Volkswagen's Unprecedented GTI 2010 Launch

Yesterday, VW took an unprecedented step in marketing by choosing to launch their new 2010 GTI model exclusively via an iPhone app. According to Tim Ellis, their VP Marketing, "...it is a highly targeted strategy to directly reach the GTI customer, a tech-savvy, social-media activist who spends time on mobile devices, most often iPhones". Reportedly, the app launch will cost something in the vicinity of $500,000 as compared to the original VW launch in which they spent some $60 million and relied heavily on network TV. The app approach is unquestionably a low cost, efficient way to reach out to their core customer base. Furthermore, with smartphone usage exploding and apps being all the rage these days, it's a smart move by VW to include an app in the marketing approach.

Let's examine the efficiency of the deal, taking some liberties in projecting the initial adoption rate and viral potential. As Ad Age pointed out in their coverage of this story, one :30 spot on CBS's most popular show, NCIS, during the week ending October 18th cost about $130,000 and reached some 21 million total viewers (CPM $6.19). By contrast, let's assume that 20% of the 50 million iPhone/iTouch user base downloads this app and sends it to 3 friends, who in turn send it to 3 additional friends (total universe = 130 million). At a $500,000 cost, the CPM for this would be a very attractive $3.85 which would reflect a 38% efficiency advantage versus the network tv spot. Therefore, it would take about 6 spots in NCIS, at a total cost of around $780,000, to equal the exposure of the iPhone app, assuming the adoption rate scenario above. An efficiency winner, no doubt. But will an exposure level of around 130 million people really be enough to make a difference? I have my doubts. Rather, I believe this efficient marketing tactic should be part of an overall media- mix designed to move the needle on sales. Is the app-only introduction being strictly driven by the attractiveness of the low out-of-pocket investment?

Only time will tell whether this is a brilliant or foolhardy move but it should be fun to track nonetheless. What say you?