F Ford Motor Company

By John D. Stoll 

Jim Farley joined Ford Motor Co. when print ads and 30-second television spots were the way to sell an automobile. A decade later, the world's digital transformation has the No. 2 U.S. car maker rethinking how it allocates its $4 billion-plus advertising budget, and how much can be cut.

As president of global markets, and Ford's No. 2 person, Mr. Farley has a sprawling mandate, from overseeing driverless cars to shepherding sales in dozens of countries. Executives working for him are scrambling to be more creative, with the North American management team, for instance, now working entirely without desks.

Mr. Farley's bottom line: Ford can get better, even as it stretches to get its spending under control. "Having a cost problem makes it more important to be curious and find a better way," he says. This means finding even more ways to use platforms like Facebook Inc. as a core selling tool, and looking to entertainment providers, including Netflix Inc., to produce today's auto ads.

Mr. Farley spoke to The Wall Street Journal about how rapid changes in the marketplace are influencing a 115-year-old company. Edited excerpts follow:

Tighter belt

WSJ: Ford is talking about dramatic cost-cutting in the name of what it calls financial "fitness," including putting its longtime advertising account with WPP up for review. What is driving this?

MR. FARLEY: The digital platform to engage with customers is big enough and the targeting tools are precise enough now that we can make private offers to customers. So it was pretty clear that we needed a new model.

That "fitness" work really questioned the basics of what gets in-sourced; what the agency does; what kind of talent we need, and how efficient can it be. The biggest change is not the agency -- it's us.

WSJ: So you believe advertising is a place you can be more efficient?

MR. FARLEY: Creative development and placement of the ads for digital can be done by machines and software. In the past you would kind of position your brand in a search with Google, for instance, and you would have these programs that would help with the search algorithms. We've now moved past that, where if you look at, say, Netflix, they are modifying the creative based on viewers' behavior; they're instantaneously making the creative different.

WSJ: How does this apply to car selling?

MR. FARLEY: Let's say I'd like to talk to Lincoln Navigator and Ford Expedition owners. Most of those customers are in just a few ZIP Codes. You could say: "I want to serve up an ad to people in Ann Arbor who have not done a search for full-size SUV nameplates in the last three years but have the words Expedition, Chevrolet Tahoe or Cadillac Escalade somewhere in their Facebook newsfeed. And they've had at least two conversations about those in the last three months." You may be able to do it through an agency, or you may be able to do it direct.

WSJ: What does this say about using platforms like the National Football League?

MR. FARLEY: Those large venues still matter. For our truck customer, the NFL is really important. If we have a new Super Duty truck, we're going to tell people on a big platform that fits the customer. People have to find the brand in the right places and the right ambience. Most important is when you're talking to them, it's personal and one-on-one.

WSJ: Sounds like you need to develop new skills?

MR. FARLEY: The digital piece that people engage with today is an online video that grabs your attention in two seconds. And who knows those kinds of skills? It's not the traditional people who design 30-second TV ads or one-page print ads.

Using platforms

WSJ: How do you change the way you sell in a business that is more than 100 years old?

MR. FARLEY: Digital advertising. And talking to people. We went to Google and Facebook. They have software, targeting, to serve up ads to specific audiences using their platforms. At Facebook we would say, for example, please show a Ford Expedition ad to someone who lives in Birmingham, Mich., who has family sports in their news feed, has a picture of a GMC Yukon or Chevy Tahoe in their pictures, and has googled new SUVs in the last week.

You have to ask yourself: Who is your best customer? Who is your most difficult customer? Who is the customer that uses most of your software tools? Who is the most data-analytics-driven customer? Then go talk to them on the platforms where they are. It's just the process of being curious about the right things and getting out of Detroit.

WSJ: What are you learning as you get out of Detroit?

MR. FARLEY: We need, as an industry, much more professionalism and deeper thought into how customers use the product in reality. We did a leadership-team event in North Carolina and we all rode around in vehicles. Now that sounds really simple, but it was one of the most fascinating days I've had in the auto industry.

We think we know everything, and then you're with a single mom who has two jobs, somehow has to get her kids to school and has to do everything on 75 cents on the dollar. They're not technologists, they don't know how our navigation system works and when you get in their car and they have three phones attached to the dashboard, they're driving with their knees and you can see all the scuff marks in the center console where she throws her purse every day, you start to look at your product differently. It was a huge "aha" moment for most of us.

WSJ: What are customers telling you about the types of cars they want? Is the crossover craze here to stay?

MR. FARLEY: Customers change in fits and starts. If someone wanted a family vehicle in the '70s, they bought a station wagon. Then Hal Sperlich came along with the Chrysler minivan, and it was a new form factor that was quickly superior to station wagons.

Then customers shifted to SUVs, and the reason they shifted is they get superior function and image. These changes happen every 10, 20 years. We are starting to see a silhouette shift again. The battery-electric vehicle allows you to put the electric components low and on the corners. You can move the wheels out and give the customer more interior room for the same overall length. [Examples include the Porsche Cayenne, Lamborghini Urus, and certain Peugeots and Renaults.]

We could really see a change again. But if you execute it wrong, people don't find it all that interesting. If you execute it right, like Chrysler did with the minivan or Ford did with the Explorer, it's magic. Absolute magic. Lightning in a bottle.

WSJ: Where does all this transition in the business leave the thousands of dealers who sell your cars in the U.S. and have their own independent businesses? Can you bring them along with the changes you are making?

MR. FARLEY: Dealers will be very important. I think we're going to see a shift. Their ability to manage a fleet of vehicles, keep them maintained and clean -- that's a new business.

When I see the best of our dealers, many of them are in the commercial-service business. The autonomous vehicle will be the same kind of product. They're going to have high mileage. Someone needs to be looking after that fleet, and constantly, every hour of the day, making sure that fleet is running well, clean, professional and serviced. I think that's going to be a new business for our dealers.

Mr. Stoll is a reporter for The Wall Street Journal in Detroit and writes the Full Disclosure column. Email john.stoll@wsj.com.

(END) Dow Jones Newswires

May 20, 2018 22:28 ET (02:28 GMT)

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