SEMA News: Mass Marketing With Myles Kovacs | Print |
Press

semanewsNo Turning Back: Mass Marketers Embrace the Specialty-Equipment Industry

“It’s about the styling,” said Myles Kovacs, president and co-founder of DUB Publishing, publisher of DUB magazine. “We’re the plastic surgeons. We take a base car, lower it, fix the proportions.”

The specialty-equipment industry has shed its image as street-racing outlaws or dangerous thrill seekers in the eyes of most Americans, including some of the largest old-money American brand names that have turned to the industry for a slice of cool—and a slice of its audience’s wallet.


 

Members of the specialty-equipment industry have seen this business go both Hollywood and small screen. Movies ranging from The Dukes of Hazzard to The Fast & the Furious and TV shows such as “Unique Whips” and “Overhaulin’” feed mainstream America the images and language of our industry and demonstrate to them that they don’t have to settle for the same car or SUV that their neighbor has.

Now the specialty-equipment industry has reached even deeper into the discussions of creative teams that lead America’s largest advertising agencies. Mass-market brands, products and services increasingly tap into this industry’s ability to spark trends and set the tone of automotive style. This is as mainstream as it gets: Mass-market products seeking legitimacy through an association with this industry, all hinged on a single principle—personalized cars are cool. “It’s about the styling,” said Myles Kovacs, president and co-founder of DUB Publishing, publisher of DUB magazine. “We’re the plastic surgeons. We take a base car, lower it, fix the proportions.”

With a deft cosmetic surgery analogy, Kovacs captured the essence of why corporate America has rushed to grab a piece of the specialty-equipment industry’s shine.

“The next thing you know, the car looks much better with just these minor enhancements,” Kovacs continued. “That’s what actually resonates in the marketplace, and it’s why customization is so important.”

In recent years, the specialty-equipment industry’s profile has risen dramatically with advertisers and marketers, all of whom seek the age group and spending power of the industry’s enthusiasts. First into the water was Universal Pictures in 2001 with the first of its three-film The Fast & the Furious (F&F) franchise, a classic Hollywood treatment of the import-tuner niche. Universal’s success with F&F—the first film grossed more than $144,500,000—opened not only the tuner segment, but also the urban lifestyle market to more mainstream dollars. The latter market, sometimes called the “DUB scene” after the magazine that popularized the culture, was characterized by actors, athletes and hip-hop stars and centered on the flashy cars, homes, jewelry and wheels—especially the wheels—afforded by the rich and those who wished to appear so.

In recent years, the specialty-equipment industry’s profile has risen dramatically with advertisers and marketers, all of whom seek the age group and spending power of the industry’s enthusiasts.

Kovacs, who launched the magazine with two partners in 2000, said the impact of F&F was felt across many lines of car culture, for both better and worse. Part of the sport-compact market’s recent softening, for example, can be traced to exaggerated expectations fostered by the film.



 

“Movies have a great effect, both positive and negative,” Kovacs said. “[The Fast & The Furious] blew up, and everybody—all these investors—thought that the niche was huge. Then the bottom fell out. The movies create demand, but it’s not real demand. Everybody’s aware of it, but who’s going to buy the products? Awareness is really high, but actual acceptance is low.”

Kovacs, however, has managed to form some of the most visible partnerships between non-endemic corporate America and the specialty-equipment market. The distinction is important.

Automakers and their dealers are increasingly aware of how the specialty-equipment industry benefits them and presents a lucrative, still largely untapped revenue stream. But these partnerships move beyond the OEM level and into the cutthroat realm of consumer goods—a realm where good marketing is often more important than the product’s merits.

DUB’s partnership with Pepsi is perhaps its most high-profile one. This year the soda giant ran its Free Ride promotion on 700-million bottles of Pepsi, in which, every day for 71 days, it gave away a DUB-edition Subaru WRX customized by the DUB design team with wheels, a body kit and audio/video systems. It was a $55 million media campaign that has resulted in 3.5 billion impressions. Pepsi ran a similar promotion with DUB last year involving the Chevy Tahoe, which resulted in over 14-million registered entries on Pepsi.com.

Pepsi has even released a soda can design dubbed “Car Culture” that features Dropstars and TIS wheels. Pepsi is not entirely new to the specialty-equipment market; the company was a past sponsor of the popular Hot Import Nights car show series.

DUB’s marketing partnership with Pepsi, as well as brands such as Proctor & Gamble, Wal-Mart, Energizer, Best Buy, Anheuser-Busch and now Amp’d Mobile are some of the high-profile relationships between corporate America and the specialty-equipment market. But they’re not the only ones.

Pepsi has even released a soda can design dubbed “Car Culture” as part of its choreography campaign that features Dropstars and TIS wheels. The wheels will appear on 70-million Pepsi cans.

Two years ago, McDonald’s partnered with Modified Mag and Hot Import Nights as a sponsor. Burger King recently tapped die-cast model-car maker Jada Toys to make DUB-style cars for a kid’s meal promotion. Even Mountain Dew caught the bug at the height of MTV’s “Pimp My Ride” fame, releasing a 30-second spot featuring a car that morphs into a customized truck, low rider and tuner car with the push of the car’s remote alarm/door control.

The reason is simple: The specialty-equipment market initiates trends and purveys automotive style.

“It’s exciting that Madison Avenue [ad agencies], these big marketers, have made the connection with our industry,” said Peter MacGillivray, SEMA vice president, marketing and communications. “They’ve identified our industry as a place to make their brands authentic and a place to start a grassroots buzz. They’re not putting wheels on a Pepsi can because they’re stupid or uncool.”

The specialty-equipment industry not only sets the tone for automotive style but also delivers a prime audience for corporate America’s products.

“It’s a very lucrative market that skews young,” said Steve Miller, senior reporter covering the automotive industry for Brandweek. Miller noted that the 18–34-year-olds, loosely referred to by demographers as Gen Y (although 30–34-year-olds are largely accepted as part of the preceding Gen X), has a thick wallet that is getting thicker.

“It’s a great place to be because Gen Y is open to brands,” Miller said. “They don’t look askance at branding. They’re developing brand loyalty at these ages.”



 

Miller cited greater general affluence as one reason this consumer group can spend thousands of dollars on custom parts for their cars. But he also noted that this is a generation that works earlier and smarter.

“That crowd tends to be a little more entrepreneurial, and a little more creative,” he said. “They find ways to make money. It’s not like they’re out mowing lawns.”

Despite being flush with disposable income, Gen Y is not always getting a receptive message from corporate America’s middle managers, typically older men and women who can at best fake their way through the language and social mores of their younger consumers. Media partners like DUB help bridge the gap.

“These people tend to have the same emotional connection to car culture, but the symbols are different,” Kovacs said. “A car that evokes emotion in someone within a corporate America environment doesn’t have the same kind of emotional tie to the same symbols that youth culture does. And that’s creating a disconnect.”

Kovacs illustrated his example using a ’32 Ford versus a popular youth culture car, such as a Toyota Scion or a Subaru WRX. The enthusiasm both groups share for cars is the same. The only real difference is the sheetmetal.

Kovacs said both groups find common ground in what he calls aspirational cars—brands like Bentley. “The kids know what a Bentley is; they know how much it costs,” he said. “Corporate America aspires to drive a Bentley, too. Now they find out they’re both working toward the same symbols.”

The partnership between the specialty-equipment industry and mainstream marketers is also a two-way street. Mainstream brands glean legitimacy and street credibility through an association with specialty-equipment products and brands. But the industry—long seen as a stew of hot-headed innovators and renegade wrenches—also earns validation in the eyes of mainstream, non-automotive enthusiasts.

“We’ve been fortunate to get early adopters like Pepsi on board with us,” Kovacs explained. “They give us legitimacy in the corporate arena and the finances to go out there and make a bigger difference.”

But the street runs both ways, not only when it comes to image and legitimacy, but also cold, hard dollars. Kovacs has seen too many examples of scabs moving in for a quick grab of the corporate money—a short-sighted strategy in his eyes.

“Most guys look at corporate America and try to gouge them all at once,” he said. “And, yeah, [corporations] have a lot of money. But they’re also smart. They’ve been doing this a long time. They’re going to give you $1,000,000 to get $3,000,000 worth of work. Most guys want a million dollars to do $100,000 worth of work. If we can get these people excited and they continue to come back, there’s going to be a lot of money—but over time.”

Now that the specialty-equipment market is on the radar of many mass marketers, it’s likely there to stay. That is, provided the industry remains true to its principles of innovation and personalization, particularly as car buyers—hardcore enthusiasts and otherwise—increasingly demand more fuel-efficient and environmentally friendly products.

Kovacs anticipated this changing environment and detailed plans for a “green-car” project that DUB is working on with Pepsi. One of the partners involved is outdoor-goods manufacturer Patagonia, supplying enviro-friendly interior materials. “As long as we continue to be an industry that represents grassroots enthusiast entrepreneurs, these brands will want to continue to leverage our sizzle,” SEMA’s Peter MacGillivray concluded.

What does this increased awareness of our industry mean to the bottom line? Initially, the direct impact may be hard to quantify. But the long-term implications are enormous. As mainstream marketers continue to find success in reaching their most sought after demographic utilizing the specialty-equipment industry, examples such as the Pepsi/DUB promotion will become the norm.

“Marketers have found that they can successfully connect to an audience through their vehicles,” MacGillivray said. “It’s a new business model that they’ve learned can be extremely rewarding—and that extends well beyond the urban market. Companies looking to reach outdoor enthusiasts are doing it through their four-wheelers—it’s reaching across all the automotive enthusiast categories. And they’re looking to SEMA companies to make those connections for them.”

But the increased prominence of the industry is not confined strictly the non-endemic companies. According to the Detroit Free Press, Toyota Motor Sales Group Vice President Jim Farley noted that the company will judge the success of the new Tundra and its Scion brand based on the number of those vehicles in booths other than Toyota’s at this year’s SEMA Show. More so then ever before, businesses are looking to the specialty-equipment industry not only as a means to reach consumers, but also as a real indicator of their marketing efforts.

“What people should keep in mind is that a guy like Myles Kovacs didn’t start out where he is today,” MacGillivray noted. “He was a small business in a very important marketplace. He utilized his expertise and made the most of his branding and promotional strategies to create opportunities. Our association is filled with people just like Kovacs who have the ability to offer an authentic voice that can profoundly influence mainstream marketers.”

Ultimately it could result in increased sales as mainstream American consumers are drawn to your store, your services or your products by the images of specialty equipment all around them. And the industry will likely remain in the minds of ad planners and executives in the future.

“Early on in this industry, from when [Robert] Petersen developed Hot Rod magazine, there was a niche that, at the time, was so radical and over the top that corporate America didn’t embrace them either,” Kovacs said. “It took a while for them to prove that they weren’t going to go away and that the niche was much larger than people thought. The key for us as an industry is to go out there and educate people on what it really is and what it means, lead them to it and let them feel it on their own.”


Who is Myles Kovacs?

“If I can achieve success, you can, too,” says Myles Kovacs president and co-founder of DUB Publishing, as he looks around the room. “Don’t ever give up. Failure brings with it opportunities—learn from it.”

The 33-year-old Kovacs frequently finds himself speaking in front of audiences waiting on his every word, and today is no exception. He’s been called upon to offer his expertise to top executives of major auto manufacturers, and when it comes to leading corporations looking for ways to bridge the gap between their long-established brands and today’s most sought-after young consumer, Kovacs’ credibility is unrivaled.

But today his message is directed toward a different audience. Today he’s addressing a class at an East LA high school. He’s part of a project that requires students to speak on individuals who have been positive influences in their lives. Students wait to take their turns at the front of the class holding posters covered with photos of Kobe Bryant, Shaquille O’Neal and even Bono of U2. When Kovacs got word that he was the subject of a student presentation, he made time to visit the classroom in person and address the students firsthand.

Kovacs could have easily used the opportunity to bombard the captive audience with messages centered on any one of his many enterprises. There is no need for boasting when it comes to the number of successes he’s enjoyed—the continued growth of DUB magazine and its series of custom auto shows and concerts; any of the three wheel lines currently under his purview; or one of the pending plans for DUB special-edition vehicles. Nor is there mention that, in 2005, Newsweek magazine named Kovacs one of the 10 Big Thinkers for Big Business, or that his commercial ventures will soon hit the $100-million mark.

What he does mention is that he was once a student sitting in a classroom, feeling like he didn’t particularly fit in with the establishment. Kovacs recalls not being very interested in schoolwork; he was much more concerned with playing football. He explains how, rather than allowing a system designed for conformity to bring him down, Kovacs followed his dreams to the position of prominence he holds today.

“We are all the same,” he says. “I’m not up here talking down to you, filled with arrogance. I started in the industry driving a delivery van for a wheel shop. I took pride in my work and eventually became a sales guy, then the manager.” He goes on to say how seeing a country music star’s Mercedes sell for an unbelievably high price during a televised auto auction made him realize the power of celebrity. It was a realization that would eventually evolve into DUB magazine.

“Every one of you has a gift,” he says, wrapping up. “I want you to find out what that is and use it. And once you do, never give up on it.”

Asked later why the president and co-founder of a successful automotive lifestyle brand like DUB would take time to visit with local high-school students, Kovacs replies without hesitation: “I’ve taken care of DUB for the past seven years. Now, DUB takes care of me. I now have the chance to give back—and that’s what I’m going to do.”

That is Myles Kovacs.