukebox at the booth, which include Celine Dion, Shania Twain and Smashmouth. Bill Clinton walks in, in a casual shortsleeve shirt and sits down across from her. “Anything look good?” he asks. “We have some great choices,” she says. A waiter arrives and puts down a basket of carrot sticks. “I ordered for the table,” Hillary says and Bill looks despondent. “No onion rings?” he asks and Hillary responds, “I’m lookin’ out for you.” A menacing-looking guy at the counter looks at the pair. “Where’s Chelsea?” Hillary asks and we see a car inexpertly pulling into a parking space as Bill responds, “parallel parking.” The guy at the counter gets up as Bill asks, “How’s the campaign going?” Hillary responds, “Well, like you always say - focus on the good times.” Then the guy from the counter walks by the couple, stopping for a moment to coldly eye Hillary. The couple looks at each other and Bill shrugs. “So what’s the winning song?” Bill asks. “You’ll see,” Hillary answers. “My money’s on Smashmouth,” he says, “everybody in America wants to know how it’s going to end.” “Ready?” Hillary asks as she puts a coin in the jukebox and the screen goes black. The spot ends with the words “Find out the winning song at www.hillaryclinton.com/song“

What Works:
Every four years, professional brand marketers get a fascinating opportunity to peek inside an alternate universe as national political campaigns build brands out of candidates. These campaigns are run by specialists who consistently flout every guideline for ad spend and media concentration that brand marketers have developed and tested for the past sixty years. For example, brand marketers know that a TV spot begins to wear out after 6 or 7 viewings and past that point it may start to have the opposite effect the marketer intends. Political campaign specialists don’t believe this - in fact they seem to think that seeing a spot 20 or 30 times might be optimal. Of course, we professional marketers think that these folks are just trying to chase the media tale - that elusive last 10% of TV viewers that watch so infrequently that they are nearly impossible to capture on network television. To reach these people at 3X frequency you have to oversaturate virtually everyone else. As marketers we also wonder why these campaign specialists don’t use viral media more effectively. After all, they’re operating in one of the highest-interest, highest-attention categories in the world during their ‘buying season.’  And we know these same people who watch little television spend a huge amount of time on the Internet.
All of which makes this tiny viral video from Hillary Clinton’s presidential campaign worth considering carefully. As wobbly as it looks from an executional standpoint, it has been extremely effective at garnering attention and moving the campaign conversation back to Senator Clinton. While political advertising on network television often looks like amateur hour, this unpolished viral video has all of the hallmarks of solid, professional brand marketing.

Why does this viral video work? By the numbers:

1. Courts Controversy: As Hillary Clinton’s campaign seems to understand, loud voices transmit most effectively on the Internet. There are a number of designed elements of this video which beg for supporters or opponents to speak up passionately. First is the choice of casting Hillary Clinton as Tony Soprano - a mobster. This plays into the pre-existing views of the Republican opposition who could be expected to speak loudly about this fact - thus spreading the video and gaining the attention of the mainstream press. It is not lost on the campaign that these folks will not vote in the Democratic Primaries. A number of other small choices give fertile ground for conspiracy theorists to create conversations about the video - who is the goon looking harshly at Hillary? Is he part of some vast, right-wing conspiracy? Why would the campaign draw attention to Bill and Hillary’s relationship?
2. Changes the Media Conversation: Lost in the debate over this video is the fact that the media could easily have spent last week with a different story on Hillary Clinton - how her song contest ended up picking a Canadian theme song for her campaign (by Celine Dion). This video is ostensibly luring voters to the campaign web site to view the video, but the real purpose is to bury that story under the weight of a new controversy.
3. Reframes the Candidate: Solid brand marketing does not argue with consumer’s pre-existing beliefs about a brand. Instead, it embraces these views and then subtly subverts them by showing the positive side of seemingly negative qualities. Listerine is painful to use and tastes bad. When the brand tried to run away from this in the seventies and eighties, it failed. Only when it embraced the experience - as evidence that Listerine was ‘killing bad bacteria’ - did the brand succeed. Similarly, Hillary Clinton is embracing the stereotype of herself as a power-hungry candidate, but subtly recasting the issue. She is shown here as a patriarch, someone who is exceedingly competent and will take care of the family. It is a good bet that competence will be one of the primary voting issue for Democrats this campaign season.
4. Addresses a Brand Issue: This spot also cleverly redefines the relationship between Bill and Hillary Clinton as she looks forward to a general election. The problem here is that Hillary Clinton needs ex-President Bill Clinton to win the race, but she cannot risk being seen as his pawn or part of a dynasty. If Al Gore made a mistake by running away from President Clinton after the Monica Lewinsky scandal, Senator Clinton cannot make the same mistake. In this spot, when Bill Clinton asks the question, “How’s the campaign going?” we are given a recast version of the Bill/Hillary relationship. He is supportive, available and engaging, but not in control - not involved on a daily basis.

What Doesn’t:
It’s safe to say that Senator Clinton won’t be able to pay the bills as an actor should her Presidential bid fail. Bill Clinton, on the other hand shows some promise. It is also a risky proposition for the campaign to raise the issue of the relationship between Bill and Hillary Clinton, as the trickiest question for the general election would be the vision in voters minds of a White House inhabited by two occupants, one called “Madam President,” and the other by right and tradition, “Mr. President.”

Branding Bottom Line:
Love them or hate them the Clintons have stolen four days of the national debate from their political rivals.

Issue: The Audi Driving Experience shows the opportunities and challenges of building a brand experience
Commentary by: David Vinjamuri

Your advertising blogger recently had the opportunity to attend the Audi Driving Experience at Sebring Raceway in Florida. The program is called an ‘advanced handling course’ and as such it falls somewhere between the teenage netherworld of driver’s ed and the high thrills, high dollar sport of amateur racing. The goal is to teach adults how cars handle in real-world situations and give them practical experience in recovering from ice-induced skids, sudden road obstacles and other road hazards. The program is run by experienced professional race car drivers; at Sebring it is a team led by Grand-Am Cup racer Nick Fanelli through Panoz Racing School. About a dozen adult males (and the adult daughter of one) turned out for the opportunity to drive Audi TT coupes around various configurations of cones and on a wet/dry skidpad with Nick Fanelli’s team.

The Audi Driving Experience is an enjoyable weekend for the participants, and a nice add-on to race car training for Fanelli and Panoz, but it is deadly serious business for Audi. It is a very rare chance for Audi to indoctrinate its most loyal customers in the brand and to turn them into brand advocates. As we all know, those consumers who are most passionate about a brand recommend it. These brand advocates (or brand evangelists) have a huge effect on long-term brand strength. In some brands, we can see over half of all new users being influenced by a brand advocate with a personal recommendation.

The Audi Driving Experience is a well-run program, but it misses huge opportunities to position and build the Audi brand with enthusiasts. The Audi marketing team seems to have little connection with the school and they did not turn the Audi Driving Experience into a step behind the velvet rope for the participants. Among the missed opportunities:

1. Brand Connection - There was good Audi signage and Audi vehicles as well as instructors who had tested other Audi products and spoke highly of them. However the school didn’t either sell or distribute Audi branded material (students seemed uniformly disappointed not even to be given a t-shirt or hat to commemorate their weekend). Beyond that, nobody from Audi USA corporate attended the event. This would be a golden opportunity for marketers to connect with the base and more importantly to give these consumers a sense of being included in the Audi family by discussing upcoming vehicles, challenges, etc. Instead the experience seemed very removed from the brand.
2. Sampling - The majority of the adults in this class were high-net worth individuals, many with a stable of cars. Given that, it was surprising that Audi only supplied the school with 2006 model Audi TTs, and none of the high-end Audis that the participants would be more likely to buy upon returning home. This obviously springs from a cost reduction focus (flogging a $70,000 A-8 or RS-4 on the skidpad is more expensive than a car costing half as much and makes maintenance trickier as well). On the other hand, Audi could have sold a few cars immediately (perhaps getting a return on the higher equipment and maintenance costs) and it certainly would have generated more enthusiasm with these brand faithful if they had let the students drive their premium products. BMW appears to understand the importance of high-end sampling as they routinely use M-5’s (one of their most exclusive cars) in their own driving school.
3. Relationship Building - Running a branded experience should be the beginning, not the end, of a relationship. While Panoz, the company running the training understood this, Audi did not. Ironically, at the end of the course students walked away with materials on other classes from Panoz but nothing from Audi.

All of this goes back to a theme that the ThirdWay Advertising Blog has been harping on for most of the past three years - execution. It’s not enough to have a good idea for your brand and to construct a decent strategic plan to execute it. You have to get the details right, all of them. The Audi Driving Experience is a great example of a brand getting the big idea right, but fumbling on the execution. While senior management can dismiss the impact of these programs because they reach relatively few consumers, the impact of these consumers can be significant. Just try Googling “Audi Driving Experience” in a week or so. You’ll likely find these words up near the top of the list, next to Audi’s.

Brand: Reebok
Execution: TV, Online, Print
Target: Joggers
Rating: ****
Reviewer: David Vinjamuri

Description:
Reebok unveils a cross-platform, $30mm campaign to support its new “Run Easy” tagline.  The intro spot in 1:00 and :30 features pairs of runners (celebrities including NBA’s Allen Iverson, soccer star Thierry Henry and track athletes Carolina Kluft and Aries Merritt) chatting while running at a relaxed pace.  The conversations are intercut to add a comic effect.  The website features social networking functionality, allowing visitors to upload their favorite runs and tunes and share photos as well as chatting.  The campaign takes a direct poke at Nike with the line “I am what I am,” and lines such as “What are you just doing?”

What Works:
The Run Easy campaign is a breath of fresh air from Reebok in a category obsessed with an obsessive attitude towards athletics.  Nike has been successful positioning its brand to serious athletes, thus attracting millions of other consumers who admire but do not imitate this level of dedication.  Too often both Reebok and Adidas ad campaigns have looked like pale clones of the original Nike strategy.  This new multimedia campaign from Reebok aims to position Reebok squarely with casual athletes.  It is a risky but worthwhile endeavor.

We are most impressed that Reebok understands that it cannot own women as it once did (during the early days of aerobics) and needs to find meaningful differentiation from Nike.  Run Easy is appealing because it is not a statement of ability but of purpose.  Reebok uses the spots to show consumers that there are multiple reasons that people exercise, and that one of the primary reasons is social.  Social exercising is obviously still healthy, but considerably more pleasant. Using professional athletes gives ordinary people permission to take a more social and relaxed attitude towards their exercise and seeks to build expertise for Reebok as the brand that connects people through running.  The campaign aggressively targets Nike (as in the print execution above which chides “What are you just doing? Run easy”) and seeks to put Reebok in a separate orbit.

The online aspects of this campaign are slick and well-executed.  It’s too early to know whether Reebok can attract a real community of runners but it seems distinctly possible given the tools they’ve given consumers to share and interact.

What Doesn’t:
There is no doubt that Reebok has hit on a relevant cultural and social message, and this alone should build credibility for Reebok.  However it is less certain whether consumers will perceive “social exercise” as an ownable area of expertise.  The question for Reebok is whether consumer will take the message, relax their attitudes but still buy Nikes because they are what serious athletes wear.  Reebok is in new territory, trying to understand how to make social running aspirational.  Which is why they used professional athletes in these spots.  This was also somewhat jarring because it seemed out of context, but it was understandable given the challenge Reebok faces.

Executionally, our sole complaint is that we would have liked to see more of the Reebok brand earlier in the spot - the usual client-side whine.

Branding Bottom Line:
Reebok smacks Nike with common sense.  We like it.

Brand: Hyundai
Execution: TV
Target: Japanese Car Buyers
Rating: **
Reviewer: David Vinjamuri

Description:
A 90-second spot kicking off a new campaign for Hyundai around the idea of ’smart.’ The spot is narrated by Kelsey Grammer (of ‘Frasier’ and ‘Cheers’ fame) and features a series of shots of smart people including Einstein, FDR, JFK, the Professor from Gilligan’s Island, Rodin’s Thinker and not less smart people including Wile E Coyote and the Scarecrow from the Wizard of Oz. The second half of the spot features Hyundai cars and talks about their various smart features and awards.

What Works:
Hyundai pulled out all the stops for this new campaign which will reportedly spend $650 million to reshape consumer opinions of the Korean car manufacturer. There was a ferocious agency competition (chronicled in BusinessWeek and blog commentary) resulting in a win by Omnicom Group’s Goodby, Silverstein & Partners. The resulting campaign is anchored by the familiar voice of Kelsey Grammer and features a veritable trademark licenser’s dream team of familiar images, from FDR and Einstein to cartoons.

On the positive side, we can say that the spot is well-edited, has engaging visuals and moves along at a good pace - even the 90-second version we link to here.

What Doesn’t:
There is no shortage of claimants to the title of “Most Colossal Waste of Marketing Money” this year, from Microsoft with $500 million for Vista to the disturbing new Axe spots. But Hyundai might just sweep this award category with this unfortunately misguided campaign.

This campaign has significant problems in both strategy and execution, but the strategic errors alone make the entire effort a terrible waste of money. This advertising blog has previously discussed Hyundai’s strategic error - the short story being that Hyundai argues with strongly held consumer perceptions in this campaign. Even though new Hyundai models are by all reports, as reliable as Japanese cars and very safe, consumer perceptions are rooted in the original brand image of Hyundai that is not likely to change through direct confrontation.

The execution of this spot is not better. The first and possibly worst mistake is starting the introductory spot with the picture of a lightbulb glowing. This is a classic General Electric image and immediately cues that brand. Then we do not see the Hyundai brand or hear the Hyundai name until the second half of the :90 second spot.

Finally, the ‘unique selling proposition’ is a confused muddle of competing claims and benefits including quality, safety and awards. Too much is less here and the viewer is left without a hook for Hyunda’s new brand positioning at the end of the spot.

Branding Bottom Line:
Hyundai fritters away a superior product with bad strategy and mediocre advertising. We keep driving our Toyota.

Brand: Axe (Unilever)
Execution: TV (second execution here)
Target: Teenage boys
Rating: **
Reviewer: David Vinjamuri

Description:
A new campaign for Axe body spray which replaces the “Axe Effect.”  The spots in this campaign again show women taken out of their normal routine by the effects of Axe body spray.  In one execution, a woman is preparing for a date with her man but when she arrives at the restaurant she is distracted by a waiter carrying bread.  She bursts out with the phrase “Bom Chic A Wah Wah” while undulating.  Then she catches herself and looks embarrassed.  A second execution has a woman teaching English to a group of foreign students when a teenager enters and she repeats the Bom Chic A Wah Wah and shimmy which the foreign students repeat.

What Works:
Unilever has gone to some lengths to ensure that this new campaign for Axe - the proverbial golden goose - is memorable.  They have certainly put together spots that are unique on television and should be highly memorable.

As with most Unilever advertising, this campaign does focus on the unique selling proposition of Axe and the advertising strategy has good continuity with the old campaign.  This adds credibility to the effort.

What Doesn’t:
This campaign features the most cringe-worthy advertising produced thus far this year and puts this advertising blog in the odd position of feeling considerable sympathy for the actress/models who have to utter the “Bom Chic A Wah Wah” in front of millions of their fellow Americans.

It is always possible for the story to work against the brand in spots like this and it happens here.  Frequently, the problem is that the story is memorable, but the brand is not.  That is not the case here.  Unfortunately, while both the brand and the store are memorable, the connection is neither pleasant nor motivating.  In five syllables, Axe crosses the boundary from uncontrollable attraction to creepy stalking behavior.

Of course, we are not the target for this advertising, but we very much doubt that 13-year old boys will find this campaign compelling, either.

Branding Bottom Line:
Axe goes from hero to zero.  Lose this campaign before we lose our minds.

Issue: Hyundai sales lag in spite of high quality, reasonable prices
Commentary by: David Vinjamuri

Last month at the Jacob Javitz center in New York, Hyundai introduced the Genesis sedan.  This $35,000 sport sedan is an ambitious and impressive challenger to such auto industry heavyweights as BMW, Infiniti and Lexus.

More impressive than the styling of this new car (which looks far less like the odd panoply of competing design themes that defined the Hyundais of the 1980’s) is the expected quality.  In fact, in 2006, J.D. Power’s rated Hyundai #3 in initial quality - above both Toyota (#4) and Honda (#6).  In addition, Hyundai models in the past several years have been regularly recommended by Consumer Reports for reliability as well as value.

In spite of this good news, Hyundai is in a pickle.  BusinessWeek reports that “last year the Korean automaker’s earnings fell 34% … and its operating margin was halved … Hyundai’s sales bank [of unsold cars] has gone largely unnoticed.”    The appreciation of the Korean won against the dollar has neutralized much of Hyundai’s pricing advantage and the brand is under pressure to sustain premium pricing.

Hyundai’s marketing chief, Steve Wilhite (COO of Hyundai Motors America) is struggling to find a recipe to make Hyundai a premium brand.  The current plan of the company lies with an upcoming advertising campaign intended to position the brand as the choice for rational, clear-headed buyers unaffected by marketing hype.

This plan might or might not work in the long-run, but it is an expensive and unlikely way to solve the brand’s woes.  Wilhite’s thinking is one-dimensional, and his impressive resume (helping to lead turnarounds at Volkswagen, Apple and Nissan) points to the reason - he has primarily worked in single-brand environments.

Faced with the same challenge, a packaged-goods marketer might think differently.  Instead of trying to reinvent a failing brand with a stable of good products, why not create a new brand for those good products.

Hyundai consumer research seems to bear this out.  As Businessweek points out, consumers exposed to concepts for new Hyundai models were actually less likely to express purchase interest than when the concepts had no brand attached.  Instead of being a sail for the brand, the Hyundai name is currently an anchor.

Of course, there are good examples of brands which have repositioned themselves in the automotive industry - and Mr. Wilhite has worked on two of them.  Volkswagen was in a brand netherworld before re-emerging with the “Drivers Wanted” campaign and the New Beetle.  Nissan was virtually a commodity when Wilhite helped reinvigorate the brand.

Unfortunately for Mr. Wilhite, both of those brands had underlying heritage which made refreshing the brand more achievable.  Nissan was beloved of a generation of drivers who remembered it bringing real sports cars to the masses with the 240Z - and these drivers were now of an age and family size to require a Maxima.   Volkswagen captured the hearts of the masses with the original Beatle.  Repositioning it as the brand that cared about drivers was more like reintroducing the original concept than arguing with consumers.  (Nissan does of course have a second brand, Infiniti, but more on that later.)

Hyundai’s problem is that it has no brand heritage to look back on.  Hyundai came into the U.S. market much as Yugo did - as a cheap car, cheaply made.  The early Hyundai Accent was a dreadful tinny little car that did not engender much love.

To be fair, there are at least two examples of automakers with questionable initial offerings and poor brand reputations turning into automotive powerhouses - Toyota and Honda.  The first Hondas were also tinpots known more for their propensity to rust than anything else.  Toyotas had a similarly undistinguised brand as an inexpensive Japanese car.

These brands, however, were saved by a divine intervention that Hyundai and Mr. Wilhite can hardly hope for - the OPEC oil crisis of the seventies which forced consumers to re-consider small cars.

These same two companies do offer a more useful model of dealing with entrenched consumer opinions about their automobiles, however, with their Lexus and Acura brands.  Both Toyota and Honda (along with Nissan) faced the difficult question of how to move upscale as their consumers aged.  They also saw a brand opportunity as no domestic or foreign carmaker was able to deliver “reliable luxury” to the U.S. consumer.  They understood that their brand names did not connote luxury to U.S. consumers and might never do so.  So they chose to build new brands at huge expense.  It was an investment well worth making.

For Hyundai, rebranding would be well worth the effort.  Merely renaming the company and the dealerships would be difficult, and consumers might see through the effort.  It might be smarter altogether to launch a new brand and begin to put updated versions of the smartly designed, reliable and clever new cars into this brand.  Over time, the Hyundai name could be retired.

This begs the question of dealer networks.  The U.S. auto market is, unhelpfully for consumers, largely driven by distribution issues.  Most dealerships still distribute only a single brand and consumers are reduced to driving all over town to shop for a new automobile. (Imagine doing the same thing to shop for a dishwasher and the absurdity becomes clearer.)  This is justified by the service end of the business, but at the end of the day it does no favors to anyone.

Hyundai should look at partnering with another car manufacturer needing to penetrate the U.S. market.  This model is already common at the high end where brands like Aston Martin, Ferrari and Lotus lack the sales volume to support independent dealer networks.  Renault might make a good partner as it is gearing up for a re-entry into this market.

There are reams of data to support the fact that consumers don’t like to be argued with.  The path Hyundai is pursuing with rebranding will be expensive and might fail.  Which would be a shame, because the automaker is finally producing some vehicles worth considering.