'Spot the badge' on these telly favourites
Channel 5's long running series The Hotel Inspector includes a sideshow. As well as watching its formidable presenter Alex Polizzi trying to rescue some hapless hotel owner from the brink of bankruptcy, car enthusiasts are counting the number of times she is seen driving an Audi A5.
Shots of the four overlapping rings on the bonnet and steering wheel boss are so prevalent that it's prompted comment on the Pistonheads website, with one viewer calling it 'blatant product placement'.
Among other contenders in this pastime of badge spotting is another Channel 5 series, Superior Interiors, with presenter Kelly Hoppen driving a BMW X1.
Though the Pistonheads contributor may be right in sentiment, the appearances of BMW and Audi do not fall within the category of product placement - where suppliers pay for the privilege of publicity - but take the cheaper route of prop supply.
"When a car's badge is shown on a TV programme, it's rarely by accident," says Jon Zammett, Audi's public relations chief. "We are always looking for appropriate opportunities to place our models to give them added exposure."
"If the context is appropriate, we are happy to loan vehicles," confirms Gavin Ward, BMW's media relations manager. "We would get an idea from the programme script of what is acceptable. We wouldn't push for an opening shot of a BMW - it would be too in-your-face."
Carmakers, especially those in the premium sector, say they are unlikely to take advantage of product placement following the relaxation of Ofcom regulations in this area.
"We would not consider a paid-for offer because there is no need," said Ward. "Our cars are desirable, so producers want them to feature in their programmes."
No takers for Corrie?
Though Coronation Street now has a Nationwide-branded ATM in the programme's corner shop, word on the street is that approaches to car manufacturers for a product placement deal linked to Steve McDonald's Street Cars taxi firm have so far failed to attract any takers.
For lifestyle programmes like Superior Interiors, BMW is only too pleased to see Kelly Hoppen driving one of its X1s on extended loan. And it's win-win for both the manufacturer and the programme's producers.
As Liza Read, executive director at BRANDirector Entertainment, the agency which secured the deal, explains: "We save the production company a significant amount of money by not having to hire a car for six months or so."
BMW may not have been so happy to see another of its models, an X5, featured in a recent drama, Top Boy, about drugs gangs on a London housing estate. "The registration plate showed that it was not a new vehicle - it's something we have no control over," says Read.
Sarah Chapman, Audi's communications manager, pointed out that prop supply is not, in its strictest sense, a free deal. "There's the car's depreciation to take into account during a long-running series like the Hotel Inspector."
One agency specialising in prop supply believes Ofcom's relaxation of the rules is unlikely to see a rush towards paid for placement. Sarah Curran, business development director at New Media Group, pointed out that as part of the concession the regulator stimulates that there should be no 'undue' brand prominence.
"But this only applies to paid-for placement - not to free supply, so the latter is actually a more appealing proposition for suppliers, especially as it extends their presence to the BBC where product placement is still forbidden.
"Prop supply can be arranged at a third of the cost of product replacement," added Curran. "In the US, which has always had product placement, 80% of the deals are still to do with free prop supply."
However, Liza Read at BRANDirector says paid-for placement has its attractions. "It's not just about on-screen time, but the spin-offs that companies can use in their marketing campaigns. For example, in the case of Superior Interiors there could be a website video link inviting viewers to test drive an X1."
Curran believes that there is no conflict between embedding popular brands in TV programmes while maintaining another Ofcom demand for production integrity.
"Cars and IT equipment like mobile phones and computers are what we call 'hero' props that help push along story lines and illustrate the real world. Fictitious brands - like the lager they serve in EastEnders - jar with the audience."
It's a view supported by a YouGov poll in July where 46% of respondents said that having real products in TV programmes made for more realism.
Liza Read describes car props as a short cut to character and plot. "Contrast someone getting out of an Aston Martin and heading for Harrods with a harassed looking mum carrying shopping and getting into a car with child seats."
On the BBC beat
While commercial channels may have an easy ride with car placement, the BBC has to be more wary. What Audi's Jon Zammett describes as 'action cars' are depicted on the Beeb's spy series Spooks, with the appearance of badges ranging from Audi and Mercedes to Lexus and Saab.
But another brand on the Spooks' car list, Volvo, was recently seen straying from entertainment into the more serious world of current affairs. In an edition of Panorama, Cops Behaving Badly, the Volvo driven by reporter Richard Bilton was clearly identified with two front shots and one wheel badge shot. Incidentally, in another programme, Bilton was holding a MacBook Pro.
"If we need a vehicle in our programmes, we use standard hire cars, but on the final day of filming Cops Behaving Badly a car hire firm was unable to supply the car we had booked," said a BBC spokesman.
"For continuity purposes, we needed the same type and colour of vehicle used in the rest of the programme and in order to avoid re-scheduling filming - and incurring extra costs that would involve - we were able to source a vehicle from a local dealership. It was a one-off arrangement made in exceptional circumstances.
"Regarding the MacBook, we blanked out the fluorescent logos but it is not always practical to completely disguise what brand an object is."
Sarah Curran summed up the BBC's predicament by commenting: "You can get a viewer complaining about someone holding a can of Guinness on one of its programmes while ignoring the fact that most of its chat shows feature guests plugging their latest DVD, film or book."
MSN Cars
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Caution over commission
Insurance add-ons, ranging from MoT repair cover to paint protection, generate significant income and help customer retention, but one provider has a word of caution over commission.
Combine the bone-cutting margins on new cars with the continuing erosion of service and repair work to the independents, and it’s little wonder that the franchised sector looks upon F&I as a vital revenue stream.
But that stream could turn choppy. With commission-driven practices now embedded in retail generally, regulators are taking a renewed interest in products which may not be suitable for the consumer, but generate hefty bonuses for the sellers.
Though banking is an obvious target, Duncan McClure Fisher, managing director of Warranty Direct, said the regulators’ aim could affect any business involved with financial services. “Some (motor) dealers can make quite chunky profits on insurance, but they have to be careful. The way things are going, you can’t sell products which are viewed to have too big a margin.”
His cautionary words follow a pledge by Martin Wheatley, head of the newly formed Financial Conduct Authority, to “change the culture of viewing consumers simply as sales targets”. Though not opposed to commission-based selling in principle, Wheatley said: “We will look at how firms make their money, how they pay their staff and whether they are designing and selling products with customers in mind.
“This is a change from the traditional regulatory model which involved setting standards and then looking back at what firms have done.”
Though commission revenue plays a significant part in most insurance offerings, notably extended warranty, among the carmakers’ retail networks, it is arguably of less importance than the product itself when it comes to generating business for the workshops and aiding customer retention.
As the name implies, most of Warranty Direct’s deals are through car owners, but McClure Fisher points out that 60-70% of the company’s repair claims, totalling around £1m a month, are directed through franchised workshops.
Warranty Direct is also seeking to extend its ‘direct’ presence in the franchised sector, currently around 7%, with a ‘white label’ version of its extended warranty. “Our proposition is intended to address the challenge of manufacturers not knowing who the third and fourth owners of their product are," said McClure Fisher. "With our marketing and database resources, we are saying ‘let us promote a manufacturer direct warranty to those drivers - we pay you commission and you get repeat business on servicing and repairs’.”
Extended warranty and GAP generally form the core of dealer insurance offerings from MapFre Abraxas, but it’s been talking to partners about options to expand their portfolio.
“Products like tyre and alloy cover and MoT insurance are top of the list and they have the added benefit of helping to support customer retention efforts,” said Steve Burgess, head of new business. “If a customer has these additional products and needs to make a claim then their first port of call is the supplying dealer which, as a minimum, is another opportunity for dealers to talk to a customer about other current offers.”
But with F&I expected to contribute £2.5m to its bottom line this year, Vauxhall and Chevrolet dealer Drive Motor Retail is selective about these products. As managing director Paul Manning explains: “Offer more than three and we find the customer switches off.” GAP and warranty come high on the list, but Manning said it was difficult to put options such as key insurance or MoT cover in front of the customer.
However, Manning added that the approach would vary depending on the franchise represented. Dealers selling expensive, prestige brands may have more success with paint and alloy wheel cover than mainstream franchises.
David Johnson, group finance and insurance manager with Perrys, said: “What you need to put in front of the customer is a sensible portfolio, not an exhaustive list. The sales procedure is protracted enough as it is. The customer can be left feeling fed up with the whole process.”
Eric Stone, business development director of the WMS Group, reinforces the point that add-ons not only improve profits and cashflow, but also help customer retention.
"Historically, there have been many commoditised products that could only draw revenue at the point-of-sale, whereas our business has successfully been built on providing not only front-end revenue but also helping with workshop absorption,” said Stone.
He reported that since the start of 2012 WMS had seen a 13% uplift in the sale of MoT insurance, with businesses recognising that such products can almost guarantee to bring the customer back the following year. “These products carry a range of profit-making opportunities at the point of sale, repair work and again at renewal.
“Based on the RRP of just £49 for 12 months, customers can rest assured that their vehicle will be covered against MoT failures (including lighting equipment, steering, suspension, brakes, seats and much more) up to a claim limit of £750. MoT insurance goes hand in hand with a comprehensive warranty, and the two products combined will provide upmost peace of mind to buyers – and repeat profitability for dealerships.”
Stone said that tyre and alloy wheel insurance – introduced by WMS five years ago - was proving to be another appealing offer, building value in the mind of the customer (as well as the sales executive), and available as either stand-alone or combined. “We have recently made several improvements at no additional premium, and cover now includes unlimited tyre repairs/replacements during the three-year duration, and wheel replacement costs up to the individual claim limit if they become damaged beyond repair.
“For franchised dealers, it is not uncommon to see wheel and tyre penetrations in excess of 20%, with this figure rising to 40% in specialist or luxury franchises. Profit margins are obviously dependent upon the RRP, but with a total customer value of £2,500 and an RRP of just £299 for three years cover, dealers should expect a post-tax margin of circa £150 per sale.
“Refurbishment of wheels and the replacement/repair work on tyres can be sent back to the supplying dealer to provide additional revenue during the three year cover.”
Warranty Direct used to offer MoT insurance, but this is now included in its extended warranty. “Leaking shock absorbers, for example, are covered, but not items like chipped registration plates or bulb replacement,” said McClure Fisher. He added that sales penetration of products like GAP and paint protection tended to be better than lower margin options such as extended warranty.
Nick Jones, group finance manager at Vauxhall dealer Greenhous, said insurance products typically add 10-15% as a percentage of profit to each used car.
“We are looking at MoT insurance, it’s something Vauxhall is keen to get involved with,” he said. “We offer our Protection Pack with a leaflet explaining the insurance options, including ValueGuard for GAP, along with the Network Q extended warranty.
“We stopped the smart repairs option because of lack of demand, but drill down on GAP because it’s seen as vital protection for the customer, followed by Diamondbrite (paint protection) and warranty."
Perrys’ David Johnson said the group separated regulated products like GAP from the non-regulated. Two thirds of the company's outlets had a business manager, with satellites featuring a sales manager, controller and two supervisors. "Offers like MoT cover would not typically be offered at point of sale, but they may be included in the future," he said.
AM magazine