GM has lacked a small luxury car in recent years -- a segment that accounts for 60 percent of the luxury market and one that also garners younger users.

As the smallest and least expensive Cadillac, the 2013 ATS is key to GM's hopes of making Cadillac more of a global luxury brand. It goes on sale in the U.S. market next month, following on from the launch of the large XTS sedan last month.

With a starting price of just under $34,000, the ATS is a direct challenge to BMW and Daimler AG's Mercedes-Benz C-Class.

"The task of ATS is very ambitious, going into the largest luxury segment against a brand like 3-Series that's dominated the segment," said Cadillac global marketing director James Vurpillat.

The marketing campaign begins with a 2-minute video on YouTube and will include 10 TV ads during the Olympic Games in London, starting with the opening ceremony on July 27.

The campaign dubbed "Cadillac ATS vs. the World" features the car being driven in exotic locales such the winding roads of Morocco's Atlas Mountains or through the remote hand-carved Guoliang Tunnel in China.

Cadillac officials declined to provide the marketing budget for the ATS launch, but said it was on par with the introduction of the CTS car two years ago when the brand spent more than $297 million on ads for the U.S. market according to Kantar Media.

However, GM, which filed for bankruptcy in 2009 as part of a $50 billion US taxpayer-funded bailout, has failed in the small luxury segment before. In the early 1980s, it launched the Cadillac Cimarron, which Time magazine in 2007 called one of the 50-worst cars ever built.

Brand image remains perhaps the most crucial asset in the luxury car market, where it can take a long time and a lot of money to overhaul consumer perceptions, analysts said.

The average age for Cadillac drivers in the first half of the year was 58 years old, according to CNW Research. That's nine years older than BMW but one year younger than Mercedes.

That is an improvement for Cadillac from 1995, when the average age was about 63. The Escalade SUV's reception from hip-hop artists and the success of its CTS model has helped upend Cadillac's "geezermobile" image and that trend should continue with the newer models, according to Art Spinella, president of market researcher CNW.

"Anything that's more sporty is going to end up dragging that number down quite a bit," he said.

The ATS will be built on a new rear-wheel drive platform, but will also come in an all-wheel drive version.

(Editing by Edwina Gibbs)

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