Without a doubt, it’s been a difficult year for just about everyone in this room.
When estimates for sales figures begin dropping by the millions, there is cause for alarm. In 2007, we had a down year in the industry. Only 16.1M sales that year, excluding fleet, and that was down from 16.5M in 2006. But in 2008, we’ve projecting the worst year since 1993, at 14.2M total units sold. Add to that the financial crises that are currently going on, skyrocketing unemployment, a wild ride on gas prices as they seem to continually ebb and flow, if you’re in this room, you’re either doing something right or recognize that you’re in trouble and want to learn over the next few days what you can do right in the future.
Sales are shrinking and profits are shrinking too. The most profitable type of vehicle, Trucks, have done a 180 degree turn in sales figures compared to 2007, when they represented 51% of total market share. In 2008, they’re projected to represent just 46% of market share with Car share increasing 10% in year-over-year growth to 54% of market share.
Most of that growth is coming from the Compact vehicles, it’s not surprise. Large vehicles are down a lot, Midsize is down slightly, and Compact is up a lot versus 2007.
Automotive sales are down and for the first time in recent years, automotive Internet spending among OEMs is also down. Normally, the first half of the year trends to be just slightly less than the second half of the prior year. In 2008, however, the first half of the year took a big hit falling by 80M in spending compared to the second half of 2007 when spending reached 344M. Given that the second half of the year is typically higher than the first half (with most launches occurring in the second half), it will be interesting to see how this all turns out in 2009 – but one thing is for sure, finding efficiencies in your marketing efforts and ensuring you’re reaching the ‘right’ people is a common goal for all OEMs and their agencies right now.
Shrinking, falling, declining numbers…that’s just about all we’ve seen so far. So, what’s growing? J.D. Power and Associates is going to be releasing the 2008 New Autoshopper.com Study next week, surveying over 29,000 new-vehicle buyers and what they did during their shopping process. For the rest of this presentation, when we talk about ‘shoppers’, it’s what actual NVB’s did before they purchased. Vehicle buyers using the Internet in their shopping process is growing. This is the largest year-over-year percentage point growth that we’ve seen in the AIU rate since 2001. All of the info Gene just walked through, the changing shopping patterns of vehicle buyers moving from larger vehicles into smaller vehicles, those shoppers turned to the Internet at a higher rate than before. Now, without a doubt, we saw an increase in the Internet’s impact on how much to pay for a vehicle. In a tough economy, pricing is very important. But, even more important, the Internet’s impact on what make or model to purchase grew at even a faster rate than it’s impact on how much to pay. They needed information about the new segment they found themselves in – Can my family still fit in it? Does it have all of the features and options that I’m accustomed to? Can a 4-cylinder engine still accelerate enough to get on the highway safely or climb that big hill on my way to work? All of these are questions that shoppers turned to the Internet for. Now, what other online content is growing? We’re going to spend the rest of the roundtable talking about some of these very topics and how to most strategically use them to benefit your marketing efforts.
The use of search grew in 2008. Up from 81% to 84%. Most of this was fueled by growth from Google, which is now used by 64% of AIUs to find automotive information. To get a sense of how big that number is, the next most used search engine is Yahoo!, with just 30% of AIUs using Yahoo! to find auto information. The other search engines, MSN, AOL, and Ask.com, all experienced double digit declines from 2007. Will Google continue to grow next year or will a merger create a new major player, or will someone come out of the blue and reinvent the Search game as Google did years ago. No matter what, it’s going to be an interesting story to watch unfold.
Mobile access grew among AIUs in 2008. While it pales in comparison to search with only 18% of AIUs accessing the Internet through their mobile phones, it grew by 21% compared to 2007. At that rate, over a quarter of AIUs will be accessing the Internet in just two years, 2010, and I’d personally be surprised if the access rate doesn’t exceed that 21% growth rate. Are you ready for a mobile shopper? A shopper that’s possibly at the very bottom of the purchase funnel, looking for incentives, or inventory, or just the next closest dealer to them? As an industry, I don’t know if we are prepared. Of the top five most visited 3 rd party sites, only one has a mobile site, EdmundsToGo.com. It loads quickly and provides a paired down version of Edmunds’ site. The other four 3 rd party sites have a median home page weight of just under 400kb. Have you tried to load 400kb on your mobile phone? And when it finally loads, the links and text are often broken or scrambled. Now, the argument could be made that technology for mobile browsers and connections will improve, so there’s no need to create an entirely separate site for mobile shoppers. But for some OEMs and their dealers, there should be real urgency to take action now. Looking deeper, of the next 5 most visited 3 rd party sites, 4 have mobile specific sites – Cars.com, CarandDriver.com, Vehix.com and MSN Auots, so some sites are already on the move to prepare.
AIUs with mobile access will soon be mobile shoppers. Half of Land Rover AIU buyers access the Internet on their mobile phones. Over 1/3 of the remaining top 5 sites’ AIU buyers access the Internet through their mobile phones. Key demographics, like age and income, definitely help to determine if your brand needs to be on the cutting edge or has room to take the wait and see approach. Kia, Hyundai, Buick and Mercury--there are likely more important things to be addressing at this point than your mobile efforts. Knowing which side of curve your shoppers fall onto should help you make educated decisions on where you should be making efforts related to mobile.
Again in 2008, over two-thirds of AIUs use consumer-generated content in their shopping process.
Vehicle ratings and reviews written by consumers are by far the most used form of consumer-generated content. They’re also the most helpful type of content used in shoppers’ purchase process. More important than usage of this content, real sales are being won and lost because of what shoppers are saying about your vehicles.
Taking a look at just the highest grossing models. Of shoppers that say they used consumer written ratings and reviews in their shopping process, and did not use any expert ratings or reviews, they are most likely to purchase a Camry followed by the Honda Accord Sedan and the Nissan Altima. Now, conversely, of shoppers relying solely on expert opinion through ratings and reviews and not using consumer feedback, they are most likely to change their buying behaviors – instead, being more likely to purchase the Accord Sedan, followed by the Altima and then the Camry. It would appear that Toyota is winning for share of the voice of the customer while the experts seem to support the Accord and Altima. Knowing which side of the fence your models fall on can help you decide which models need the most of your efforts in helping to possibly influence consumer ratings and reviews.
Something that’s not growing -- over the last 5 years, the % of AIUs submitting a request for referral or quote has held relatively flat. Something with the process is broken and shoppers know it, so they avoid the process all together. This is nothing new, we’ve talked about this at this very roundtable in the past.
In the past, we’ve always speculated what was wrong with the request for referral system. This year, we set out to find real answers and conducted a follow-up study of our NewAutoshopper.com respondents. On the previous slide, we saw that 29% of AIUs submit a request. About 1 in 5 will likely never submit a request for various reasons, such as they prefer to negotiate price in person or by phone, they already have a relationship with a dealer, or they’re going to use an alternate purchasing program, etc. So, right off the bat, we are only looking at how the process could improve for the remaining 49% of AIUs to possibly convince them to submit a request.
Of that remaining 49% of AIUs, they currently don’t submit a request for referral for two main reasons – they fear dealer contact and they have doubts that they would receive valuable or accurate information in response to a submitted request. Privacy, timeliness and prior experience are also reasons mentioned, but really dealer contact and completeness of response are the two major hurdles.
For a while, I think most OEMs and Dealers have really focused on getting responses, which were growing in magnitude, back to shoppers in a timely manner. In reality, of the 29% of AIUs that do submit a request for referral, they are actually more satisfied with the timeliness of response than with the completeness of information in that response. The perceptions of shoppers who don’t submit a request seem to match up with the realities – Dealers need to focus on giving meaningful information in their request for quote responses. The most frequently mentioned missing information is pricing info. Shoppers also wanted better information on available inventory and available options on their requested models. If pricing is something that you feel is just too valuable of information to disclose, you have to ensure that you are doing everything possible to provide detailed responses about inventory and, if requested, available options too. Using an automated response system that doesn’t provide valuable information and just tries to get shoppers to call the dealer or have them come down to the dealership is at the heart of the problem. And, if the Completeness of response issue is fixed, the Fear of dealer contact issue will go away in time, or at least shrink compared to where it stands now, as shoppers realize that they will actually receive valuable information from going through the process of requesting a quote.
On average, shoppers visit 6 different Web sites during their shopping process. What do they go to different sites for? What type of information is important for you to be including or keeping up to date? Independent, or 3 rd Party Sites, are really the most trusted source for pricing information. They represent an unbiased source for pricing info. Additionally, Independent sites are the primary place to find out what other shoppers and experts are saying about vehicles through Reviews/Forums/Ratings and Compare Vehicles tools. Manufacturer sites, likewise serve a specific purpose for many shoppers. AIUs visiting Manufacturer sites felt they were most useful for their available information on options, features and specifications for vehicles. The Equip or Build a Vehicle tool was also frequently mentioned in comparison to Independent sites and Dealer sites. And lastly, Dealer sites are most useful for their inventory information. Just as with the request for quote process, displaying available inventory on the dealer site should be a priority.
Now, what about with specific sites. With limited budgets and the growing importance of targeting, finding shoppers while they are shopping and creating their consideration sets is of the utmost importance. Of the two most visited sites, Kelley Blue Book and Edmunds.com, both have carved out their own niches in the industry, kbb for their pricing information and Edmunds with their available Reviews/Forums/Ratings indexing much higher than the industry. Similarly, of the top 15 most visited 3 rd party sites, two sites grew the most this year – Cars.com and Vehix.com. Both of these sites are carving out their own niche in the industry, with both sites over-indexing in Comparing vehicles and having simple navigation on their sites. Providing valuable comparison info that’s easy to get to, is one way to make sure your site meets shoppers’ needs and grows in visitation.
With ad spending down, getting the “right” traffic to brand sites is more important than ever before. Both Nissan and Saturn increased their year-over-year traffic more than any other of the top 15 most visited OEM sites. Nissan was able to capitalize on this increased traffic by slightly increasing their site close rate, the % of AIUs visiting Nissan’s site and purchasing a Nissan. However, while Saturn did a good job of creating awareness and building traffic to the site, they missed out on the opportunity to close those sales, with their site close rate actually dropping the most of any top 15 site this year compared to 2007. Whether it was poor content offered on the site, non-competitive products or incentives is difficult to say. But, this much is sure, an opportunity was missed with Saturn paying for traffic to come to the site but not receiving the payoff of those extra visitors in the end.
JD Power and Associates Automotive Online Marketing Review
Automotive Online Marketing Review Gene Cameron, VP Marketing/Media Solutions Scott Kane, Senior Research Manager October 7 th , 2008
2008 U.S. new vehicle sales will total about 14 million, the lowest annual result since 1993 Source: J.D. Power and Associates *JDPA Forecast Total U.S. New Light Vehicle Sales Record Year - 17.4 Million Units Total New Light Vehicle Sales (Millions)
With higher gas prices, cars are now out-selling light trucks by a substantial margin Source: J.D. Power and Associates *August YTD
Compact vehicles have gained share at the expense of both Midsize and Large vehicles Source: J.D. Power and Associates *August YTD
Online budgets are being reigned in this year. Reaching shoppers efficiently is more important than ever Source: Automotive Internet Advertising Spending Ad Spending (Millions)
Automotive Internet usage (AIU) rates rise rapidly as shoppers change their purchase behaviors Automotive Internet Usage (AIU) Trends New 1 Vs. Used 2 – Vehicle Buyers 10-Year Trend 1 Based to new-vehicle buyers. Source: J.D. Power and Associates 1999-2008 New Autoshopper.com Studies 2 Based to used-vehicle buyers. Source: J.D. Power and Associates 1999-2007 Used Autoshopper.com Studies
When do buyers begin shopping for vehicles? 89/87 days before First shopped for any model 62/29 days before First shopped for the model they ultimately purchased 74/56 days before First shopped for a model within the vehicle segment which they purchased Average/Median days prior to purchase Based to AIUs. Preliminary Unweighted Data Source: J.D. Power and Associates 2008 Auto Buyer Clickstream Study
Number of Models Shopped Increases in Month of Purchase Based to AIUs. Preliminary Unweighted Data Source: J.D. Power and Associates 2008 Auto Buyer Clickstream Study 3.1 Purchase Month 1.5 1 Month Prior 1.2 2 Months Prior 1.1 3 Months Prior 1.1 4 Months Prior 1.0 5 Months Prior Number of Models Shopped per Buyer Timeframe
Use of Search is also growing, fueled by growth in the use of Google Based to AIUs. Source: J.D. Power and Associates 2007/2008 New Autoshopper.com Study
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 3X Increase Based to AIUs. Preliminary Unweighted Data Source: J.D. Power and Associates 2008 Auto Buyer Clickstream Study
In 2008, use of Mobile access grew by 21% versus 2007 Based to AIUs. Source: J.D. Power and Associates 2007/2008 New Autoshopper.com Study
Mobile should be on some OEMs’ top priorities, but of less concern to others 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)
Consumer-generated content (CGC) remains an important part of the online shopping process Based to AIUs. Source: J.D. Power and Associates 2008 New Autoshopper.com Study
Vehicle Ratings and Reviews are by far the most used type of CGC 95% 87% 81% 78% 69% 66% % Finding Helpful* *Based to AIUs who used each type of CGC Source: J.D. Power and Associates 2008 New Autoshopper.com Study
The model purchase decision is impacted by Expert and Consumer Ratings & Reviews 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
Online NVBs are avid users of Social and Video Sites Based to Online New Vehicle Buyers. Preliminary Unweighted Data Source: J.D. Power and Associates Total Online Media Behavior 371 20% 74% go.com 184 1% 1% hulu.com 347 1% 3% twitter.com 1,541 1% 12% abc.com 261 19% 49% facebook.com 196 35% 68% myspace.com 210 34% 71% youtube.com NVB Reach/IBP Reach IBP NVB Index % Reach First 6 months 2008
As a percentage, online submissions hold relatively steady year-over-year Based to AIUs. Source: J.D. Power and Associates 2004-2008 New Autoshopper.com Study
Realistically, 1 of 5 AIUs will never submit a Request for Quote Based to AIUs. Source: J.D. Power and Associates 2008 Follow-Up Study to NAS <ul><li>Prefer to negotiate price in person or by phone </li></ul><ul><li>Already have relationship with dealer and know where they’ll next purchase </li></ul><ul><li>Use alternate purchasing/discount program </li></ul><ul><li>Etc… </li></ul>
Fear of dealer contact and doubts about receiving valuable or accurate information deters shoppers from submitting requests Based to AIUs that did not submit a request for quote Source: J.D. Power and Associates 2008 Follow-Up Study to NAS
Providing quality responses to requests is at the heart of the problem Based to AIUs that submitted a request for quote Source: J.D. Power and Associates 2008 Follow-Up Study to NAS
Active Online Shoppers have a relatively limited use of sites within type Based to AIUs. Preliminary Unweighted Data Source: J.D. Power and Associates 2008 Auto Buyer Clickstream Study 2.6 Dealer Sites 3.1 OEM Sites 3.3 Third Party Sites Average Number of Sites Visited Active Online New Vehicle Buyers in 6 Months Prior to Purchase by Type of Site
What do shoppers find most useful about different types of sites? Based to AIUs Source: J.D. Power and Associates 2008 New Autoshopper.com Study
Online New Vehicle Buyers Visit a “Long Tail” of Third-Party Sites Top 15 Third Party Sites Share of Total Third Party Sessions Based to AIUs. Preliminary Unweighted Data Source: J.D. Power and Associates 2008 Auto Buyer Clickstream Study
Carving out a niche is important to growing and sustaining a useful site Based to AIUs visiting each site who thought that site was most useful Source: J.D. Power and Associates 2008 New Autoshopper.com Study
Getting more traffic to the brand site is great, as long as it’s the right traffic Visitation: Based to AIUs. Close Rate: Based to AIUs visiting each site. Source: J.D. Power and Associates 2008 New Autoshopper.com Study Saturn Nissan Volkswagen Jeep Hyundai
Summary Observations <ul><li>Difficult market </li></ul><ul><ul><li>Tighter sales </li></ul></ul><ul><ul><li>Major shifts in purchase patterns by Segment </li></ul></ul><ul><li>Increasing Internet use with shifts in patterns, fragmentation </li></ul><ul><ul><li>Consideration counts are not expanded for models or sites used for shopping </li></ul></ul><ul><ul><li>Third Party Sites exhibit long tail, suggesting fragmentation </li></ul></ul><ul><ul><li>CGC, Mobile, Video, ? </li></ul></ul><ul><ul><li>Shoppers/Buyers in new territory, use of internet </li></ul></ul><ul><li>Request for Quote is only effective if it responds to shoppers, is complete, not just rapid </li></ul>
Summary Observations <ul><li>Challenge to become more efficient and effective </li></ul><ul><li>Targeting more important than ever, customize targeting </li></ul><ul><ul><li>Join the conversation </li></ul></ul><ul><ul><ul><li>Common interest </li></ul></ul></ul><ul><ul><ul><li>Add value </li></ul></ul></ul><ul><ul><ul><li>Build engagement </li></ul></ul></ul><ul><ul><ul><li>Relevant traffic that converts </li></ul></ul></ul><ul><li>Understand shoppers, position your site and marketing to give them a reward </li></ul><ul><li>Leverage information throughout the organization </li></ul>