Choosing Who Hypes Hyundai

Six ad agencies battled to win over the Korean carmaker's top brass and help them in their quest to reinvent the brand. Who was left standing?

For the first five years of this decade Hyundai Motors America was the fastest growing car company in the U.S. But the Korean company's U.S. growth came to a screeching halt in 2006. Last August, Hyundai hired Nissan Global Chief Marketing Officer Steve Wilhite to take over the U.S. operation and charged with him finding a marketing solution to what ails the company.

The problem for Hyundai is image, or more precisely the low esteem in which U.S. consumers appear to hold the company's automobiles. Hyundai's scores on J.D. Power 's Initial Quality Study are better than Toyota's, though Toyota (TM ) bests Hyundai for long-term reliability. Consumer Reports scores Hyundai's new Santa Fe sport-utility vehicle and Entourage minivan two of the five most impressive new models of 2007. But even with all the improvement since Hyundai's bad old days in the 1990s, when its cars were poor-quality rust buckets, only 23% of new car buyers last year considered buying a Hyundai. Approximately one-third of new car buyers did look at Toyota.

Wilhite says Hyundai must change the story of the brand that consumers have in their heads. To that end, he invited five advertising agencies in March to pitch the automaker's national advertising account. The Hyundai chief operating officer, who also has held top marketing posts with Volkswagen of America and Apple (AAPL ), invited BusinessWeek to ride along throughout the process of selecting an agency for the $350 million account, which culminated in late April with the selection of San Francisco agency Goodby Silverstein & Partners, a subsidiary of Omnicom (OMC ). What follows is a look at what the six agencies presented to Hyundai.

Siltanen & Partners

This Los Angeles-based agency had an inside track on winning the account because it sold a campaign, themed Smart Move, to Hyundai in March. Wilhite said Siltanen's pitch was "a few degrees away from true north" as far as where he wants to take the Hyundai brand. Wilhite emphasized to the agencies that he wanted them to run with the idea of Hyundai being a "smart" purchase.

Siltanen signed actor Kelsey Grammer as the voice for its TV ads and created a series of ads that compared Hyundai models to much more expensive brands like Lexus and Land Rover, making the point that the Hyundai in many instances outperformed or had more standard features than vehicles $10,000 to $20,000 more expensive. One ad showed crash test dummies scurrying out of a Volvo to get into a Hyundai Sonata because it has more standard air bags.

Hyundai liked the campaign and put it on the air in April and May. But Director of Marketing Joel Ewanick says the positioning of Hyundai as a value alternative to luxury cars is limiting. "I don't think long-term we want to define ourselves relative to other brands. We want to establish our own story," he says.

StrawberryFrog

This New York agency tried the riskiest strategy of all the bidders. StrawberryFrog understood Hyundai's problem perfectly. "It's like there is a 'Do Not Enter' sign on the brand for a whole lot of people," says Chief Executive Scott Goodson.

The agency was impressed that Hyundai, according to the automaker's research (and backed up by Edmunds.com) is the brand most heavily researched on the Internet. Some 80% of Hyundai buyers use the Net to comparison shop before buying a car. For those people, reckoned StrawberryFrog, a lack of image is not a problem. People who are not shopping Hyundai at all, though, says Goodson, have such a mental block against Hyundai because of its past that "...they don't believe the hard data and evidence of improved quality even when you show it to them."

Goodson's team came up with an idea-and a word-it felt Hyundai could own in the marketplace: defog. Huh? Yes, it's a little out there. But halfway through StrawberryFrog's pitch, one could see what they were driving at. The idea is summed up in this ad copy: "There's something unusual about Hyundai drivers, something you may not have noticed. They're curious. They do their research...more than any other driver. They find the truth. They cut through. They see the world more clearly."

Billboards in Times Square and downtown intersections in L.A., Miami, etc., would have the word "defog" alone on a white background, with the Hyundai logo. The idea is to drive people to defog.com to discover what the word means and how it relates to Hyundai. In the middle of a full-page of classified car ads in a newspaper would be a big white-space ad, with just the word "defog."

The agency took the trouble to secure a commitment from Wikipedia.com co-founder Jimmy Wales, who is a Hyundai owner. Wales, an icon of Net denizens, would appear in a number of Hyundai ads. A Web site called Hyundaipedia would be a Wikipedia-like site for Hyundai facts and information on such technical terms as "ABS brakes."

Hyundai was looking for a really big idea. But the consensus of the selection committee was that "defog" was too big an idea, and perhaps too complex. Defog, in the end, did not feel like a strategy around which Hyundai executives could wrap a recovery. And CEO Goodson conceded in the end, after learning his agency did not win, "Maybe it was too big, but it definitely would have moved the brand to a new place, and that was the assignment."

Arnold Worldwide

The other agencies competing for Hyundai's business wondered whether Arnold had an inside track on winning because Hyundai COO Wilhite had partnered with them when he was at Volkswagen in the mid-'90s. But most of the people Wilhite was close with at Arnold aren't there any longer.

There was another piece of intrigue with Arnold. At the same time the agency was pitching Hyundai, it was also pitching the Volvo account. Normally, in the ad business this is verboten. You don't pitch two accounts in the same category, and you don't pitch a car account if you already have one. Arnold CEO Fran Kelly even told Hyundai that if Volvo selected Arnold, it was committed to take the Swedish brand owned by Ford. If Hyundai wanted Arnold, it would have to form a new agency with its parent company, Havas , to service Hyundai exclusively. The agency won Volvo, but Hyundai chose another agency.

Arnold believed Hyundai's strength to be that it offers customers more standard equipment than competitors such as Toyota and Ford Motor (F ) at lower sticker prices. The agency wrapped its pitch around the slogan, "Here's To More." In all of Arnold's ads, the idea of getting more was positioned as a value we can all embrace. And in keeping with Wilhite's desire to position Hyundai as the smart purchase, Arnold reckoned, "What could be smarter than getting more for less money?"

Among the ideas that Arnold came up with was to turn the Hyundai key-fob into an MP3 player through a partnership with Samsung (SSGFY ). Samsung is a Korean brand that has broken free of the reputation for cheap products. In one of Arnold's TV ads trumpeting Hyundai's superior safety ratings, a man was seen celebrating his 60th birthday. The ad then replayed his life in reverse, all the way back to when he was 22 and survived a crash in a Hyundai. The ad line: "Here's To More Birthdays."

Kirshenbaum Bond + Partners

This New York agency is known for handling brands like Snapple , Target (TGT ), and Kenneth Cole (KCP ). It was KB+P 's handling of Target that intrigued Wilhite and Ewanick. Wilhite, in fact, says that Hyundai's problem, or challenge, is very similar to Target's. "Target went from being a mass merchant also-ran to Kmart (SHLD ) to redefining that whole retail segment," commented Wilhite, who added that Target only changed about 10% of its product to earn the cachet it enjoys today.

KB+P presented the widest array of solutions for Hyundai. In addition to a raft of ads themed around the slogan, "Why Doesn't Everyone," the agency created a strategy of social networking, direct marketing, and multicultural and corporate marketing. Some ideas from the pitch stood out.

To get past the baggage that Hyundai's own logo is associated with its poor-quality past, the agency hatched an idea to break out the letter "Y" from "Why Doesn't Everyone" and Hyundai's own name, and turn it into a new graphic icon that overshadows the Hyundai logo. It was a clever way to give Hyundai a fresh look and new start without asking the automaker to change its global logo. And to capitalize on the social-networking craze, the agency cooked up a scheme of car-sharing in several metro markets.

Cars would be parked in public lots and people who bought a subscription to the program or who already owned a Hyundai could avail themselves of the car-sharing program directed by Hyundai. Another idea was to supply repurposed Hyundai-branded cargo containers as cool houses and schools to impoverished communities, and to tell those stories through ads.

Ewanick says, "the reach of Kirshenbaum's pitch made it very difficult not to choose the agency." Public relations director Chris Hosford was impressed with how the agency went well beyond advertising: "I could see we couldn't do everything because of cost, but every idea was exciting, and that's a nice problem to have."

Goodby Silverstein & Partners

The agency that won the Hyundai account had been fired by General Motors' (GM ) Saturn brand last January, though many in the ad and auto industries felt that GM's lack of direction was more to blame for mediocre workmanship than any lack of imagination on the agency's part. Goodby kept its auto team intact so it would not miss a beat in handling Hyundai's business; all the other agencies had to first build an auto team.

Interestingly, Goodby's actual slogan, or tagline, bombed with Wilhite and most of the rest of the group. "Have A Nice Car," Wilhite thought, was too trivial a phrase like, "Have A Nice Day."

Hyundai, Goodby said in its pitch, should be the brand that cuts through all the noise of car advertising. Speaking about how the rational part of buying a car has been lost in a sea of ad fluff, Goodby wrote in its opening pitch, "Somewhere between winding roads at golden hours and the artist formerly known as John Cougar belting out the vanilla virtues of a mythical America [a knock on Chevy's current ads], something was lost." Goodby's idea, which will surface in its first ads in June, is that Hyundai must create a new voice and environment of total honesty.

One TV ad showing a woman walking in slow motion through an art gallery carries the following voiceover: "There's a lot of great stuff in the world that you miss when you're in a hurry. In your mad dash to get to the Mona Lisa, you miss cubism, impressionism, and the whole French Renaissance. So, what we are really saying is slow down. It's not something you usually hear from a car company. We're not telling you to go out and buy one of our cars. We're just going to tell you how we're safer and better made than some of the cars you might be looking at. And then ask you to think about it."

Part of an Internet strategy is for Hyundai owners to have a "My Hyundai" space as part of a new Web portal, similar to the way Yahoo! (YHOO ) allows people to customize a "My Yahoo" page. This page would contain Hyundai news, Hyundai mentions on blogs, Hyundai-related films posted to video-sharing sites, information relevant to proper child carseat installation, ways people can improve fuel economy, etc. Some 80% of Hyundai buyers research their cars on the Net, so Goodby believes there would be sufficient interest in such a page that is tied to the Hyundai brand.

Some of the other ideas Goodby pitched can't be discussed because the agency and Hyundai are working on them for actual airing, and their success will depend on the ads taking the public by surprise.

Goodby may not have presented the overall best creative work and strategy of all the agencies, but they did get it right in the minds of the Hyundai selection committee. The work, not all of which is explained here, is clever and creates a different voice and story for Hyundai. Goodby's experience offered Hyundai a huge comfort cushion. It is an agency with a stellar track record internationally, and it is one of the most admired agencies in the business.

The demands of a big national car account are many. And the fact that Goodby had the Saturn team in place and waiting for a new assignment clearly made Hyundai executives feel comfortable about the agency's ability to hit the ground running. But however Jeff Goodby-who led the pitch-managed it, his agency is the one Hyundai wants to partner with to transform the way car buyers view the Hyundai brand-from tin-pot Korean import to rival of Toyota and Honda (HMC ).

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