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Social Leaderboard_Indian luxury car brands_14 September 2012

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Shack evaluated India's three top-selling luxury car brands – BMW, Audi and Mercedes-Benz – to derive a comparative benchmark of their standing on social platforms.

To request for a detailed report, you can reach us at info@shack.co.in

Published in: Automotive
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Social Leaderboard_Indian luxury car brands_14 September 2012

  1. 1. SOCIAL LEADERBOARDLUXURY CAR BRANDS: 15th Sep – 28th Sep 2012
  2. 2. 1:INDEX:  SOCIAL LEADERBOARD: week-on-week performance of top 3 luxury car brands…  SUMMARY Missing the digital gravy train…  RECONNECT GRADE: o BMW o AUDI o MERCEDES-BENZ  WHY COMMUNITIES?  METHODOLOGY: the research process…  ABOUT SHACK©Shack Companis. All Rights Reserved. Social Leaderboard: Luxury Car Brands
  3. 3. 2:SOCIAL LEADERBOARD 14th September – 28th September 2012 80% 79% 51%Historical Ranking 93% 86% 84% 80% 82% 79% 79% 65% 51% 46% 40% 31% 4th-17th Aug 18th-31st Aug 1st-14th Sep 15th-28th Sep BMW Audi Mercedes©Shack Companis. All Rights Reserved. Social Leaderboard: Luxury Car Brands
  4. 4. 3:SUMMARY 12.0% 10.0% 8.0% Engaged Users (%) BMW 6.0% Audi Merc 4.0% 2.0% 0.0% Week-5 Week-6 Week-7 Week-8 Week-9 Week-10 Week-11 Week-12BUBBLE CHART SUMMARY 1. Though BMW had the highest active user base over the 2 weeks, the average engagement frequency for the period (1.0x) was lower than Audi (3.0x) and Mercedes (2.1x) 2. The spike in Audis performance in Week-12 was on account of participation in contests related to the Quattro Golf Cup and A8 Sportscar experience 3. Mercedes-Benz launched the B-class Sports Tourer responsible for the increase in engagement during Week 11 4.5x 4.0x 2.7% 3.5x Engagement Frequncy (x) 3.0x BMW (W11) 2.5x BMW (W12) 1.9% 1.4% Audi (W11) 2.0x 1.1% Audi (W12) 1.5x Merc (W11) Merc (W12) 1.0x 3.2% 3.1% 0.5x 0.0x - 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% Active Users (%)Notes: 1. Size of the bubble indicates unique active users 2. Engagement frequency: Average interactions per active user©Shack Companis. All Rights Reserved. Social Leaderboard: Luxury Car Brands
  5. 5. 4:TAKING STOCK OF THE WINDFALLThe festive season will see car companies increasing inventory atshowrooms to meet the spike in demand. Luxury car brands areanticipating a 20% increase in sales starting with Navratri."Usually, we deliver only one car a day on an average, but on Dasara wehave around 12 deliveries scheduled this year and the sales have gone upby 15% compared to Dasara last year," said an official from the MercedesBenz showroom at Madhapur. Companies are spending on tacticalpromotion to convert consumer interest and into sales so that they can clearout inventory and also remain on course to achieve their sales targets.PITTING MARKETING STRATEGIES  A month remains for the Indian GP and Mercedes-Benz is the only brand of the three heavily invested (INR 8-10 crore) in the event. The company plans to use the F1 buzz to increase sales. It has launched a promotional campaign which allows new buyers a chance to meet Michael Schumacher in person and test-drivers to win F1 tickets.  Mercedes is cross promoting it on its social channels. So far, the Reconnect Grade shows an engaged user base of 2 in every 1000 and zero sales enquiries.  Mercedes also unveiled the B-class Sports Tourer in direct competition to the entry level cars of BMW (X1) and Audi (Q3). The strategy to©Shack Companis. All Rights Reserved. Social Leaderboard: Luxury Car Brands
  6. 6. 5: time the launch during the festive season is aimed at boosting sales volumes.  Sales volume of the Q-series (especially the Q3) is pivotal for Audi to achieve its goal of market leadership in 2013. Accordingly, the company has invested significantly in BTL activities such as the Quattro Drive Event to demonstrate the superiority of its 4X4 drive experience.  On the digital front, Audi live streams the events and conducts contest mainly on Twitter to boost engagement levels. Audi Indias Marketing Head Michael Perschke plays an important role in connecting with influencers such as Gul Panag on Twitter in order to increase the aspirational value of the brand. However, contests are note very effective for lead generation because the participation is mainly from aspirants. Therefore, it doesnt double up as an effective strategy during the festive season.  BMW is releasing a new variant of the X1 in November 2012. In order to clear out the old inventory, it has offered the existing version at a discounted price for a limited period during the festive season.  The company is adopting a strategy of pushing out the promotional message through its social channels as well as paid advertising. Surprisingly, the promotion does not appear on the platform that matters most for sales - the brand website. The company is making the common error of mistaking digital as a medium that creates demand. While the fact is that the web only influences people©Shack Companis. All Rights Reserved. Social Leaderboard: Luxury Car Brands
  7. 7. 6: already inclined to make a purchase. A report released by Google India in 2011 stated that 65% of car buyers do their research on the net before making a purchase.  As a result, we observe a big gap between the actual outcome and the desired one.MISSING THE DIGITAL GRAVY TRAINWe believe that the target group for luxury car brands can be broadlysegregated into 2  Advertisers do not understand the basic thing about the web. When it comes to driving product sales traditional advertising works well in stimulating demand. But history so far has shown us that the web is only good as a medium in fulfilling demand i.e. helping a customer when he has already decided to purchase. A cursory look at the ad revenues of Google and Facebook supports this assertion. Facebook’s 2011 ad revenues are only 12% of that generated by Google from search ads. Google directly links search queries to relevant ads i.e. fulfil demand while Facebook ads tries to stimulate it through brand engagement.  This implies an unsatisfactory ROI for BMW, Audi and Mercedes for two reasons a. Because the web is weak at creating demand, offers promoted through banner and social ads during the festive season defeats©Shack Companis. All Rights Reserved. Social Leaderboard: Luxury Car Brands
  8. 8. 7: their intended purpose. Brands will be better served to spend this money on direct channel like mailers to qualified leads. b. For a luxury car brand that sells ~10,000 units in a year, the active audience on its social channels is largely comprised of aspirants. The aspirants play an important role in maintaining the engagement levels. But the main brand objective during the festive season is to generate leads and convert into sales through offers and discounts. Therefore, aspirants are not the main target group and spending on contest and promotions to keep them engaged is a bad marketing decision. To illustrate this point, we look at the potential ROI for the Quattro drive contest done by Audi India. We assume that the social media team of Audi has at least 2 people (Copy writer, Community management) responsible for the daily management of the brand’s social platforms. We estimate a monthly salary of INR 40,000 – 50,000 and approximately 40% (c.4 hours) of time spent on managing the channel. Suppose it takes the team about a week’s time to conceptualise the contest, organise it, despatch prizes and handle complaints. That gives us a total employee cost of INR 10,000-13,000. Based on a total of 10 winners and an average of INR 10,000 worth merchandise per person, we arrive at a total cost of prizes of INR 1,00,000.©Shack Companis. All Rights Reserved. Social Leaderboard: Luxury Car Brands
  9. 9. 8: We also try to estimate the opportunity cost of this activity. The media spend, instead, could have been used on campaigns such as direct e-mailers providing a better targeting to the brand. Suppose a targeted e-mail is sent to 2000 potential consumers, out of which at least 20 make an enquiry and 2 get converted. Assuming an average pay-out of INR 40,00,000 per car sold and net cost of 1,11,500 it provides us with a net opportunity cost of INR 78,88,500. Therefore, Total Cost = Average employee cost + Prize Money + Opportunity Cost Total Cost = INR (11,500+1,00,000+78,88,500) Total Cost = INR 80,00,000 Compared to this, the brand engaged even less than 100 users through the contest. That provides us with an approximate cost of INR 80,000 per user. Therefore, it is evident that short term tactical contests aimed at boosting engagement levels haven’t been effective in yielding results during the festive season when the primary objective is to generate leads and increase conversion. RECONNECT GRADE©Shack Companis. All Rights Reserved. Social Leaderboard: Luxury Car Brands
  10. 10. 9:  BMW tied up with Delhi Half Marathon to reinforce the brand message of efficient dynamics. The event connected with 21 in 1000 members out of which merely 8 in 1000 showed improved awareness.  Promotion for the X1 discount offer appealed to 3 in 1000.15th – 21st September 2012 6.0% Reconnect Grade 4.0% 2.0% 1.2% 1.1% 1.0% 0.9% 0.3% 0.2% -22nd – 28th September 2012 6.0% Reconnect Grade 4.0% 2.1% 2.0% 0.8% 0.8% 0.6% 0.3% 0.1% -©Shack Companis. All Rights Reserved. Social Leaderboard: Luxury Car Brands
  11. 11. 10: RECONNECT GRADE  As we have asserted in a previous report, one-off contests are not effective in translating into relevant buzz around an event. It was no different during the Quattro golf cup. Only 15 in 1000 members amplified the event buzz as against 51 in 1000 participating.15th – 21st September 2012 6.0% Reconnect Grade 4.0% 2.9% 2.0% 1.6% 0.6% 0.1% 0.1% 0.1% -22nd – 28th September 2012 6.0% 5.1% Reconnect Grade 4.0% 2.0% 2.0% 1.5% 1.2% 0.4% 0.1% -©Shack Companis. All Rights Reserved. Social Leaderboard: Luxury Car Brands
  12. 12. 11: RECONNECT GRADE  The new B-class launch was met with mostly positive reactions. ~20 in 1000 members are impressed with the value proposition and feel that the launch will improve Mercedes’ market share in India.15th – 21st September 2012 6.0% Reconnect Grade 4.0% 2.7% 2.0% 0.9% 0.7% 0.4% 0.2% 0.2% -22nd – 28th September 2012 6.0% Reconnect Grade 4.0% 2.0% 0.3% 0.2% 0.2% 0.2% 0.1% 0.1% -©Shack Companis. All Rights Reserved. Social Leaderboard: Luxury Car Brands
  13. 13. 12:About the Social LeaderboardThe Leaderboard updates the results derived from our internal tools andmethodologies on a bi-monthly basis, based on which we will bring out ourconclusions. Shack uses a proprietary grading mechanismShackMatrix™ to derive the Authority, Activity and Reconnect Grades,which are key determinants of a brand’s social presence. Read moreabout the Matrix and Grades.Why Communities?Create, Connect, Curate — The Shack Manifesto for BuildingCommunitiesWith the social online world becoming an important cog in a customer’srelationship with a brand, there is a need for a common language that cangive meaning to the seemingly unstructured social data scattered acrossplatforms that represents a brand’s interaction with its core community.As has happened with the introduction of any new communication medium,practitioners are making the mistake of using the measuring stick (such asviews and reach) of traditional advertising media to gauge success in thesocial web. For over a half a century, we have been thinking about©Shack Companis. All Rights Reserved. Social Leaderboard: Luxury Car Brands
  14. 14. 13: marketing in terms of campaigns with a very clear beginning, middle and an end. But the online digital world is currently in the process of being rebuilt around people and what we know as the social web, in a few years, would simply be the web. Therefore, long term success for brands depends on leveraging these human relationships to create a strong sense of community around products, concepts and values that are dearest to the brands.How we measure effectiveness in Online Communities?The ShackMatrix™ is a proprietary framework that enables assessment of abrand’s digital footprint in a holistic way. It is a common language designed tounderstand the value of a brand’s online efforts expressed through 5 grades thatcombine the understanding of traditional branding with the dynamics of a socialonline world.  Presence Grade: Measures how well is the brand represented on digital platforms.  Authority Grade: Measures how authoritative is a brand’s owned- channels for information on the brand and its products.  TG Grade: Measures the percentage of the desired target group mix active on the brand’s owned platforms.  Activity Grade: Measures the level of activity on existing channels.  Re-Connect Grade: Measures the extent to which community members connect and identify the brand with the attributes desired by it. ©Shack Companis. All Rights Reserved. Social Leaderboard: Luxury Car Brands
  15. 15. 14:Data MethodologyWe take online performance as a holistic concept. While size of the brand’scommunity and level of activity are important factors, the profile of the TG,the authority of the brand’s platforms and its recall are also equallyimportant ingredients.In calculating the ShackMatrix™, we assign weights to the different metricson individual platforms in order to combine them into a single comparablegrade that is relevant to the digital objectives of the brand.The weights are decided based on the relative effectiveness of the platformto a brand’s community as well as the brand’s own digital goals.Data Validity and IntegrityWe source the data from the brand’s official digital properties. Our scope isrestricted by the data made available through the APIs of the socialplatforms we cover.The coverage of data in this report is restricted to Facebook and Twitter.More detailed and granular metric studies are done for clients on a projectbasis.DisclaimerWhile reasonable effort has been made to ensure accuracy of data, Shack isnot responsible for any damage caused by individual decisions based on it.©Shack Companis. All Rights Reserved. Social Leaderboard: Luxury Car Brands
  16. 16. 15:About ShackShack is a digital marketing company which brings together brands and theircustomers in carefully crafted, wholesome communities, providing exceptionalexperiences for all.We leverage communities for brands:In order to create and maintain buzz around your brand you need your targetaudience to form lasting relationships with your brand.We build platforms for the communities:Being a one-stop solution for all your community building and web-based marketingneeds, we craft comprehensive campaigns, based on careful strategy, encompassingan entire digital eco-system.We develop content for the platforms:Along with creating engagement tools both online and off-line we also encourage andfacilitate generation of remarkably effective and compelling content, in a methodicalmanner by our own team, and in a random manner, by your community members.We measure the impact on the brand:You need to monitor the impact that the campaign has on your brand. This impact isnot something hypothetical, it is hard, tangible, three-dimensional data that not onlytells you where you presently stand, but also tells you where you need to go andwhat path you need to follow with the help of Shack’s proprietary Digital EcosystemManagement tool. Website || Blog || Twitter ©Shack Companis. All Rights Reserved. Social Leaderboard: Luxury Car Brands

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