Auto July Key Insights. Industry Outlook. Industry at a Glance: Spending % Change. US Automotive Industry Online Ad Spending 2011 to 2016
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1 INDUSTRY UPDATE July 2013
2 Industry at a Glance: Auto July 2013 Key Insights The US Auto market is projected to continue to grow in 2013, which should drive growth in ad spending. In an effort to drive sales in a slow growth market, OEMs will try to boost efficacy of their search and display efforts, with dealers putting a strong focus on direct response advertising. Effectively targeting consumers and serving the right creative is an efficient way to manage marketing spend. Real Time Bidding (RTB) can be used to not only enable an efficient media spend but also to target specific user groups/channels even while incorporating interactive, rich media elements. Directing advertising to consumers already in the purchasing mindset could help to boost engagement and ultimately guide their purchase decision making. Industry Outlook The automotive industry is currently experiencing YOY growth, though anticipated sales for 2013 are still below the sales record set in Longer term forecasts predict overall growth for auto sales, though market share estimates vary depending on auto maker, with one survey estimating that Hyundai/Kia, VW/Audi, and Ford will experience the most growth. 2 In 2012, top-selling makes in the US were Ford, Chevrolet, Toyota, Honda, and Nissan. 3 National Automobile Dealers Association (NADA) chief economist Paul Taylor forecasts sales of 15.4 million cars in the US this year (up from a low of fewer than 11 million units sold in ), due to pent-up demand, credit availability, a shortage of usedvehicles, improving home values, declining unemployment and the skirting of the fiscal cliff. 5 US Automotive Industry Online Ad Spending 2011 to 2016 billions and % change Spending % Change $4.35 $ % 23.3% $7.44 $6.90 $6.34 $ % 13.5% 8.9% 7.8% Note: emarketing benchmarks its US industry-specific online ad spending projections against the IAB/PWC data, for which the last full year measured was 2010; includes all automotive-related categories including sale/purchase of vehicles and parts and maintenance. Source: emarketer.com, Jan 2012 PAGE 2
3 Overall, ad spending in automotive correlates to vehicle sales. 6 Likewise, growth in online ad spending for the automotive vertical is comparable to overall online ad spending projections. 7 Ad spending for automotive will continue to grow over next 5 years, and digital is growing more than any other medium, in part because digital ads offer a robust platform for automakers to showcase new features that are playing an increasing role in attracting consumers. The automotive vertical is currently behind retail, telecom, and financial services in online ad spending, but is trending to overtake financial services within the next year. emarketer forecasts that the auto vertical will account for 12% of digital ad spending through Given that the US auto market is growing slower than in the past, OEMs need to work harder for sales gains and increasing market share. This may influence marketing decisions, and encourage more sophisticated campaigns, more effective creative, and advanced targeting techniques. DATA VS. CREATIVE Defining effective creative is difficult, and there are conflicting views on the role that data should play in decision making. Adam Kleinberg, CEO of Traction in San Francisco, says that to assert that all creative should be data-driven is to consign your brand to the middle of the pack. 9 PointRoll Technical Sales Director, Dan Mouradian, counters that data doesn t make creative choices; it ensures the right creative is shown to the right user. Mouradian stresses the importance of designing creative to serve your digital campaign goals. One variable that influences goals for automotive is advertiser tier. Tier I advertisers (usually OEMs) focus on branding efforts, want to track engagement and exposure, and are interested in behavioral targeting efforts. Tier II advertisers (at the regional level) employ direct response tactics, and typically rely on geo-targeting to serve their ads. Tier III advertisers (dealerships) usually have the least amount of money to spend, and rarely pursue digital efforts. 10 EFFECTIVE TARGETING AND DYNAMIC CREATIVE OPTIMIZATION Another great thing about digital is it allows us to better target what we re going after. Although media today is very fragmented, [with digital] we re able to reach our target market more specifically and precisely and serve them up unique messages. We have put more thought and plan and science into the sites we select to run our advertisements on. Homepage takeovers on major portals like Yahoo! and AOL have been an important way to engage the audience. When we use page takeovers, we find that it not only builds interest, but it often helps spike our website traffic and brings better awareness to the car. - Mike Accavitto, VP of Marketing, American Honda Motor Co. 11 Mr. Accavitto makes several important points here. With digital, auto advertisers can leverage the benefits digital advertising provides with targeting specific consumers and tracking campaign results against key performance indicators. Dynamic creative optimization enables advertisers to serve the right creative ( unique messages ) to the right consumer, and continuously refine efforts based on the results. By doing so, advertising becomes more efficient than creating one campaign that is supposed to speak to all consumers. A recent review of PointRoll s data from Q showed that dynamic campaigns are resulting in over 470% higher conversion rates than campaigns without dynamic elements. But in thinking about ways to target consumers, it s important not to lose sight of the impact homepage takeovers can make to increase brand awareness, engagement and conversions. PAGE 3
4 REAL TIME BIDDING (RTB) Online targeting efforts also influence the way media is purchased for automotive clients. According to Rubicon Project, the automotive vertical is the third-highest spender in real-time bidding media purchases, and RTB spending is projected to grow through Erica Bigley, Ford and Lincoln Digital Media Manager, explains why RTB is useful for Ford s media strategy: By going through one RTB platform, we know exactly what we re buying and exactly who we re targeting and showing creative to We re also using RTB to geoserve and target. That s given us speed to market and additional efficiency RTB has given us the ability to talk to people we didn t talk to before, because in the past, we didn t have a vast budget to reach them. - Erica Bigley, Digital Media Manager, Ford and Lincoln 13 There is a myth, however, that RTB platforms are only appropriate for standard ads with limited or no interactivity. Luckily, RTB platforms are sophisticated enough to serve rich media creative, providing enhanced engagement opportunities that ultimately generate higher conversions while leveraging the efficiency benefits RTB offers. MOBILE IN THE PURCHASE FUNNEL Auto advertisers should not underestimate the importance and influence of mobile in the purchase funnel. ClickZ found that 51% of auto searchers on a mobile device end up making a purchase. 15 Directing advertising to consumers already in the purchasing mindset could help to boost engagement and ultimately guide their purchase decision making. Ideally, a digital campaign will be part of a marketing effort that creates a seamless experience for the customer, from the starting point of online research, to eventually going into the showroom and making a purchase. Steve Davies of Fitch Media explains that it is in the interests of both dealer and manufacturer to join up the online and offline experiences. The ideal of a great online car research experience, followed by a smooth transition to the forecourt means more sales for both, as well as more effective measurement of online marketing and how it can translate into offline sales. 16 Creating an effective online experience, incorporating advertising, will be even more important if car buying moves online. THE 5TH SCREEN One innovation in automotive that is impacting the industry is the emergence of the car as the 5th screen 17. The 5th screen refers to screens embedded in vehicles, whether in dashboards, media consoles or inserted in the back of automobile seats. Considered 5th screens due to being behind televisions, movie screens, PCs and mobile phones, cars are even coming with internet capabilities. General Motors (GM), for example, is providing 4G LTE broadband connectivity in some of its 2015 models. 18 However, it is unclear whether this connectivity will be in an environment controlled by the OEM, or in a more open system, and how advertising will be incorporated. PAGE 4
5 5 Things Automotive Marketers Can Do Now 1. Consider your campaign goals when designing your ad creative. Do you want to generate awareness for new models? Maybe an interactive pre-roll video campaign showing the vehicles in action while also allowing users to explore different models, could be the way to go. Would you rather inform consumers on new features of a vehicle? Creating a rich media ad campaign enabling consumers to customize their own vehicle based on available options could achieve desired results. 2. Target your ads based on demographic and behavioral criteria to ensure your advertising is being seen by your target consumers. 3. Utilize dynamic ads to serve the right creative to the right target audience. For instance, if you are trying to promote specials for local dealerships, you can utilize dynamic versioning to display the correct specials to geographically targeted consumers. Beyond dynamic versioning, optimize your creative to gain learnings from your ad campaigns to display the messages and creatives most likely to generate results. 4. Consider where your consumers are in the purchasing process, appropriate marketing channels/devices and available device capabilities as you are developing your ad campaigns. For instance, consider incorporating dealer locators, local dealership specials and inventory into your mobile advertising. Consider utilizing capabilities like i-device accelerometers to test drive new vehicles. 5. Utilizing RTB platforms for rich media creative can help auto marketers gain efficiencies from their media plans. POINTROLL & AUTOMOTIVE Automotive has been one of PointRoll s strongest industries served over the past decade. PointRoll delivered its first auto campaign in 2001, and has since served hundreds of billions of impressions for more than 250 auto advertisers, viewed on thousands of publishers for thousands of campaigns. PointRoll s auto clients have been amongst the most innovative particularly with high-impact and dynamic ads. Today, PointRoll continues to build on the legacy of auto innovation delivering video, mobile, rich media, social, and other emerging formats, across all digital screens. See below for recent auto campaigns or view our product showcase for more examples. Honda Rich Media Ad PAGE 5
6 Land Rover Tier II Ad with dynamic data and interactive features Chevrolet Take Over Video Ad Jaguar ipad ad View more examples at pointroll.com/productshowcase PAGE 6
7 About PointRoll s Industry Update Reports PointRoll s Industry at a Glance reports are created periodically to show key digital advertising trends and insights for numerous verticals. These reports uncover insights based on analysis from numerous industry sources and PointRoll benchmarks. Marketers use our Industry at a Glance reports to inform their marketing decisions and anticipate trends in their business. You can find a list of these reports and others in our Aducation: Reports library. About PointRoll Since 2001, PointRoll, a Gannett Company, has transformed the way advertisers, agencies and publishers create, manage and deliver the most effective interactive advertising. Today, PointRoll provides display advertising products including video, mobile, rich media, social, standard display and emerging formats, across all digital screens. With OnPoint, a next generation ad design, delivery and analytics platform, PointRoll enables advertisers to manage and create compelling campaigns more efficiently connecting with consumers, driving engagement and generating quantifiable results. For more information, visit or follow us. PAGE 7
8 1 2 Booz & Co US Automotive Industry Survey and Confidence Outlook, 2012, p Vlasic, Bill Sign of a Comeback: US Carmakers Are Hiring New York Times Feb , Petrock, Victoria The US Automotive Industry: Digital Ad Spending Forecast and Key Trends emarketer, April 2012, p. 3 7 emarketer Advertising and Marketing Data Dashboard: Digital Ad Spending, 8 Petrock, Victoria The US Automotive Industry: Digital Ad Spending Forecast and Key Trends emarketer, April 2012, p. 2 9 Kleinberg, Adam Data-Driven Creative Equals Mediocre Creative AdAge Feb , 10 Fisher, Lauren, B2B Perspective: Ford Revs Up Real-Time Buying Strategy emarketer Oct. 12, McKay, Lauren, CMO One-to-One: Honda Revs Up Mobile Technology for New Car Launches emarketer, Nov Fisher, Lauren, Real- Time Bidding: Ad Spending Forecase and Future Growth Factors emarketer Nov Fisher, Lauren, B2B Perspective: Ford Revs Up Real-Time Buying Strategy emarketer Oct. 12, Keizer, Gregg, Firefox to auto-block third-party ad cookies by summer Computer World Feb , 15 Dohnert, James, 51% of Mobile Auto Searchers End Up Making a Purchase, November 14, 2012, 16 Charlton, Graham How should the automotive industry use the web? econsultancy, Jun , 17 Hudson, Mike, Connected Cars as the Fifth Screen: A Market of Millions Connected by Asphalt emarketer Feb Stenquist, Paul With Its Eye on Infotainment, General Motors Is Upgrading OnStar New York Times, Feb , PAGE 8
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