Honda Shifts Money from Ads to Music Content

Honda shifts $$ from tv to musicAmerican Honda announced recently that it’s revamping its advertising model,  moving money from traditional television advertising to launch its own music-streaming channel, and the sponsorship of dozens of high-profile concerts and music tours. In its announcement, the company stated it expects to be able to better connect with young car buyers through content rather than ads.

The demographics speak to the transition. Members of Gen Y, those people born between the early 1980s and early 2000s, don’t watch much television. And when they do, it is usually streamed online or watched via a DVR, both of which skip over advertising.

So Honda went looking for new ideas, and “music is a great platform to do that,” said Tom Peyton, Honda’s assistant VP of advertising and marketing. Honda uses many forms of online ads, including banner ads, twitter snippets and text messages, but decided they don’t carry the weight of a video commercial.

Honda didn’t disclose exactly how much money it is shifting from the $370M it spent in prime time television last year to music events. The events, to be managed by Live Nation Entertainment, Clear Channel and Revolt, will highlight new or upcoming groups favored by millennials.

The concerts will provide video content for other forms of native and television ads, and it is likely Honda will sprinkle the arenas with social media and twitter enthusiasts.

Some analysts saw a secondary message in the announcement. Noting that the announcement was made during the upfront sales period for network advertising, Brian Wieser of Pivotal Research Group said “It is a negotiating ploy. Advertisers don’t have a credible way to walk away from negotiations.”

All viewership trends say networks aren’t working with younger buyers, and that new types of advertising or communication methods are needed. It will be interesting to see who follows Honda into experiences and other experiments to reach this demographic.

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