Who remembers the 90s … the days of dial up modems, AOL, and a new tool called email? Back then the most complex part of watching video was figuring out how to program your VCR.
After Y2K (when the world didn’t end), we moved into the “real” digital era … satellite radio, game consoles, and smartphones. Netflix meant getting DVDs in the mail. We started to socialize with Facebook and Twitter. Who knew 140 characters could take us so far?
Then came the first real subscription video on demand (SVOD) – Netflix as we know it, Amazon Prime Video, Hulu, and more. This is when the concept of time-shifted viewing and “on demand” really took off.
The digital era has disrupted every industry, including automotive. While automakers have generally enjoyed robust growth and sales over the past decade, there are warning signs of a rocky road ahead.
To succeed in this environment, auto marketers must address three key challenges:
- Reducing wasted advertising spending
- Building harmonized personal connections across the customer journey
- Planning, measuring and optimizing consistently across channels
In spite of these challenges, new opportunities are emerging for savvy auto marketers. Let’s dive into how the digital era has changed the auto buyer’s path to purchase and created these challenges.
>> Learn More: Watch our session at the 2019 J.D. Power Auto Revolution Conference on demand: Connecting in a Fragmented World
Consumers Live in an Increasingly Fragmented World
As we approach 2020, there’s an explosion of devices and ways to consume media, with new tech, new platforms and new distribution mechanisms from wearables to virtual reality, connected homes and connected cars. It’s increasingly customized, personalized and interactive.
Despite all of this fragmentation, there is more time spent consuming media than ever. Over the last 17 years, weekly media consumption increased by over 60% to 82+ hours/week, with an increasing percentage using digital devices, according to Nielsen’s Total Audience Report. With advances in distribution channels, targeting, addressability and measurement, this represents a tremendous opportunity for advertisers.
According to eMarketer, the auto industry will spend $15.9 billion on digital advertising in 2019. Nielsen benchmarks show that 40% of that will be wasted. This equates to $6 billion in wasted spending for the auto industry in 2019.. That’s a huge problem, but also a huge opportunity to increase efficiency.
People are More Reachable Than Ever
While our cross-media diet is increasing, the ingredients vary by age group. Adults in the US continue to increase their media consumption, and opportunities abound for businesses that have efficient strategies to capitalize on them at their most engaged.
As of Q2 2019, U.S. consumers spend 11 hours and 45 minutes per day interacting with media across TV, TV-connected devices, radio, computers, smartphones and tablets— that’s 81 minutes more than just one year ago.
While that time comprises 49% of the total minutes available in a day (including sleep time), some simultaneous usage does occur across devices via multi-tasking consumers. A deeper look into the share of time spent on each platform reveals an increasing shift toward digital device usage, and not surprisingly, usage varies significantly by age group.
As you might expect, younger consumers spend significantly more of their time on smartphones compared to older adults, with seniors 65+ watching the most TV.
So… there’s more opportunity than ever to reach consumers, but it’s fragmented across channels and varies by age group.
The Auto Path-to-Purchase is Fluid
To make matters even more complex, our purchase journey is long and fluid. Of course, this varies depending on the type of product or service. Obviously the journey is different for CPG companies vs. automakers, for example. The longer the cycle, the more important it is to identify the stages of your buyers’ journey and target particular stages.
According to the 2018 Nielsen CMO Report, automakers describe the purchase funnel for auto in three stages: future-market, near-market, end-market. Auto marketers report that they’ve “done a really good job lately on the end market...the bottom of the funnel stuff. But if we’re not building demand in the mid-to upper funnel, then we’re not filling that pipeline up with enough customers to deliver on our goal.”
Whether you’re an auto OEM, dealer, aftermarket company, or other product/service, you have to speak to consumers wherever they are in their journey, all simultaneously. This further complicates the planning and execution process.
Activating Across the Marketing Funnel
So let’s break it down. As an auto brand, for example, you want to activate across the future market, near market and in-market stages simultaneously. The overarching goals of these stages vary – from growing awareness to driving consideration to winning the consumer decision. Different tactics are more relevant for each stage.
Think about how this construct may fit your business. What stages comprise the customer journey and which objectives and tactics are most relevant for each? Once you have a good understanding of your structure, you can start to plan. Planning requires a deep understanding of your customers, which presents yet another challenge.
Addressing Automaker Challenges
So let’s recap. Media consumption is fragmented across channels. It varies by age group. And you need to reach your customers across multiple journey stages simultaneously. Without a good single view of customers, this creates a ton of waste in today’s media spending.
What does this mean for auto marketers? Collectively, your media touchpoints with consumers—throughout the path-to-purchase—must reinforce your overall brand story and elevate it in consumers’ minds.
Your marketing must achieve two goals: generating awareness and increasing consideration. Knowing which channel to use will help deliver the best results. According to Nielsen research:
- Generating Awareness: TV drives the highest level of ad recall of all channels by a wide margin—over 2x greater than print, the next highest channel in terms of ad recall.
- Increasing Consideration: While TV enjoys the broadest reach, consideration among those who recall an ad is higher across other channels such as mobile, direct mail and even billboards.
Mobile is proving to be an increasingly important channel in auto advertising. It’s the second-highest driver of brand consideration. With the growth of location-based advertising, not to mention mobile’s targeting and dynamic creative capabilities, this may come as no surprise.
Nielsen research also shows that there’s power in combining traditional and social channels. Consistent with our ad recall analysis, total brand awareness is highest among heavy TV viewers while purchase consideration is highest among social media users.
- 11% of heavy TV viewers who use social media consider making a purchase, a 29% increase over heavy TV viewers who do not use social media.
- Even among light TV viewers (< five days a week), purchase consideration increases by 17% when TV and social media are used together.
Leveraging Broad Reach and Targeted Media
What’s clear is that automotive brands should leverage a coordinated mix of broad reach and targeted media, with careful consideration of the synergies between channels.
For instance, this means using TV and radio for brand building throughout the path to purchase—especially at the outset—and combining these efforts with personalized marketing via digital (including social), mobile, and even direct mail can effectively encourage purchase consideration.
Auto marketers must bridge the gap across TV and digital because people in all demographics are consuming media across multiple platforms and devices. This provides an opportunity to engage with consumers across the purchase journey.
In an era of industry transformation, new opportunities are emerging. Auto marketers must rethink traditional approaches for how they communicate with and measure their target audiences.
Watch our session at the 2019 J.D. Power Auto Revolution Conference on demand: Connecting in a Fragmented World
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