Toyota Finds Itself in the Brand ER – and Most of Its Wounds are Self-Inflicted

Irony of ironies, now Toyota is a poster child for brand neglect. Having bested GM for two years running to become the largest sell car company in the world, Toyota finds itself losing market share in key markets; losing its reputation for quality for the first time in the U.S.; being criticized for faulty engineering, making ho-hum cars with no zip; and losing touch with its customers.

The December 12^th issue of the Economist has a cover story entitled “Toyota Slips Up” arted with a big fat banana. It details many of Toyota woes. In China, for instance, where it lags behind VW and GM, it has been “slow off the mark” to compete on performance and pricing—with market share dropping two points.

In Europe it is criticized for offering too many boring models. In the U.S. it is experiencing a series of image and engineering problems across a wide spectrum of measurements, including those of J.D. Power, Consumer Reports and Strategic Vision, which bases its “Total Value Index” on feedback from 48,000 buyers. In an annual study of three-year-old vehicles J.D. Power placed Toyota behind Buick and Jaguar.

But what is not mentioned is Toyota’s long history of lackluster marketing, which in the U.S. has been particularly pathetic over the last 10 to 20 years. People working at Saatchi & Saatchi and DentsuAmerica, Toyota’s current agencies, will not talk about Toyota’s marketing.

But I know from research on my book, “Casting for Big Ideas,” that Toyota’s North American management has little interest in creating impactful advertising, saying that it could virtually sell out its inventory of Camrys and Corollas without any advertising and post its near $1 billion in media expenditures towards sales discounts and profit. When asked why Toyota didn’t do that, my source merely shrugged his shoulders, and told me: “They don’t want to be accused of not understanding the value of good advertising—but they don’t want to commission it either.”

The fact is part of the loss of a halo effect around Camry and Corolla has to do with the failure of Toyota to upgrade styling and in-car features to keep pace with market gainers Hyundai and VW. But also to Toyota’s failure to re-enforce brand loyalty and perception with memorable advertising. You can’t keep pumping out semi-annual Toyotathon marching bands and silly commercials with balloons and stupid sales patter and expect to have any lasting emotional impact. Toyota’s advertising at all levels is predictable and forgettable.

Toyota’s new CEO, Akio Toyoda, 53, grandson of the founder, was blunt in speaking to the Japanese press that the company could be locked into a spiral of decline. And certainly some of Toyota’s problems have to do with how any big company ossifies as it reaches No.1 and begins to regard itself as a Master of the Universe. We here in America have lived with that realization while we watched our three great automakers, GM, Ford and Chrysler, slowly slip into irrelevancy over a 40- to 50-year period.

But improving Toyota’s reputation in the U.S. is not just a matter of better engineering—although for a brand whose bedrock values quality and safety its problems in these areas must be immediately corrected. Brands also need nurturing. I like to compare mature brands to great singers such as Paul McCartney whose new CDs are still very much in demand. Like McCartney, legacy brands must be continually re-invented and renewed with the creation of new sounds and ideas, new kinds of connections in the digital space and old kinds of promotions such as a national tour to spark interest. Most of all they need to have their contribution to the culture trigger excitement and interest.

When you talk about cars you may be talking about simple utility – four wheels and a motor to get you to the grocery. But you can’t help wanting more than transportation. We choose a car that makes us happy every time we crawl behind the wheel and becomes such an extension of ourselves that we are proud to show it to others.

Toyota has somehow forgotten that simple lesson. You can be sure it has been told about its failings by countless consultants, ad agency gurus and car magazine writers. But I don’t hear Mr. Toyoda including marketing in his calls to the troops. At the Tokyo motor show he said, “I want to see Toyota build cars that are fun and exciting to drive.” Great if you can do that. But meanwhile start selling the inventory of Camrys and Corollas sitting on dealer lots right now. And down the road, re-discover Toyota’s core values and find innovative ways to communicate those values to the car buying public.

Toyota should expect more competition from Ford and GM—if not the newly reformed Chrysler-Renault partnership. And VW and Hyundai are not far behind. So Toyota has to make cars that fun to drive in a hurry. And I’m looking for advertising that is fun to listen to and watch. It might take three years for Tokyo to begin spitting out a new generation of Toyotas. I believe a new attitude toward brand communication should start right away. For a brand that is already caught up with a failure to live up to the brand promise it took half a century to build, starting this new kind of conversation with consumers can’t start soon enough.

When It's Time to Pass the Baton

Compass Points today is about the fine points of building an agency brand, with a salute to the life’s work of my good friend Mike Hughes.

In the early ‘70s Mike was a newspaper writer who was bored with being “an ink-stained wretch” and was starting to think advertising might be an interesting career. He walked his news clips around Richmond, Virginia to show Harry Jacobs, then the legendary creative director of the South’s only interesting agency, Cargill Wilson & Acree, then to David Martin of the Martin Agency, and finally to a little Richmond office of Chicago agency Clinton E. Frank, where they put him to work writing ads for Reynolds Metals.

Finally Harry Jacobs, who had just moved over to the Martin Agency as a full partner with Martin, called Mike in for another look and hired him. In those days the Martin Agency was a swinging Southern hotshop, where writers and art directors like Luke Sullivan and Cabell Harris would put in a day’s work, and then repair to a bar or someone’s home, and do ads for non-profit clients. Their after-hours agency had a several names like Drinking Buddies Advertising, and Harry tolerated it because he was getting good work from these “kids” – and because their clients were no threat to the Martin Agency’s trajectory.

In the ‘80s the Martin Agency had the standard roster of accounts like banks and utility companies – but where it excelled was in ads for agricultural BtoB clients who wanted to sell their herbicides to farmers in obscure publications—and didn’t mind what the agency did in their ads as long as they worked. Suddenly the Martin Agency’s quirky work for cattle feed was winning metal in the big national shows.

Then, about 1990, Harry and Dave decided it was time to sell the agency to a big national or international agency – and settled on becoming a wholly owned subsidiary of Scali, McCabe Sloves, which, in turn, had become part of Ogilvy. About this time, Martin Sorrell bought Ogilvy to fill out his other network purchases and inherited Scali and the Martin Agency. Marvin Sloves had some issues with Sorrell and arranged for the agency to buy back its stock; only to turn around and sell it again to Frank Lowe, whose London-based agency had in turn become part of Interpublic. (Dizzying, isn’t it.)

These deals couldn’t happen in today’s universe, but Martin Sorrell had been beat up by another creative shop he bought—and didn’t see how letting Scali/Martin go would interrupt his longer term strategy.

It’s not clear why Frank Lowe wanted Scali and its Southern appurtenance—other than that he admired the work being produced by these agencies.

As things settled down, David Martin took his money and pushed off—leaving the agency to Don Just and Harry Jacobs. As the ‘90s wore on, Don handed off client service and administrative duties to John Adams, who took the title CEO, and Harry became chairman and handed off creative to Mike, who took the title President/CCO.

Mike was able to light up the creative sky again—thanks to a campaign starring a wily, green lizard with a funny British accent, which [along with some cranky cavemen] made Geico the country’s top automobile insurance company, and, then again, when he made drab, dependable UPS a talking point, with the campaign “What can Brown do for you?”

At the same time, in his off hours, Mike was serving as chairman of the board of the “The AdCenter,” the country’s only masters-awarding, creative advertising graduate program, at Virginia Commonwealth University.

Mike recruited Rick Boyko from Ogilvy to run the AdCenter. Under Rick, some new faculty members and a distinguished board, the school suddenly became the leader in portfolio-based, creative advertising training. The school (recently renamed The BrandCenter), continues to rank high not only as a creative center but against the MBA programs at the leading business schools which increasingly are adding a creative branding component to their curricula.

Now, almost 40 years after joining The Martin Agency, Mike has brought in John Norman from Wieden & Kennedy to be his successor as chief creative officer. Mike will continue as president of the agency to help John Adams, try to begin to make it a global creative shop—similar to what Wieden, Fallon and Bartle Bogle Hegarty have become.

“Establishing distance offices has always been difficult for me,” says Hughes, “because I was anal and wanted to watch the work all the way through [from concept to execution].” But Hughes says it’s time. He and John have named three younger partners-- Beth Kelley, head of HR and “manager of creative:” Matt Williams, a senior planner and John Norman-- to begin the transition to running an international shop on their own.

Mike is a gentle giant, known the world over in creative circles, but hardly a household word among clients. That’s, in part, due to the way he generously credits others for the agency’s successes and, in part, due to his seemingly light but firm management style. He says he isn’t disappearing from the agency scene and if anything is more "motivated" by his new duties. But he has earned almost every accolade the agency world has to bestow, because of who he is and what he and John Adams have accomplished from their out-of-the-way, red-brick-and glass base in Richmond.

Mike gets the Compass Points 2009 award for brand building—both the agency’s and his client list (which now includes Wal-Mart), hands down.

One of the hardest tricks in all ad-dom is to manage this kind of transition. We’ll see if he and John can pull it off. There was nothing sadder for me this year to see Cliff Freeman have to close its doors and go out of business; and, earlier, to see Fallon/Minneapolis essentially become part of Saatchi & Saatchi. There should be another way to keep great agency brands alive.