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Where will all the money go?

If you don’t know that the NMMA Board has voted to temporarily dock the industry’s “Discover Boating” national media campaign, you haven’t been reading the news. If you think allowing the manufacturers to use 85 percent of the money to spur sales is a high risk gamble, you’re not alone.

Now it’s not my view that the decision is necessarily a bad one given the economic realities. However, it is surely an unfortunate one. Dropping the excellent national media campaign that has been building momentum over the last three years is a major setback at a time when it would be most desirable to continue the forward motion. Moreover, although the NMMA Board included a sunset provision ending June 30, 2009, it will also revisit the matter in early May and that will risk keeping the campaign at the dock. After all, not all manufacturers supported the Grow Boating engine assessments in the first place. The debate could start all over again and that wouldn’t be desirable.

But the real gamble here becomes obvious when you realize that it’s up to each manufacturer to decide how to spend the money to help “bolster dealer sales.” The manufacturers will be required to sign a pledge that they will do so, but if you’re looking for any genuine oversight in this, can you say Freddie Mac or Fannie Mae?

The greatest risk in all this will be the nearly impossible task each boat builder now faces in trying to deal fairly and equally with all dealers. After all, one of the key facets of the Discover Boating ad campaign was that it never favored any region or area – it was strictly national and directed from one source. Now, the funds (estimated to be $7.5 million) will be in a hundred different hands. Their marching orders are to: “create marketing and promotional efforts that will assist their dealers in moving product during this difficult economic climate.” A grand goal, to be sure. So, why is Abba’s “Mama Mia, here I go again” ringing in my head?

I can see it now. . .every dealer lining up for a share of the handout – sorta like the banks, yesterday, all trying to get a chunk of the bail out billions without any plans or commitments to use the funds in a beneficial way. Well, we won’t have that problem distributing the Discover Boating money – isn’t that like saying “if you jump out of the boat, you may experience contact with the water!”

So, I have a couple of recommendations. For dealers, you should contact your manufacturers now and find out what may be under consideration. Remember, another of the NMMA Board’s directives to its members is: “Fully inform their dealer network on how the credits [funds] are being spent.” So, don’t sit on the sidelines – you gotta squeak to get oiled!

For manufacturers, to keep it simple, I recommend the money be spent to help dealers with the costs of this winter’s boat shows. Like them or not, shows are still the single most effective way to put prospects face-to-face with the boats and the sales force. It seems logical that if we’re not using the funds to convert newbies, we need to convert shoppers into buyers and the most likely shoppers are always current boat owners. And, who goes to boat shows – mostly current boat owners.

One thing is certain – it will be interesting to see who does what.

Comments

12 comments on “Where will all the money go?

  1. Arch

    Good stuff Norm.
    Here are my 2 cents.
    If the money is going back to it’s source, it shouldn’t be up to NMMA to decide what they do with it. These companies are LOSING MONEY, it should go straight back into their bank accounts. With boat show season around the corner, I”m sure the money will be spent on boat shows anyways.

  2. Waterdog

    Your right Norm those boat builders, like our representatives in Washington, are not to be trusted, they will squander the 85% of the 100% they sent to Washington- I mean to Chicago. Your suggestion that they give it right back to the guys in Chicago for the boat shows they run is spot on. Yea Baby!!! Grow Grow Grow

    Now for reality Norm
    How about the organization get creative and become more cost effective with the shows they own. Like free admission at all shows for the 2009 & 2010 seasons, reduced cost to exhibitors, etc, etc. They are their biggest source of revenues you know.
    Everyone is trying to survive from what I see & hear. I don’t think insinuating that the manufactures are jumping up & down thinking that the $0.85 on the dollar they sent to Chicago is some how going to be looked at as a wind fall. And telling dealers to act like welfare recepiants at a democratic OBama rally doesn’t speak or boad well for this now cottage industry where the largest companies bond ratings are considered JUNK. Let’s all grow up and work togeather rather than snipe across the supposed manufacture/dealer wall of resentment.

    My 2 cents

  3. Jeff

    My questions….

    1. Why should the dealers continue to give a boat manufacturers any grow boating money? For every dollar the dealer invests, at most the dealer will see 85 cents back! (Sounds like government to me!)

    2. Boat manufacturers already have funds budgeted for marketing and boat shows. How can grow boating verify to the dealers that the 85 cents we get back is in addition to those budgeted funds? (Looks like the dealers will be funding their own programs!)

    3. Is this what the media has been referring to when they discuss “Redistribution of Wealth”?

  4. David

    As you pointed out Norm…the best way to sell boats over the next 6 months is through contacts made at boat shows…but the dollars have to work. Boat show prices have increased to the point of limited upside for both dealers and manufacturers. If you have to sell 20 boats to pay for the space then the show is probably too expensive. Dealers must pick shows that offer the best ROI. That might mean smaller less expensive boat shows, shows that don’t have unions, and facilities that are consumer friendly with free parking. And yes free or reduced admission fees for the public should be a given. Anyone that gets in their car and drives to a show is a qualified prospect. NMMA ought to spend some of OUR money to promote all boat shows not just NMMA shows.

  5. Ken Lamain

    Any money going back to manufacturers right now will more than likely go toward meeting payroll. If the ad campaign stops now, think about how hard it will be to start up again. Boat shows are very important but some very large dealers rely on Open Houses to generate thier business. Has anybody associated with “Grow Boating” taken a look to see what the RV industry is doing? Our industry continues to pick up the crumbs of the recreational dollar. I have been in this industry for over 24 years at the retail and wholesale level. It just shocks me that we can still read current articles from some marine marketing wizzard about how we need to target women. You can bet that the RV, Power Sport, Golf and Casino industry know who thier market is. My two cents, keep the program going. A slow down for a couple months makes some sence but show season and spring will be here before we know it.

  6. Robert

    Dealers have no idea what a Manufacturers internal budget may be. Manufacturers will receive the Grow Boating funds and make “expenditures” with smoke and mirrors and finagle and confuse the process to their own advantage. Although transparency is specifically called for in the directive from Grow Boating to manufacturers, dealers know better.

    What is transparency anyway, and how do you provide it? It is a great idea to work to get the $$ to the dealers; but the program will unfortunatley be abused by most manufacturers with no accountability.

    Why not mandate that manufacturers apply all received funds to dealer floorplan assistance or similar specific initiative? That will assist and could serve to help preserve a dealer more effectively than free admission to a show or other uselss feel-good marketing expenditures in a very down economy.

    Surely there will be some professional and ethical manufacturers that will provide their dealer network with a detailed accounting of these windfall funds along with a solid plan to equitably assist, in a concrete manner, all of their dealers. But don’t hold your breath.

  7. Jim

    Ad dollars are always the first thing that manufacturers and dealers want to cut from their budgets when things slow; when in actuality ad dollars are most needed right now to continue to get whatever pie is out there and to indeed strengthen our share of it.
    To end the program is amazingly dumb based on the time and amount of work it took to get it rolling; to trust builders with the money??? you may as well trust a politician…

  8. Dan

    I’m a small dealer and we are not in a metropolitan area. We have only one boat show in our area and it is probably not going to happen this year due to lack of displayers. I don’t agree with the use of Grow Boating funds for boat shows. I have not heard a good explanation of why the Discover Boating campaign has been abandoned. Sure there will be less funds available with sales down but has anyone heard of scaling back the campaign to match the funds available. We need to promote boating more than ever, not just dump the effort.

  9. Arcy Faulto

    Of course nobody asked me, but I would have continued the Grow Boating program. I would have slowed it down a little to make it last longer. Developing entry-level boaters is a long-range proposition. The advertising becomes effective only through repetition. Times are uncertain, but families still value recreation. We still represent affordable recreation. Or have you stopped believing that?

    Every potential working customer did not just go broke. Their attention has been seriously diverted. Perhaps new boaters will rent for a season rather than buy. Perhaps they will buy used rather than new. Perhaps they will buy smaller rather than larger. But nothing will keep motivated people off the water. We cannot hook new boaters if we don’t get them out on the water. The returns will be slower in coming in, but we have to maintain faith in the appeal of our own businesses. The advertising program should have gone forward, forward at new re-negotiated lower ad rates.

    Now that it’s off we lose all the momentum we had going. The chances of resuming the program once the money returns to its source are almost nil. We had a sunk cost that would have continued to promote the industry. During bad times almost everyone’s instinct is to cut advertising first. Oh ye of little faith! Returning ad money to your payroll account will not save you if things are that bad. At best we’ve sacrificed industry-wide upside for the same hundred uncoordinated, ineffective efforts we had going before.

    Bad times are when advertising has the least competition for the potential customer’s attention. Too bad we don’t believe in our own business.

  10. David G. Brown

    Killing “Grow Boating” and passing around the money is about as smart as castaways in a lifeboat eating and drinking their fill on the first day adrift so they won’t have to argue about food and water after they become hungry and thirsty.

    I agree with Norm that the decision is not all that destructive, although for totally different reasons. There really is nothing for “Grow Boating” to promote at the moment. Has anyone else in the industry noticed that the conspicuous spending days of the 90s are over? We’re into the “nexeconomy” these days and boating as it has existed for a couple of decades simply doesn’t fit. It’s not the money. In this case it’s the amount. The whole activity costs too darned much for the majority of the buying public. If people don’t want to buy bloated boats with ravenous fuel appetites, we can’t stop ‘em.

    The “Go Boating” ad campaign won’t be missed in this market. But, wasting the “Go Boating” money is award-winning stupidity. Instead, the industry should be using those funds on research. Who will be the buyers in 2020? how many men? women? how much disposable income will they have? how much leisure time? The industry should study hull design to find ways of building boats that don’t push water around like a New England snowplow. We need to get an idea of cost and availability of fuels. In short, we need money for research.

    Anyone in this lifeboat who thinks the redistribution of the “Grow Boating” wealth is going to improve the status of the industry had better find a recipe for fricasee sea gull — and I don’t mean an old British outboard motor!

  11. Gordy McKelvey

    My 3 cents worth: Give the money back to the boat owners. They are the ones who ultimately paid for the Grow Boating boondoggle. Basically it went like this, NMMA extorted the money from the manufactuers, the manufactuers passed the cost on to the dealers and the dealers passed the cost on to the boat buyers. Sort of like the Bush tax rebate. Ya Think!

  12. LARRY RODRIGUEZ

    Norm and all of us know when something you’ve been using successfully no longer works because the market changed, it’s time to re asses and change the “something”, not do away with it altogether, or worse yet, dock it & send $$$ back to those you worked so hard to convince originally, about the wisdom of an unbiased party doing it!
    it’s unfortunate indeed, worse yet anyone (present non-boaters) who visited the recent Ft. Lauderdale boat show and had to pay $ 18 at the door (on regular days mind you), just to walk through it, (never mind the parking fees!!!), and in these economic times, well “my friends” (to quote McCain), they will tell you in simple terms, ouch!
    By the way what I gather was that attendance was down 20+%.
    Everyone will agree a change is coming, in fact it better come soon, the tax rebate idea? not bad, horrible! That some of the “refund” will ultimately go to pay the unbelievable cost of today’s shows, the NMMA somehow knew that cash would come back to Chicago in one way or another.
    One concern though, I can’t help to wonder when it’s decided, that we need to un-dock the campaign, how many will quickly jump on that idea, and/or put their money where their mouth…….?
    The reality of the credit crunch is hitting the industry hard, as it has the mortgage & auto industries, as first time buyers are being dramatically squeezed by this crisis.
    Perhaps too early to predict the impact.
    Lets continue to work as best we can at all levels, to help on what ever recovery is on the way, the new administration will need all the help it can get.
    In my 60+ years I’ve never seen us face a tougher challenge as a people.

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