How Digital Is Shaping Auto Marketing

Contributor James Green lays out the state of the automotive industry's digital transformation, suggesting ways companies can take advantage of the opportunity.

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Over the last several years, the U.S. auto industry has seen an immense rebound after the recession and bailouts of 2008. According to many volume forecasts, 16 million new vehicles will be sold in the U.S. in 2014.

These sales predictions bode well for digital marketing budgets, as consumers will increasingly tap into digital technology to research and purchase new vehicles.

Digital advertising in the U.S. is up as a whole across auto, retail, financial services, telecom and travel industries. However, eMarketer estimates that the auto vertical will likely overtake financial services in 2015 as the second-largest spender on digital advertising among US industries, only behind retail.

The rise in digital ad spending is directly related to the increased adoption of devices and growing reliance that consumers have on real-time information available to them 24/7.

Digital’s Influence On The Purchase Path

For each of the next five years, eMarketer expects U.S. automakers and dealers to tack on an additional $1 billion or more annually in digital ad spending, significantly eroding every traditional media ad budget except TV. eMarketer also predicts that automakers and dealers will spend more than $6.15 billion on U.S. digital advertising in 2014, up 18% from the previous year.

The majority of spending (60%) will go to direct-response tactics, with the rest put toward branding. Moreover, 35% of total digital ad budgets will be slotted for mobile tactics, a share in line with spending by other US industries shifting their marketing efforts toward smartphones and other mobile devices.

One large reason as to why the automotive category is seeing such a high spike in digital is the transformation of the consumer purchase path, which increasingly begins online at the national or local level, yet still converts almost exclusively in brick-and-mortar dealerships. Consumers don’t buy cars online, but they conduct loads of research and price evaluation across digital platforms.

There’s a tremendous opportunity for digital to play a vital role in brand building, where consumers can engage in upper funnel activities. From there, search retargeting and other data-driven efforts can feed lower funnel activities such as locating a dealership and building a car model, which ultimately transforms prospects into car intenders and potentially buyers.

The Role Of Search

Because there’s such a long buying cycle associated with purchasing big ticket items such as vehicles, auto brands must work to remain top of mind for consumers along every step of the purchase path.

While search engines were the most used path for consumers to get to auto retail websites over the last few years, according to Deloitte, other internet channels and entities are actually capturing consumers’ attention and influencing their buying decisions.

In Deloitte’s 2014 Global Automotive Consumer study (PDF), car reviews on independent websites ranked highest among sources that influence car purchases. The amount of intent data captured on these entities from search data to site behaviors is premium fuel for data-driven, hyper-targeted advertising campaigns.

Data from Magnetic (my company) collected from search entities beyond the major search engines, showed that searches for [tires], [oil changes] and [used cars] were among some of the top search categories for the summer months (2014).

Additionally, Honda, Jeep and BMW were the top three brand searches. In essence, search engines have really become the gateway for consumers to obtain more information. While the actual searches are happening both on dedicated search engines and on other sites with search functions, independent research sites play a role in informing advertisers what their consumers are interested in buying.

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A Multi-Tier Opportunity

Regardless of the tier, companies within the automotive category have numerous ways to take advantage of digital at every stage of the consumer funnel. The customer pool is massive for every level of auto advertiser, from national to regional and local dealerships.

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Digital channels and strategies across social, mobile and local ad targeting equip different tiers with different needs. For example, tier one may be rolling out a new vehicle leveraging a national ad strategy across TV and digital; and by using location-aware advertising, tier three can capitalize on the national advertiser’s marketing efforts. The various tiers make the auto category a perfect contender for both branding and direct response campaigns.

The amount of online activity that occurs before a car purchase makes automotive one of the most prominent verticals in digital advertising.

With digital advertising no longer being text ads limited to search engines and display advertising limited to desktop, more auto companies of all sizes have the opportunity to use digital as their primary source for influencing audiences and turning consumers into auto intenders.


Opinions expressed in this article are those of the guest author and not necessarily MarTech. Staff authors are listed here.


About the author

James Green
Contributor
James Green is chief executive officer at Magnetic, a technology company with a marketing platform for enterprises, brands and agencies. James is charged with driving the company’s strategic vision and overall expansion.

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