Auto sales in the U.S. are declining after several years of near-record sales. Experts predict they may never reach these heights again. The reason for the stall is complicated in an industry that’s facing a number of existential threats. Automakers would be wise to embrace this new reality and use measurement tools to improve marketing and profitability.
An Industry Under Threat
At the top of the list of threats are “alternatives to purchase” such as ride hailing apps, car sharing, electric scooters and even robo-taxis. These alternatives have dramatically changed car-buying consideration, particularly among Millennials and subsequent generations.
While owning a car was once the most convenient way to travel, rising sticker prices, concerns about the cost of maintenance, fuel, and parking as well as traffic, city gridlock and pollution have driven consumers to question the need for their own set of wheels.
Older, suburban dwellers also fear economic uncertainty, the effects of tariffs and volatile interest rates that impact any major purchase. And the industry itself has caused increasing fragmentation and choice with expanding lineups and innovations such as electric and self-driving cars.
Fighting Back Against Ownership Leakage
One way automakers can respond to these threats and fight back against car ownership leakage is through better marketing and measurement.
Automotive remains one of the top-spending advertising categories in the U.S. But according to the Nielsen Digital Ad Ratings Benchmarks Report, on average 40% of digital ad spend is wasted.
With $16B in automotive digital ad spend at stake in 2019, auto marketers need to make sure that they get the right message to the right audience at the right time so that they can maximize their marketing investments. It’s a steep challenge that can only be overcome with an understanding of how people shop for cars and how they are influenced by advertising.
Technology has dramatically changed the way that consumers shop for cars. Multiple visits to a series of dealerships are out. Today, the majority of consumers begin the car-shopping process online, researching options and making purchase decisions before ever stepping onto a dealer lot.
Automakers have learned that they must meet consumer demands for a digitally enhanced experience when researching and buying a car, but implementing solutions to plan, activate and measure the digital experience is a speed bump for many.
Building Consideration with Omni-Channel Marketing
Car shoppers start out on the path to purchase by considering two to three brands on average. By the time they’re ready to buy, they typically have five brands under consideration—nearly twice as many as they started with.
Using an omni-channel strategy allows marketers to reinforce messaging across all media touchpoints so that they remain part of the consideration set as prospects get closer to visiting a dealership.
Automotive brands can leverage a coordinated mix of broad reach and targeted media, with careful consideration of the synergies between channels. This means using TV and radio for brand building throughout the path to purchase and combining these efforts with digital (including social), mobile, direct mail and even in-theater advertising to encourage purchase consideration.
The key is to develop campaigns that can deliver on both fronts: building long-term brand equity and capturing people’s attention when they’re weighing their options.
Rethinking Traditional Approaches
Consumers’ complex, multi-channel, multi-device journeys mean that auto marketers must rethink traditional approaches to how they communicate with and measure their target audiences.
Automakers must constantly identify and attract large audiences of “in market” car buyers and current owners in order to meet their business goals. Further, their ranks are constantly changing as car buyers leave the segment and new intenders join in.
Like many other industries, automotive manufacturers and dealers invest significant time and resources in advertising and marketing. Yet traditionally, it's been difficult for them to track consumer influence, engagement, and conversion, especially for offline activity.
Many dealers attribute marketing results using a flawed “last click” model, because tracking conversions across multiple marketing touches is so difficult. New technology tackles this vexing issue, enabling marketers to finally understand the true drivers for each sale so they can invest more in marketing tactics that work and less in those that don’t.
Advanced measurement techniques such as marketing mix modeling and multi-touch attribution provide strategic and tactical insights to optimize marketing spend. Short-term tests can show the impact of marketing campaigns before rolling out national launches.
Whatever the objective, leveraging technology that combines audience data with marketing performance gives automotive marketers the intelligence they need to tailor tactics and experiences for prospects and customers to increase dealership traffic, accelerate sales, and maximize business results.
Marketing for the Digital Era
Auto marketers have more channels than ever before to reach car shoppers efficiently and effectively. They also have more data about car shoppers to guide audience segmentation, targeting and creative decisions.
Automakers and their advertising partners must work together to determine the marketing strategies and tactics that best resonate with target audiences, so they can optimize consumer experiences and drive desired outcomes, both online and offline.
This level of consumer insight, coupled with the right marketing and strategic measurement technology, can help deliver relevant advertising, optimize campaigns, improve customer experience, generate more dealership visits and engage the car buyers of the future.
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