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Richard Payne gets a new Merc "every few months". Well, he should, since he runs the marketing and communications for Mercedes-Benz passenger cars in the UK and it's important to sample what he sells.

But, being cosseted regularly by the newest innovations in heated seating, power-steering and sat nav has failed to separate he and his marketing team entirely from the rest of the world. For the internet has managed to enter the consciousness of this most historic of brands. Quite what Gottlieb Daimler and Karl Benz would have made of email is impossible to know, but their successors are wholly convinced of the benefits of online.

So much so that Mercedes-Benz will be committing eight to nine per cent of its estimated £17m UK marketing budget to the web in 2005 - about double the industry average, according to the company's agency - in what will represent a crucial year for the brand.

In the ever-fierce battle with immediate rivals BMW, Audi and VW - as well as the Japanese marques - Mercedes is launching four new cars, two of which are entirely new concepts, rather than updated versions of existing models. That means that, as well as pitching new ranges to a highly educated audience, the brand must, in some cases, convince them of new ideas. Given the nature of the 2005 cars, it will also need to reach outside its traditional 'executive car' stomping ground and seek out a fresh, younger crowd.

Solving these kinds of problems, says Payne, is all part of the job of online. "Our business (in 2005) is going to be all about 'conquest' business - bringing new people to the brand," he reckons. "The opportunity is to get to more of what we describe as 'urban progressives' - younger customers - and it's that which convinced us to use online channels. It allows us to get the brand across to that market."

The new effort follows some notable successes online. The digital 'Drive the Elements' campaign for its SLK-class model this summer attracted almost 50,000 unique visitors, of whom more than 14 per cent ordered a brochure (see case study, p35) or booked a test drive. And an online viral effort boosted the highly praised 'Lucky Star' spoof movie-trailer, starring Benicio Del Toro. Meanwhile, sister brands Chrysler, Jeep and Smart - run out of the same Daimler-Benz HQ in Milton Keynes - have been at the forefront of interactive promotions in the UK.

But now, the company is taking things further: "In 2000, we had an ad hoc approach to internet promotion," explains Payne. "What's changed is this strategic approach - we're looking at the long-term future. My responsibility is to drive this integrated approach and it is now very much at the heart of our business."

Such things are easier said than done, but the plans for 2005 underline Mercedes' commitment.

The four launches for next year, in order of appearance, are: the new A-class range, an update of its versatile runabout due to launch in January; the CLS luxury executive model due in March; the new M-Class off-roader range to be launched in the third quarter of 2005; and the Compact Sports Tourer (CST), which should arrive in the fourth quarter. Each model will be supported by a genuinely integrated campaign, says Payne, in which digital channels will be key.

"The web is a big opportunity to engage with people," he notes. "There will be holding pages (on the Mercedes site) for all the new projects and then we're going with an electronic customer relationship management (eCRM) programme. We are giving potential buyers more information as we reach launch - then they'll be a privileged set who we'll be inviting to book test drives. As we go on, we'll be asking them for more information and the end result is to get them to visit the retailer."

For a car company, marketing is all about driving 'warm' or 'hot' sales leads to its dealerships. A core part of Mercedes' new focus on the web is to develop an eCRM programme that is advanced enough to isolate the genuine sales leads and drive them to the forecourt while, at the same time, promoting the brand in the right way to the remainder of its audience.

Payne explains how the internet is breaking down a key issue in the dealer-customer relationship, which, he admits, might be "intimidating" to some prospective buyers. The web allows people to research their purchase fully before arriving at a dealer. In fact, according to research by NOP, MindShare and MSN Cars, 58 per cent of all car research is done online.

While some might think this puts the dealers at a disadvantage, it actually means that those customers who walk through the door are fully armed with information about the cars and their rivals - those entering a dealership are serious about buying.

Paine reckons this helps dealers: "Customers can go in with the right knowledge. You find there is a feeling of respect between the dealer and customer. We won't put every lead through to the retailer - only if they are relevant and the next thing is for them to go into a retailer - it's a filtering process."

Julian Mitchell, who joined Mercedes after two years working on Land Rover for Wunderman Cato Johnson, points out that the company's new programme also has a major secondary goal - to build brand loyalty among those who are in the market for a Mercedes-Benz. "We can segment our audience online. We're trying to find people interested in the concept of the car. On the web we can target prospective buyers or people that are young or not ready to buy," he explains.

This approach is supported by the web sites for each car. Payne describes how they will enable consumers to find what they want, whether that means just taking a look at the car, finding detailed specs or, in the end, booking a test drive.

And, during a year in which Mercedes will be adding four new models to its ever-expanding range, the web can also address growing consumer choice by acting as a virtual dealership.

Richard Calvert, head of user experience at Tullo Marshall Warren who helps to manage Nissan's CRM programme, explains the problem: "One of the biggest issues facing the industry is that people don't buy cars by segment any more. They don't buy, say, an MPV or a saloon, for example.

They buy a car that answers their needs, like one that is good around town and good on the motorway.

"The upshot is that there are more cars around to meet those niches and showrooms don't have the space to show them all. Mercedes is going mad with massive numbers of new cars in 2005 and the web, in its interactive, experiential guise, offers consumers the chance to play with and experience something of a car. It will never replace 'bums on seats', but it can start to put across the nature of a model."

The internet can enhance this ever-more bespoke approach to selling, by letting users extract whatever information they want from manufacturers.

"There is a huge opportunity for flexibility," notes Payne. "From the user's perspective, if we get the web site right, then it will be right for each of them. Each will arrive and say 'This is right for me, it gives me the relevant information I want'. With other, more conventional media, it is more of a broad brushstroke. But the two work hand-in-hand."

Mercedes' integrated approach is characterised by the way it works with its agencies. Syzygy, which has been Mercedes' online consultancy since it did some work in Germany on the Vaneo MPV (multi-purpose vehicle) in 2000, sits alongside the rest of the brand's marketing suppliers on a 'brand council'.

Previously, most agencies could expect only to develop work based on original ideas from Mercedes' above-the-line consultancy CDD, but things have moved on. A brief is now pitched to all of the agencies at the same time, fostering a truly media-neutral attitude. Increasingly, this has meant that the web is being used to build 'buzz' in the run-up to a launch, with the work in other media often being used to drive audiences to the web site. There, Mercedes can push more information and brand messages, as well as encourage conversions.

The ongoing CRM effort is also critical. The lead-up to the launch of a new car is the key time for Mercedes. It understand the power of car web sites, such as those of influential car magazines, as well as the dedicated channels offered by online portals. The company does content deals with these web sites, providing titbits of information about upcoming cars with the aim of driving the site's users to its own domain. If the site can then persuade the user to sign up for more information, it can add them to its database for ongoing communications.

Payne explains: "We want to give opinion-formers nuggets of information to take into their own conversations." The issue here is that, according to Gartner, 80 per cent of car buyers use the internet for research but only 40 per cent of them actually start at the manufacturer's web site.

Thus, the underlying theme of all the work is to get potential customers on to the Mercedes home site, where it can control the messages users are given about the brand and offer them information 'tailored' to whichever needs they may have.

Simon Sutton, client services director at Syzygy, comments: "The advantage of the web site is that it allows us to segment the audience and reach them appropriately."

But the devil is in the detail. For the A-class - a car that sits outside Mercedes' traditional luxury, executive market - the brand has more work to do to promote its benefits than other models in its range. This means a microsite will be launched at the beginning of January. Holding pages have been up and running in the meantime, encouraging interested users to sign up for more news on the brand. Those who do sign up will be immediately regarded as sales prospects for the A-class.

Another email will be sent out to 'warm' prospects, continues Mitchell.

Then, once the car has been launched, more content will be added to the microsite and emails will continue to be sent out with the aim of migrating registrants to its brand newsletter, so they can remain in regular contact.

Gradually, a database is being built up, which allows Mercedes to segment its audience, based on the cars in which they are interested and their purchase history.

Mitchell explains: "Email will be a key element online. It is a useful tool for pushing people back to the web site when they find something relevant to them."

For cars such as the CLS, less attention will be paid to attracting users. As Mitchell puts it: "We won't have any problem selling the CLS." In this case, Mercedes will purely ensure that its web site - to which all above-the-line media will point - fulfils the needs of interested customers.

Next in the launch line-up, the M-Class off-roader, will be pushed heavily through advertorial work on car channels and magazine sites, as well as through its email database.

However, Mercedes is clearly undergoing a major process of email 'clean-up'. Mitchell says the company is committed to an opt-in approach and making sure its lists are useful. "A lot of time is being spent on the database, on qualifying leads. We are very conscious of the (negative) impact that email can have on the brand. But, done right, it is a great way of communicating with people cost-effectively."

In particular, he says the A-Class launch is key. "The car is so many things to so many people," he explains. "We need to maximise its exposure to explain its benefits, especially given the competition in that marketplace."

Of course, Mercedes is not the only automotive brand to be committing itself to the internet. Rivals such as BMW, VW and Volvo have garnered plaudits for their online work, so, even here, Mercedes has to be at the top of its game to stay ahead.

Mitchell says: "It is always competitive, but that just focuses our minds. All the automotive companies are doing great things online, and so are we."

But, one concern is that the company's efforts to reach a new type of audience could alienate customers in its home territory. Will going after younger punters turn off the older executives? Payne answers: "What we have to do, as we extend the brand, is to remain loyal and true to it. People who are buying an A-Class or C-Class are also buying into that brand. As long as there is a consistent, underlying message, it can be managed. Our site and tailored marketing messages mean we can offer a diverse product range under one overriding umbrella."

And, as Mitchell concludes: "Creating a relationship with customers is actually not that difficult - it just takes good agencies and good planning."

MERCEDES-BENZ ECHOES DRIVE THE ELEMENTS TV AD ONLINE

Microsites are excellent for e-marketing. They enable organisations to turn up the volume on brand values and create a more immersive browsing experience than is possible on the main site. And they also enable brands to monitor interest in their particular products or services more closely.

For the launch of the SLK-Class in summer 2004, Mercedes-Benz's agency, Syzygy, was given this brief: echo the striking TV ad that pitted the car against the natural elements; cross-sell another new model (the C-Class) that shared product features and brand values; and encourage significant customer action.

To achieve the first aim, Syzygy created an interactive, Flash-based microsite, which challenged visitors with a virtual test drive against the elements. For the second aim, it created content that communicated the features of both cars simultaneously. And for the third point, it framed the web site with prominent calls to action.

Tagged pages allowed the agency to track the behaviour of users, which was then translated into customer intelligence for Mercedes-Benz. The microsite attracted 46,445 visitors, with 72 per cent completing the virtual test drive. Also, 14.2 per cent responded to the calls to action by booking test drives and requesting brochures.

Julian Mitchell, online specialist at Mercedes-Benz, comments: "The internet was an important medium for the 'Drive the Elements' campaign, to convert consumer interest from the TV execution into tangible requests for test drives and brochures.

The customer insight tracked from the microsite is invaluable in understanding the reach of the campaign and informing future marketing activity."

VOLKSWAGEN LINKS WITH CLASSIC FM IN TV/RADIO MULTICAST

Volkswagen aligned its new Phaeton luxury car with radio station Classic FM because the brand associations added up right from the start.

The challenge was to carry the partnership beyond a brand match, and to encapsulate a product and channel synergy that would benefit a technologically advanced, luxury car.

Sponsoring the launch of Classic FM TV broadband, in a worldwide media first, aimed to achieve that.

Multicasting TV and radio means that the five million homes in the UK with a broadband connection are able to watch the same broadcast, without needing to replicate the signal for each viewer.

Every time a new viewer requests to see a TV or radio channel, the signal is supplied from their nearest active node, which benefits both the ISP and the host broadcaster.

The campaign combined banner advertising and bespoke streamed video footage in an exercise that integrated the benefits of TV, radio and online.

Volkswagen was able to showcase the interior and exterior details of the Phaeton, and engage with a technologically savvy and cultured target audience.

Alison Lomax, media director at Tribal DDB, commented: "Digital media plays a key role in our communications strategy for Phaeton.

"The launch of Classic FM TV represented the ideal platform to not only reach a refined and knowledgeable target audience, but also to reflect the advanced technology within the car through the adoption of online video-streaming," explained Lomax.

Both the partnership and launch were promoted heavily on Classic FM's radio and TV platforms.

The online media was negotiated by Tribal DDB and Tim Ferris, new media executive at Opus.