There’s been no shortage of reporting on how rising gas prices are impacting automotive sales. To summarize: large vehicle (esp. truck) sales are way down, while compact and four-cylinder midsize vehicle sales are way up. It’s rare that we see one issue dominate the shopper mindset in this way, but in some respects this single-mindedness can help focus the job of marketers.

Start with Web sites. You know more consumers are looking for fuel economy information, so why not give it to them up front? Ford’s brand site has this data on almost all its model pages, while Honda puts it in the homepage model flyouts. And although Volkswagen’s mileage data is somewhat buried in its specifications sections, huge font makes it hard to miss. As counter-examples, finding fuel economy on the Toyota and Chevrolet brand sites requires four clicks from the home page to the specifications section (assuming you take the shortest possible path) and there’s no specific emphasis on mpg.

Independent sites with robust research sections (e.g. kbb, Autotrader, Yahoo Autos) have long emphasized mileage information. Mpg is generally featured on the model summary pages and model trim lists. Edmunds is a notable exception: visitors have to dig into the specifications to get this basic data point. Personally, I like how cars.com formats the mileage information like a dealer sticker.

Next consider advertising placement for branding and awareness. Consumers who would have previously considered other vehicles (e.g. big SUVs) are moving to smaller segments and OEMs need to get their products in front of these buyers. One approach is to advertise on Web sites visited by segment buyers: in this case, target the segments buyers are leaving. Since many consumers are trading in large SUVs (e.g. Ford Expedition) for midsize conventional cars (e.g. Toyota Camry) and midsize crossovers (e.g. Nissan Murano), advertise on Web sites that are visited by large SUV buyers to lure them to your offering(s) in the relevant, more fuel-efficient segments.

The chart above shows the site reach among segment buyers compared to the overall vehicle buying population. For example, sites like kbb.com and Fox News are disproportionately visited by large SUV buyers and an opportunity to send new messaging their way, while sites like Food Network and Travelocity reach new vehicle buyers from all three segments, providing opportunities for messaging across all three groups.

As a wider range of consumers buy smaller vehicles, the targeting methods for these segments will also need to change. But during the current migration down, the approach outlined above may prove effective.

Granted, site content and advertising collateral takes time to develop while large portions of advertising budgets are often set months in advance. Keyword purchasing, on the other hand, can be changed rapidly. At the same time, automotive corporations as a whole are moving rapidly to restructure (GM) or retool plants (Ford) in response to the changing marketplace. Online marketing needs to move even faster.

There’s no doubt American Idol is one of the most popular programs on television. If you have never heard of the show, you’re probably one of those guys living in a tree in Berkeley. According to Nielsen, American Idol reaches an average of 26 million households each week. And it’s not just a show for teenage girls – Nielsen also reports that this season was watched the most by people aged 35-49, making up 29% of the total audience this year. With such a wide range of viewers, it’s an advertiser’s dream. But how does American Idol stack up in a smaller slice of America – new-vehicle drivers?

The 2008 Power Auto Offline Media Report shows that 4.5% of new-vehicle drivers are not just watching American Idol, but are huge fans of the show – they list American Idol as one of their three favorite television programs. These fans are 63% female, have a median household income of $95,000 ($10,000 higher than the average new-vehicle driver), and are younger than the average new-vehicle driver – 25-34 year old drivers have the highest index of any other age group (128). While most American Idol fans are driving Compact Conventional vehicles (16%), they are more likely to be driving Midsize and Large SUVs when compared to all new-vehicle drivers, with indexes of 151 and 145, respectively. Vehicle brands more likely to be driven by Idol fans are Acura (140), Pontiac (131), BMW (127) and Honda (127).

Interestingly, Ford, which has had an exclusive partnership with American Idol since the show’s inception in 2002, has an index slightly below average among American Idol fans (94). However, this isn’t necessarily bad news. With skyrocketing gas prices and consumers looking to trade in their pickups and SUVs for smaller, more fuel-efficient vehicles, Ford has the perfect opportunity to connect with a younger audience and attract these buyers to the newly redesigned Ford Focus. The Focus was featured the most in the Season 7 music videos, and the extra “focus” may have already paid off. Not only were sales for the Ford Focus up 53% in May compared to May last year, May sales of the Focus were the highest since October 2001 (source: J.D. Power and Associates Sales Report).

I listened to a marketing web presentation recently where I heard one of the presenters say that the researchers had “approximated” some numbers to arrive at an appropriate placement for creative. I couldn’t help but ask the question; when do the approximations and gut feelings subside and the calculations preside?

With new tools emerging, I believe the days of designing a media plan or branding campaign on a hunch are gone. Media buys that end up not meeting campaign goals will likely always happen, however now there is a proactive opportunity to use data to predict what the result may be instead of guessing.

The Power Auto Online Media Study (PAOMS), now in its third year, measures and quantifies new vehicle-buyers’ online activities, and new media consumption. The only measurement tool of its kind, PAOMS identifies the gap between excess ad dollars and media buying efficiency specifically in the automotive arena, with sample sizes to slice and dice the data to suit your needs. The study assists automotive marketers in precisely defining the most efficient advertising buys to reach their target audience (i.e., actual new-vehicle buyers) with the least amount of waste before a campaign begins.

As an example, let’s take a look at two different Web sites:

At first glance, The News web site looks great. It reaches a total audience of 14,506,746, whereas the Travel/Weather web site purchase reaches far fewer total impressions (Source: Compete). PAOMS identifies the new vehicle-buyer audience and the excess impressions. In the second graph, you can see the NVB Audience is 914,697 and the excess impressions amount to over one million. If you chose the Travel/Weather web site for your branding campaign, you would reach a smaller total audience, but you would be gaining an audience of mostly the right people, instead of mostly the wrong people. With the Travel/Weather web site you not only have a higher concentration of the right folks, but depending on the CPM of course, you’ll likely pay less for the same target audience. The Power Auto Online Media Study helps automotive marketers unearth stories like these, among many others.

PAOMS in combination with our Integrated Media Planning Tool illuminates the duplication across multi-publication media packages. The study calculates unduplicated reach across multiple web sites as well as the duplicate audience. Whether your campaign objective is to reach a larger audience once or achieve fewer unique impressions multiple times, the PAOMS can help you identify the best advertising locations.

Will measurement ever completely take the place of the good old fashioned gut feeling? Unlikely, but with today’s tools and measurements we can identify which of those feelings are best to follow.

Most major automotive sites have at least some content targeting one or more niches. Consider some potential targets among the new-vehicle buying population (data from the Power Auto Offline Media Report, Spring).

• Female: 44%
• Pickup truck buyers: 17%
• Enthusiast (read enthusiast magazines): 7%
• Green (will pay more for environmentally-friendly vehicle): 11%

For instance, the combined forces of the green movement and high gas prices have moved many manufacturers to add site content related to hybrids and alternative fuels. Ford, GM, Honda, Toyota, and others explain the technologies used in the alternative fuel vehicles.

Third-party sites in particular go further in their pursuit of niches. AutoTrader recently rolled out its Lifestyle Central, with sections for Family Focus, Going Green, Smart Saver, Trend Watch, and Work & Play. The content for each section consists primarily of articles – often sourced from other sites (e.g. TheCarConnection, AskPatty) – and lists of relevant vehicles. The information is timely and useful, albeit pushed down in the site hierarchy and easy to miss.

Edmunds offers similar guides (Green, Women & Family, Young Drivers, Car Safety) that are a step up in terms of quantity (far more articles and guides) and visibility (linked from the homepage). The site also has related blogs that carry the promise of regular updates and which may expand its appeal. But its major effort to draw in diverse populations lies with its Inside Line and CarSpace sites.

InsideLine is an online magazine for enthusiasts, heavy on road tests, video, and news on future vehicles. CarSpace is a social network for enthusiasts and a unique entry in the automotive space, with only a few direct competitors (CarDomain, MySpace and Facebook groups). And while these sites attract a fraction of the audience of their parent site, any repeat or unique visitors expand the total audience.

Cars.com seems to be the most aggressive about pursuing different groups. The site carries the greatest variety of articles, including those targeted at boomers, young drivers, outdoors, pet owners, tailgating (sports), and safety. Several are even linked directly from the homepage. The company has in recent years acquired both MotherProof.com and PickupTrucks.com, focused on moms and pickup truck owners respectively, in an effort to broaden its reach. Cars.com has the most feature-rich and usable mobile automotive website (as discussed in this blog entry), increasing its reach among near-term buyers. It’s even in Beta with Freebo.com, a free sell-it-yourself site.

There have always been sites aimed at niche audiences – now, some of that content is moving under the umbrella of third-party sites. Currently, the focus is on the largest and most obvious groups, but eventually we will see even more finely-tuned targeting.

Want to buy a luxury car with more features than an Audi A6, more interior room than a BMW 7, and more power than an Infiniti M at the price of a fully equipped Volkswagen Passat? Well later this spring you can. It’s called the Hyundai Genesis and it’s the Korean manufacturer’s first attempt at pushing the brand into the luxury market. This new introduction got me thinking, “Can a brand pull off a complete 180 in the eyes of consumers?” To do so would take a tremendously powerful marketing campaign and even then, it’s NEVER been done. Not once, in the 100 plus year history of the U.S. Automotive Market.

To avoid the sort of brand confusion that Volkswagen recently encountered with its Phaeton, Hyundai will have to not only hammer home their marketing message properly but also help dealers stage the vehicles in the showroom such that the $10,775 Accent doesn’t devalue the Genesis (which could potentially reach $40k fully loaded). The positive side for Hyundai of course is that having such a car could raise the perceived value of the other models in its lineup thereby increasing consumer confidence. This year, Hyundai expects to double its internet ad campaign spend over 2007, which was already doubled from 2006. The big guns have been hired and they’re already slinging. The Hyundai luxury propaganda is propagating. Will you be convinced? I personally think the strategy and timing are wrong.

“Lee Hyun-Soon, head of corporate research and development at Hyundai-Kia Group, says the company rejected a separate brand because of the marketing expense.  [Anglebrandt, Gary. "Genesis sedan’s assignment: Boost image of all Hyundais." Automotive News 10 March 2008.] Really? You say that you want to start a LUXURY brand but don’t want to invest in it? And so, they have chosen to push the limits, setting forth on a monumental challenge “to change the perceptions of the American consumer.

Manufacturers can try to push further up-market, but transforming a brand from non-luxury to luxury just ain’t gonna happen. However, manufacturers have broken into the luxury market by acquiring established brands or bringing a new luxury brand of their own to market.

Ford bought their way into the luxury market with almost instantaneous success with the purchase of Lincoln Motor Company in 1922. Honda spent nearly 15 years establishing their brand as a reliable, high-value purchase in the U.S. market prior to introducing the first ever Japanese luxury brand (Acura) in March of 1986. More than 3 years later, Toyota did the same thing (33 years after U.S. entry) and now Lexus dominates the luxury market.

Now don’t get me wrong, Hyundai has certainly been working hard improving their vehicles (as evidenced by their latest IQS score of 125, nailing the industry average on the button) but to be honest they’ve only become moderately competitive from a product standpoint over the last five years. Honda and Toyota had been making dependable competitive products for years and even they waited 15 years plus prior to having made the leap and birthed a new brand. So from the perspective of timing, I would say that America is not ready to accept luxury from Hyundai. Their public image has not had the time to develop in the mind of the U.S. consumer because it hasn’t been good enough for long enough. Coincidentally the domestics are struggling with a similar brand image issue here due to complacencies in various areas of the business so whoever finds the magic formula first is bound to be flattered with plagiarism.

Learning the ABCs of online marketing has never been easier for automotive dealers. To address the increasing popularity of dealer sites as a vehicle shopping tool, sites such as Google, Auto Trader.com, and Cars.com now offer training materials aimed at dealers to help them understand how they can most effectively use the internet to reach prospective customers.

Google
Google offers a series of four short training videos aimed at dealers to help them understand how they can use Google to reach prospective customers.
The series is entitled Selling Cars with Google.
101: Search
102: Local Business Ads
103: Search & Display
104: Dealership Advertising Trends
The videos cover a broad range of topics, including basic Google CPC pricing for a sponsored link, Internet usage trending, and tools like site targeting and geotargeting, which enable dealers to reach certain audiences – down to a specific DMA. The information on the slides, especially numbers, is almost impossible to read and the narrative sounds overly scripted. Regardless, each of the four segments provides a wealth of useful information.

AutoTrader.com
AutoTrader.com offers an online education program, Advertising Essentials, to help dealerships get the most out of their online advertising. The courses cover all the elements of successful online marketing including vehicle photography, pricing, ad copy, and the benefits of online reporting. Each of the video lessons is well-made and the information provided will prove useful to anyone looking to sell a vehicle online, not only dealerships. In addition, the site offers information on AutoTrader.com’s Dashboard feature to help dealerships manage their “virtual marketplace” and a schedule for nationwide training workshops for dealers.

Cars.com
When it comes to the amount of training materials available to dealerships, Cars.com’s Dealer Center is by far the winner. Dealers have access to DealerADvantage – a free e-newsletter containing articles to help maximize advertising ROI, and DealerADvantage Live – a series of webinars with advice from Cars.com trainers and various dealers. There are schedules for events, tradeshows and local training workshops conducted by Cars.com trainers. Cars.com has categorized this collection of resources into four topics: Maximizing Online Ad Results, Improving Your Sales Process, Understanding Online Advertising, and Increasing New Vehicle Sales. Users are required to register each time they watch a video, which may deter some prospective students. Cars.com also offers a comprehensive look at the reach the site offers through its online partners and advertising campaign.

While all of the materials offered are ultimately sales pitches for their respective services, Google, Auto Trader.com and Cars.com offer needed education to the one automotive group that has yet to completely embrace the Internet as a key factor in the vehicle shopping process – dealerships. Chances are, even dealers that currently utilize online marketing have more to learn and may not be using online technology to its full potential. I would therefore encourage not only dealers unfamiliar with online marketing, but also auto marketing veterans to check out all three sites.

Your Thoughts?
I would love to hear any feedback you have regarding both the content and presentation of any of the dealer training materials.

Sales data is in for the first two months of the year and, surprising to few, the numbers do not look good. Year over year sales for total light vehicle sales are down 5.4%. If the first two months are a good indicator for the rest of the year, 2008 sales will be driven by MPG and price. While the Large vehicle super segment saw a 15.1% drop, the Midsize super segment dropped only 5.4%, and the Compact super segment sales were actually up 3.5%.

But even within the Compact super segment, the push toward less expensive vehicles with good gas mileage was evident, as segment sales of Compact Sporty and Utility vehicles actually fell by double digits. Compact CUVs (also known as crossovers) have also seen their sales rise as buyers seek the utility of an SUV, but with better fuel economy. The superstar was the Compact Basic segment with sales up 34.3% in January/February 2008 compared to 2007.

Smaller vehicles are selling, but not necessarily those with the highest gas mileage. The eco-darling Toyota Prius has a 9% increase, while the much smaller and less expensive Toyota Yaris is up 51%, the Kia Rio 71%, and the Honda Fit an incredible 91%. While some of these changes may be related to availability and production, they also indicate a major shift in vehicle preferences. It appears that, for the time being, low price is king.

Automotive marketers may need to quickly update their messaging to keep up with an ever-adjusting marketplace. Descriptors such as large, roomy and spacious might need to take a back seat to affordable, economical and smart buy. Today’s headlines of high gas prices, lowered home values and a bleak economic outlook may keep many consumers from purchasing a new vehicle in 2008, but those that want (or need) a new vehicle appear to be choosing low price and high gas mileage over comfort and roominess. This is likely to affect the search terms used when shopping and also the type of information sought on automotive shopping sites. By the end of the year, sales will most likely be down from 2007, but there will be winners. You have to know the current “hot” buttons and make sure they are the ones your campaign is pushing.

For the past two years, we have named OEMs that excel at online marketing and meeting the needs of new-vehicle shoppers as Automotive Online Marketers of the Year. The recognition is based on competitive performance metrics from J.D. Power studies on automotive Internet marketing, including the New Autoshopper.com Study (NAS) and Manufacturer Web Site Evaluation Study (MWES).

We are attempting to capture the full range of activities that comprise high quality, highly effective online marketing. As the consumer shifts more of their automotive shopping activity to the Internet, online marketing is becoming the most important component of a successful marketing program.

In response to client feedback, we have modified the metrics in order to more directly reflect results stemming from decisions of the online marketing team. These new and improved criteria will be used for future iterations of the Automotive Online Marketer of the Year.

• The Internet Share Index measures each brand’s AIU market share relative to overall market share at the segment level. This evens the playing field between OEMs who participate in different market segments.
• The Conversion metric focuses on the brand site’s effectiveness in driving Web site visitors (those who eventually buy a new vehicle) to the dealership.
• The Visitation metric examines the OEM’s ability to bring segment buyers to the brand Web site.
• The Web Site Usefulness metric averages scores from two waves of MWES to reflect each OEM’s Web site usefulness over the entire year.

We also dropped the used-vehicle metrics since many OEMs, especially those facing declining market share, opt to focus entirely on new-vehicle marketing online. Below is the weighting scheme for the updated metrics.

OEMs looking to improve their online marketing performance (as measured by these metrics) have multiple means to do so. Upgrades to the brand Web site can increase its usefulness and conversion. Effective online advertising can bring additional relevant traffic to the site, improving visitation. And the sum of these efforts should create more buyers among AIUs, increasing the Internet Share Index.

We are looking forward to finding out who will achieve the highest scores in 2008. Good luck with all of your marketing efforts this year.

Should dealers leave vehicles online that are no longer in the store?
A number of dealers utilize this tactic with the thought that they can then “flip” the shopper into another vehicle. While this technique works a small fraction of the time, you still have to decide what you are going to tell people when they call and ask about the vehicles. Do you continue to lie about the vehicle’s availability or try to get them into the store before springing the truth on them? Do you take this approach with just a few vehicles or a few dozen? How will you keep track of all your mistruths? How will you keep your staff from blurting out the fact that the vehicle has not been in the store for 6 months?

You will never know how many shoppers have figured out your tactic because most upset shoppers never complain to anyone at the store. You also may never know how many people they tell, but they probably won’t keep their frustrations to themselves. What is absolutely certain is that you have sent a clear message to your employees that you do not tell the truth. Your advertising has set the culture of your store, and you are liable for the results.

Keep in mind these important facts:

• Employee turnover is high. The longer you continue a policy of advertising nonexistent inventory, the more missionaries you have sent out into the world spreading the word about how your store does business
• The Internet makes it easier than ever for shoppers to figure out that you routinely list vehicles you don’t have
• The Internet makes it easier than ever for one shopper to tell thousands of other shoppers what they think of you and your store
• Your salespeople may get tired of working with shoppers who are looking for vehicles you don’t have. They likely want real prospects instead
• Although you will probably get fewer calls if you only post vehicles you actually have, your close rates will go up dramatically
• You might actually get a sale that you would not have otherwise, or you might lose sales based on your reputation

Should dealers post a price $1,000 less than the asking price in their online ads, with a footnote that the price does not include an additional $1,000 down payment?
This tactic seems to be growing in popularity in the Baltimore area (maybe the proximity to all those lobbyists and politicians in our nation’s capital). It is an exceptionally difficult policy to execute, because you have to eventually tell the truth about the vehicle price to actually get that price. While you are likely to get some calls that you would not have received at the actual price, you also can expect to lose sales you would have gotten at the actual price. Some shoppers are funny about signing contracts with people who have clearly tried to pull the wool over their eyes.

Should dealers respond with the best price up front?
This is arguable. Many dealers have success quoting a price that leaves a little room for further negotiations. Other stores are having success with a fixed-price policy, in which case stating the best price up front makes perfect sense.

Some dealers refuse to put a price in an e-mail response. Clearly, this approach risks losing the shopper to the next store, which is usually about one-quarter of an inch away on a computer screen. While holding back pricing information is an honest approach, it does not help drive traffic.

Is it really important to provide multiple photos of the vehicle and a complete vehicle description?
I have seen plenty of research from a number of sources that clearly show a link between how well a vehicle is merchandised online and how fast it is sold. Photos are an essential part of vehicle merchandising, and video seems to be catching on quickly. Shoppers want to know as much as possible about the vehicle. Many consumers are nervous about buying a vehicle, and the less you say and show, the more you leave up to their imagination.

Summary
The Internet has had a huge impact on vehicle shopping. Most of all, the transparency generated by online information has shown most dealerships to be very honest, forthright businesses. Generally speaking, the most successful dealerships will honestly and candidly advertise their inventory and promote their store. As in life, honesty in business is the best policy and will drive better sales—both today and over time.

Dennis Galbraith is Vice President of Operations, Dealer Products and Training at Cars.com.