Toyota's Advertising Gamble

After announcing one of the most expensive advertising campaigns made this year in the US, Toyota has launched the $1 billion advertising assault, with Toyota's name to pop-up at every step. The move, although expensive, is planned to put Toyota back in top, after the sharp drop registered following the Car Allowance Rebate System (CARS) completion.

The Japanese manufacturer has declined to make any comments of how it will spend the money. Still, the large amount of money made several analyst wonder if it would pay off in the end. As a comparison, Autonews reports, in October last year, Toyota spent $250 million promoting zero percent financing for several of its models. The results were disappointing.

This time, Toyota is said to pump its money into advertising the brand on network TV and increase the residual value on all 2009 and 2010 Toyota cars and trucks by 3 percent. The latter of the moves will "translate into a $20- to $25-per-month lower payment," as Dave Conant, an LA dealer told the source.

"It could be the tipping point for a lot of people. They're betting the values will be stronger. They're willing to take the hit, to take that chance to spur sales."

Even more, Toyota will increase contribution to ad associations to 50 cents for each vehicle ordered, from the current 32.5 cents.

"The dealers are finding that you need to spend three times as much money to move the needle 10 percent," Conant added. "You cannot drive traffic right now. But I believe Toyota wouldn't do this if they didn't think they can move the needle."