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2008 J D Power Automotive Online Marketing Review

2008 J D Power Automotive Online Marketing Review

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Automotive online marketing review - Oct 2008
Automotive online marketing review - Oct 2008

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Automotive Online Marketing Review

Gene Cameron, VP Marketing/Media Solutions Scott Kane, Senior Research Manager
October 7th, 2008

© 2008 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved.

2008 U.S. new vehicle sales will total about 14 million, the lowest annual result since 1993
Total U.S. New Light Vehicle Sales
18
Total New Light Vehicle Sales (Millions)

17 16 15 14 13 12 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008*
Record Year - 17.4 Million Units

Source: J.D. Power and Associates
2
© 2008 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved.

*JDPA Forecast

With higher gas prices, cars are now out-selling light trucks by a substantial margin
Car and Light Truck Share
Ca r Sha re 60% Truck Sha re

% of U.S. New LIght Vehicle Sales s

50%

40%

30%

20%

10%

0% 2000 2001 2002 2003 2004 2005 2006 2007 2008*

Source: J.D. Power and Associates
3
© 2008 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved.

*August YTD

Compact vehicles have gained share at the expense of both Midsize and Large vehicles
Mix Based on Vehicle Size
Com pa ct Sha re Midsize Sha re La rge Sha re

% of Total U.S. New LIght Vehicle Sales

60% 50% 40% 30% 20% 10% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008*

Source: J.D. Power and Associates
© 2008 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved.

*August YTD

4

Online budgets are being reigned in this year. Reaching shoppers efficiently is more important than ever
Automotive Internet Advertising Spending
OEMs 400 350 344 Dealers and associations Top third-party sites

Ad Spending (Millions)

300 264 250 200 150 100 50 20 0 2005 H1 2005 H2 2006 H1 2006 H2 2007 H1 2007 H2 2008 H1 80

Source:
© 2008 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved.

5

Automotive Internet usage (AIU) rates rise rapidly as shoppers change their purchase behaviors
Automotive Internet Usage (AIU) Trends New1 Vs. Used2 – Vehicle Buyers 10-Year Trend
New
80% 70% 60% 60% 50% 40% 40% 30% 20% 10% 26% 33% 43% 47% 47% 54% 59% 54% 53% 60% 61% 64% 64% 67% 68% 70%

Used
75%

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

1 Based 2 Based

to new-vehicle buyers. Source: J.D. Power and Associates 1999-2008 New Autoshopper.com Studies to used-vehicle buyers. Source: J.D. Power and Associates 1999-2007 Used Autoshopper.com Studies
© 2008 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved.

6

When do buyers begin shopping for vehicles?
Average/Median days prior to purchase

First shopped for any model First shopped for a model within the vehicle segment which they purchased

89/87
days before

74/56
days before

First shopped for the model they ultimately purchased
Based to AIUs. Preliminary Unweighted Data Source: J.D. Power and Associates 2008 Auto Buyer Clickstream Study
7
© 2008 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved.

62/29
days before

Number of Models Shopped Increases in Month of Purchase Number of Models Shopped per Buyer
1.0 1.1 1.1 1.2 1.5 3.1

Timeframe
5 Months Prior 4 Months Prior 3 Months Prior 2 Months Prior 1 Month Prior Purchase Month
Based to AIUs. Preliminary Unweighted Data Source: J.D. Power and Associates 2008 Auto Buyer Clickstream Study
8
© 2008 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved.

Use of Search is also growing, fueled by growth in the use of Google
Used Search for Automotive Information
90%

85%

84% 81%

% Using Search

80%

75%

70% 2007 2008

Based to AIUs. Source: J.D. Power and Associates 2007/2008 New Autoshopper.com Study
9
© 2008 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved.

Online NVBs Increased their use of Automotive search terms the month of purchase
Categorized Search Terms throughout the Vehicle Purchase Horizon
Percentage of the top 100 search terms by AIUs
50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 5 Months Prior Months 4
Retail

3X Increase

PriorMonths 3

Prior Months 2

Prior Months 1

P Prior u r c h a s e Month

Automotive Social Networking

Search/Portal

Directions

Based to AIUs. Preliminary Unweighted Data Source: J.D. Power and Associates 2008 Auto Buyer Clickstream Study
10
© 2008 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved.

In 2008, use of Mobile access grew by 21% versus 2007
Mobile / Cell Phone Internet Access
30% 25% 20%

% With Mobile Access

18% 15%

15% 10% 5% 0% 2007 2008

Based to AIUs. Source: J.D. Power and Associates 2007/2008 New Autoshopper.com Study
11
© 2008 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved.

Mobile should be on some OEMs’ top priorities, but of less concern to others
Mobile / Cell Phone Access to the Internet Top 5 Land Rover* 50% Porsche 43% BMW 37% Jaguar* 36% Audi 35% Bottom 5 Suzuki 13% Mercury 11% Buick 11% Hyundai 10% Kia 8%
Based to AIUs buying each brand. Source: J.D. Power and Associates 2008 New Autoshopper.com Study *Caution: Small Sample. Land Rover (n=85), Jaguar (n=61)
12
© 2008 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved.

Consumer-generated content (CGC) remains an important part of the online shopping process
Use of Consumer-Generated Content
80%

% Using CGC

70%

69%

69%

60%

50% 2007 2008

Based to AIUs. Source: J.D. Power and Associates 2008 New Autoshopper.com Study
13
© 2008 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved.

Vehicle Ratings and Reviews are by far the most used type of CGC
Consumer-Generated Content Usage
Vehicle Ratings/Reviews Dealer Ratings/Reviews

% Finding Helpful*
63%

95%

38%

87%

Enthusiast Sites Online Forums/Chat Rooms/Q&A Sites Blogs

22%

81%

18%

78%

12%

69%
Videos/Podcasts

10%

66%
0% 10% 20% 30% 40% 50% 60% 70%

*Based to AIUs who used each type of CGC Source: J.D. Power and Associates 2008 New Autoshopper.com Study © 2008 J.D. Power and Associates,
14
The McGraw-Hill Companies, Inc. All Rights Reserved.

The model purchase decision is impacted by Expert and Consumer Ratings & Reviews
Shoppers Using Consumer Ratings/Reviews (Not Expert) Model Purchased Share Toyota Camry 3.9% Honda Accord Sdn 3.3% Nissan Altima 3.2% Toyota Yaris 2.8% Toyota Corolla 2.6% Toyota Prius 2.3% Honda Pilot 2.2% Ford Focus 2.2% Honda Civic Sdn 2.2% Ford F-150 LD 2.1% Shoppers Using Expert Ratings/Reviews (Not Consumer) Model Purchased Share Honda Accord Sdn 3.7% Nissan Altima 3.6% Toyota Camry 3.2% Honda CR-V 2.9% Toyota Prius 2.5% Honda Civic Sdn 2.1% Chevrolet Silverado LD 2.0% Ford F-150 LD 2.0% BMW 3 Series 1.9% Toyota Corolla 1.7%

Based to AIUs using either Consumer or Expert Ratings/Reviews, but not the other. Source: J.D. Power and Associates 2008 New Autoshopper.com Study
15
© 2008 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved.

Online NVBs are avid users of Social and Video Sites
First 6 months 2008 % Reach NVB
go.com youtube.com myspace.com facebook.com abc.com twitter.com hulu.com 74% 71% 68% 49% 12% 3% 1%

Index IBP
20% 34% 35% 19% 1% 1% 1%

NVB Reach/IBP Reach
371 210 196 261 1,541 347 184

Based to Online New Vehicle Buyers. Preliminary Unweighted Data Source: J.D. Power and Associates Total Online Media Behavior
16
© 2008 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved.

As a percentage, online submissions hold relatively steady year-over-year
AIUs that Submitted Request for Quote
50%

% Requesting Quote

40%
31.6% 32.1% 31.0% 31.7% 29.3%

30%

20%

10%

0% 2004 2005 2006 2007 2008

Based to AIUs. Source: J.D. Power and Associates 2004-2008 New Autoshopper.com Study
17
© 2008 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved.

Realistically, 1 of 5 AIUs will never submit a Request for Quote
Submit Request May be open to Quote Process Not Likely to Submit a Quote

• Prefer to negotiate price in person or by phone

49%

• Already have relationship with dealer and know where they’ll next purchase

29%

22%

• Use alternate purchasing/discount program • Etc…

Based to AIUs. Source: J.D. Power and Associates 2008 Follow-Up Study to NAS
18
© 2008 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved.

Fear of dealer contact and doubts about receiving valuable or accurate information deters shoppers from submitting requests

Reasons Why Shoppers Did Not Submit a Request for Quote

60% 40% 20% 0%

50% 29% 15% 7% 7%

Did not want to be contacted by dealer

Wouldn’t get valuable / accurate information

Privacy or Identity Theft concerns

Wouldn’t get a timely response

Tried it before and didn’t like it

Based to AIUs that did not submit a request for quote Source: J.D. Power and Associates 2008 Follow-Up Study to NAS
19
© 2008 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved.

Providing quality responses to requests is at the heart of the problem

Request for Quote - Dealer Response Ratings

Timeliness of Response

7.2

Completeness of Response

6.4

0

2

4 6 Satisfaction Score

8

10

Based to AIUs that submitted a request for quote Source: J.D. Power and Associates 2008 Follow-Up Study to NAS
20
© 2008 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved.

Active Online Shoppers have a relatively limited use of sites within type
Active Online New Vehicle Buyers in 6 Months Prior to Purchase by Type of Site Third Party Sites OEM Sites Dealer Sites

Average Number of Sites Visited

3.3 3.1 2.6

Based to AIUs. Preliminary Unweighted Data Source: J.D. Power and Associates 2008 Auto Buyer Clickstream Study
21
© 2008 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved.

What do shoppers find most useful about different types of sites?
Top 10 Most Useful Content by Type of Site
Independent Web Sites Pricing/Incentives/MSRP Reviews/Forums/Ratings Compare Vehicles Research Info/Options, Features, Specs Navigation/Easy to Use Trade-In Value Vehicle Images/360 Tool/Video Request Quote/Contact Dealer Find a Dealer Monthly Payment Calculator/Estimate 40% 21% 17% 12% 11% 8% 2% 1% 1% 1% Manufacturer Web Sites Research Info/Options, Features, 43% Specs Pricing/Incentives/MSRP Equip a Vehicle Navigation/Easy to Use Inventory Locator Vehicle Images/360 Tool/Video Compare Vehicles Find a Dealer Monthly Payment Calculator/Estimate Request Quote/Contact Dealer 20% 17% 15% 7% 7% 4% 4% 3% 2% Dealer Web Sites Inventory Locator Pricing/Incentives/MSRP Research Info/Options, Features, Specs Navigation/Easy to Use Request Quote/Contact Dealer Find a Dealer Vehicle Images/360 Tool/Video Compare Vehicles Monthly Payment Calculator/Estimate Equip a Vehicle 44% 35% 14% 10% 7% 6% 4% 2% 1% 1%

Based to AIUs Source: J.D. Power and Associates 2008 New Autoshopper.com Study
22
© 2008 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved.

Online New Vehicle Buyers Visit a “Long Tail” of Third-Party Sites
Top Third Party Sites Share of Total Third Party Sessions
14% 12% 10% 8% 6% 4% 2%

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Based to AIUs. Preliminary Unweighted Data Source: J.D. Power and Associates 2008 Auto Buyer Clickstream Study
23
© 2008 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved.

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Carving out a niche is important to growing and sustaining a useful site
Top 10 Most Useful Site Content
Independent Edmunds.com Site Visitors 40.2% 47.9% 20.9% 29.6% 17.4% 16.1% 12.1% 12.5% 11.0% 8.4% 7.8% 4.4% 1.5% 0.6% 1.5% 1.6% 1.4% 1.0% 0.8% 0.7% Kelley Blue Book 53.7% 8.4% 7.0% 6.0% 7.4% 27.0% 0.1% 0.2% 0.2% 0.8% Cars.com 28.5% 13.5% 24.3% 9.8% 27.6% 1.9% 8.1% 2.9% 8.4% 4.7% Vehix.com 7.8% 5.3% 59.3% 13.5% 16.3% 0.0% 5.3% 1.3% 3.4% 1.2%

Pricing/Incentives/MSRP Reviews/Forums/Ratings Compare Vehicles Research Info/Options, Features, Specs Navigation/Easy to Use Trade-In Value Vehicle Images/360 Tool/Video Request Quote/Contact Dealer Find a Dealer Monthly Payment Calculator/Estimate

Based to AIUs visiting each site who thought that site was most useful Source: J.D. Power and Associates 2008 New Autoshopper.com Study
24
© 2008 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved.

Getting more traffic to the brand site is great, as long as it’s the right traffic
Top 15 Visited OEM Sites—Year-Over-Year Analysis
20%

% Change in Visitation

15% 10%

Saturn

Nissan Volkswagen

5% 0% -5% -10% -15% -40%
Hyundai Jeep

-30%

-20%

-10%

0%

10%

20%

30%

% Change in Close Rate

Visitation: Based to AIUs. Close Rate: Based to AIUs visiting each site. Source: J.D. Power and Associates 2008 New Autoshopper.com Study
25
© 2008 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved.

Summary Observations
• Difficult market
– Tighter sales – Major shifts in purchase patterns by Segment

• Increasing Internet use with shifts in patterns, fragmentation
– – – – Consideration counts are not expanded for models or sites used for shopping Third Party Sites exhibit long tail, suggesting fragmentation CGC, Mobile, Video, ? Shoppers/Buyers in new territory, use of internet

• Request for Quote is only effective if it responds to shoppers, is complete, not just rapid

26

© 2008 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved.

Summary Observations
• Challenge to become more efficient and effective • Targeting more important than ever, customize targeting
– Join the conversation Common interest Add value Build engagement Relevant traffic that converts

• Understand shoppers, position your site and marketing to give them a reward • Leverage information throughout the organization

27

© 2008 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved.

Thank you!

© 2008 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved.

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