Automotive digital marketing post apocalypse

By Grant Owens

The Chrysler and GM bankruptcies are wrapping up and “Cash for Clunkers” recently ended, so what happens next in the digital automotive space? Five answers.

While the two big bankruptcies and drastically retreating sales forecasts may seem like roadblocks against increased marketing efforts, we see a broad opportunity for digital marketing to play an important role at the end of this year and going forward.

1. Bankruptcy recovery will put a focus on dollar accountability

A cost-conscious culture will run top to bottom through automotive marketing organizations. As OEMs stop producing vehicles that sell for a loss, so too will marketing dollars move away from tactics that
don’t have clear returns.

This focus aligns well with continued improvements in digital media measurement. Even in the more intangible digital marketing channels such as social media, there are multiple ways to track effectiveness — from buzz monitoring to tagging technology called the “generational tag” developed by our folks here at Razorfish. (See more about this tagging technology in our 2009 Digital Outlook Report.)

2. In-market and lower-funnel efforts will help move and track inventory

While most dealers and factories are no longer sitting on large surpluses of vehicles, inventory control has a renewed vigor. In fact, many dealers are more concerned with lacking supply. Digital helps on both sides of the equation. In an effort to move surplus, lower-funnel media can quickly target prospects with deals that push limited-time offers –- balancing out television and newspaper media. With DVR usage hovering around 30 percent, imagine you had a limited-time, direct-response offer to move vehicles and ran a local cable TV spot. With that percentage of the viewers possibly skipping the ad or not watching the program until after the sales event completed, it would be substantially less effective. Online media acts as a reliable alternative — digital placements are always real-time.

On the flip side, using digital technology to track inventory demand is a growing strategy. Tools like Google Trends, or one of the many buzz-monitoring services, allow marketers to track in-market shoppers before they explicitly identify themselves to the dealership network. This can keep OEMs and dealerships from feeling unprepared for demand of certain models and trim levels.

3. Some brands will choose to deepen their brand positioning with digital media

Of course, marketing budgets are a fraction of what they were 18 months ago. Cost cutting remains a smart risk-mitigation effort when navigating a volatile sales environment. However, a handful of OEMs will double down as we are entering the tail-end of this shakeout. Hyundai and Audi have already made it clear that they want to emerge from the economic beating in a stronger brand position than when they started. We’d be surprised if a few other marketers don’t select the same strategy for the next 12 months. Brands desperately want to join the brand new heavies. Many of these challenger brands will look to social media to create a movement.

As consumers defer new-vehicle purchases, they need to maintain their older vehicles longer, which means more customers are coming into dealers’ service and parts departments.

4. Service remains a growth area

With the short-term influx of new-car sales from Cash for Clunkers now over, many potential new-car buyers may feel that the opportunity is past –- compelling them to hang onto five- to 10-year-old vehicles a little longer. Service and parts relationship marketing is a clear opportunity during this fallout. Owner’s website improvements, email programs and even social media activities could mean improved revenue within this category.

5. Dealer contraction among domestics could kick off local battles

In the short-term, similar to the OEM brand-positioning battle, dealerships will see this as an opportunity to grab territory both literally and figuratively. In their direct-response advertising efforts we expect to see increased location-targeted messaging within the third-party auto shopping sites and local lifestyle media. With less competition down the street you may see dealerships focusing less on price and using this as an opportunity to welcome new areas of customers to better service and long-term relationships.

Related links:

• GM, Ford Sold Cars at a Loss in First Half, Los Angeles Times, 08.30.05
• Social Influence Measurement: What’s It Worth?, Razorfish Digital Outlook Report, 03.08.09
• Traffic down at dealers, along with inventories (registration required), Automotive News, 08.25.0
• Advertising During a Recession, AdEase, 06.09
• Americans Keeping Their Cars Longer, AutoPacific, 07.14.09
• Fewer but bigger dealerships expected to boost car prices, Boston Globe, 06.08.09

Image credit:
Top photograph of a closed dealership appears courtesy of The Baltimore Sun (via autoloandaily.com); photo of the service entrance area of the LaFontaine Automotive Group’s Buick-Pontiac-GMC-Cadillac dealership in Highland, Mich. appears courtesy of Wieck Media.

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