Current New-Vehicle Buyer Traffic: An Update on Lifestyle Sites

At our last Internet Roundtable (IRT) and here, we discussed sites where marketers can find high concentrations of new-vehicle buyers, and continue to be efficient with online ad spending, by utilizing such sites.

We presented a comparison from the J.D. Power and Associates / Compete, Inc. Prospects Current Behavior tool, between total Internet traffic versus new-vehicle buyer traffic and composition on top lifestyle sites. The top reaching sites for the general Internet Browsing Population were juxtaposed with new-vehicle buyer top reaching sites to show differences and potential efficiencies. In addition, we identified those sites yielding the top composition, or concentration, of new-vehicle buyers on lifestyle sites during the month of August 2009.

While reach remains relatively consistent with subtle, various shifts, the change we’ve seen is with the composition, or concentration of new-vehicle buyers on lifestyle sites.

The chart below shows nearly no change from August of 2009 to November 2009 with respect to the Internet Browser Population top reaching sites (see figure 1.1 and 1.2 below). Google, Yahoo!, and Facebook continue to reach the highest percentage of the Internet Browsing Population, and nearly the entire list of top reaching sites stays consistent. No surprise here.

Figure 1.1 and 1.2
blog post photo

Similarly, even when we compare past to present site lists for new-vehicle buyers, the site list stays fairly consistent as far as reach goes (see figures 2.1 and 2.2 below). This is a similar scene as with the charts above, except Facebook is clearly reaching more new-vehicle buyers than Google and Yahoo! individually.

Figure 2.1 and 2.2
blog post photo

In terms of composition, the list of sites with the highest new-vehicle buyer concentration has changed considerably (see figures 3.1 and 3.2 below).

Figure 3.1 and 3.2
blog post photo

Note: Displayed sites have a minimum segment buyer reach of 5%

In data from August 2009, we see two food-related sites showing up with the highest indices among those sites reaching a minimum of five percent of new-vehicle buyers. A handful of online gaming sites were among the top 15 indexing sites as well.

Although the list is similar, the data from November 2009 tells a different story. Interestingly, grandparents.com and cash4gold.com steal the top compositional spots, followed by some of the same and some new gaming sites. Additionally, shopping sites surface in concurrence with the time of year. Finally, we also see self-help and health related sites indexing highly.

Finding the best mixture of online ad spending is a challenging undertaking. In today’s shifting market, and targeting the right audience is essential.

New Vehicle Inventory on Manufacturer Sites

Internet users have always sought information transparency; in automotive, this pressure was first felt on pricing, but has since grown to also encompass inventory. Two years ago, Mazda was the only manufacturer to provide online access to new vehicle inventory available at dealer lots. Today, there are 16 brands – primarily non-premium domestics – that do so.

We tested the usefulness of these 16 tools in the latest iteration of our Manufacturer Website Evaluation Study (MWES). While Lincoln and Ford had the highest rated new vehicle inventory locators, even the lowest rated tools scored well compared to other types of site content. In fact, the average score of 876 tied that of dealer locators and was well above the next highest rated site content – Vehicle Images at 839. These high scores demonstrate the relative value of that content.
blog post photo

Some best practices for new vehicle inventory locator tools are noted below.

blog post photo
Dodge displays inventory across a number of different dealers, allowing shoppers to truly understand the area’s available inventory.

blog post photo
Nissan provides Matching Accuracy icons, sort options, and includes Packages, Options and Accessories info on the results page to help shoppers quickly find inventory that meets their needs.

blog post photo
Ford’s Inventory Locator is easily accessible to click on at any time during the vehicle building process.

While consumers value the information, there may be compelling reasons for manufacturers to not offer access to new vehicle inventory. Publishing inventory brings the risk of greater price pressure, making it easier for consumers to play one dealer off another to get the best price. While many shoppers are already doing it, manufacturers may not want to enable this type of activity.

Displaying inventory may also run counter to the brand’s image / value proposition. For instance, part of the appeal of German premium brands is the customizability of their vehicles. There are thousands, if not tens of thousands, of potential configurations and the sales processes are geared in part toward putting customers in their dream car. These core efforts could be undermined with a central new vehicle inventory tool.

Unfortunately for these manufacturers, the push for greater transparency online continues unabated and they are likely to find themselves capitulating at some point in the future.

Beyond RFQ to Track Lower-Funnel Shoppers

One of the great challenges for the automotive Internet is reaching lower funnel online shoppers. The Request for Quote (RFQ) is the most prominent process to get buyer contact information to dealers, but its reach has proven to be limited. As shown below, the rate at which new-vehicle Automotive Internet Users (AIUs) submit RFQs has not only stagnated in recent years, it has actually gone down. What else can dealers use to track consumer interest?
blog post photo

One key problem is shopper wariness of being contacted by dealers. Data from the J.D. Power and Associates 2008 New Autoshopper.com Study (NAS) shows the average new-vehicle buyer starts using the Internet for information 12.4 weeks before buying and doesn’t start visiting dealerships until five week later. Part of the promise of online research is to avoid the pushy dealer salesperson, so consumers have every incentive to stay as anonymous as possible.

Here are a couple ways dealers can still identify, connect and track intenders:

Exchange – fulfilling promises
Fortunately, automotive sites have other mechanisms to encourage “hand-raisers” to self-identify purchase intent. Brochures, mailing lists, emailed listings, and registration content offer something in exchange for personal information (even if only an email address) beyond the too-often-unfulfilled-promise of a price quote.

Utilizing Anonymous Online Activity
Audience intent to purchase – even when tracked anonymously – can also be valuable by demonstrating consumer interest in a vehicle and/or dealership. Configurators offer a wealth of data regarding the popularity of models, colors, packages, and options which manufacturers can mine to influence factory orders, producing real vehicle configurations that consumers want to buy. Data from dealership Web site referrals, map views, and dealer chats also generally point to how many people are interested in a specific dealership.

In an era of dramatically reduced automotive sales, lower funnel shoppers are more valuable than ever. Manufacturers and dealers need to sell vehicles, while third-party sites need to find other ways to monetize in order to survive. Increasing the effectiveness with which these sites identify purchase intenders will create a better outcome for all involved parties, including the buyers.

Maximize your Marketing Return

While there are many macro and micro factors that have contributed to the automotive industry’s massive downturn, we should also consider the impact that feebly targeted marketing messages may have played. The current marketplace does not allow for misplaced messages or wide-angle targeting; the key to survival, as everyone knows, is creating a product that consumers want and then knowing how and where to reach them. The tricky part is being able to identify why consumers are avoiding a particular model or brand, and then to subsequently know where to reach those consumers.

Two studies produced by J.D. Power and Associates can provide a better understanding of new-vehicle buyer behavior and thus aid marketers in creating more effective marketing plans and advertising campaigns. The first is the 2008 Avoider Study which measures new-vehicle buyers’ brand and model-level awareness and related perceptions. The second is the 2009 Power Auto Offline Media Report which measures traditional media usage of principal drivers. Combining the metrics within each of these studies can give marketers powerful insight into new-vehicle buyer behavior.

Consider GM’s HUMMER H3 in the Midsize Utility Segment. Using data from the 2008 Avoider Study in the chart below, we can see the huge disparity between perception and reality. The H3 has the highest gas mileage avoidance in its segment (56%): which is more than two times the segment average (23%). In fact, the H3’s gas mileage avoidance is nearly double that of the next closest competitor, the Dodge Durango (29%). However, the high avoidance isn’t justified since the H3’s gas mileage is actually better than the Durango, and is competitively positioned within its segment.

blog post photo

Gas mileage serves as a good example of where consumer perceptions can negatively impact a model’s success. By knowing what H3 gas mileage avoiders purchased instead of an H3, we can use the 2009 Power Auto Offline Media Report to determine the best media sources to advertise in based on media usage habits.

In the Midsize Utility Segment, the Jeep Grand Cherokee has 24% gas mileage avoidance and is one of the most frequently purchased vehicles by H3 gas mileage avoiders. Both vehicles have comparable gas mileage and the demographics of H3 and Grand Cherokee drivers are very similar: most are married Caucasian males age 45-64.

In order to correlate the data from the two studies, it must be comparably based. To accomplish this, I’ve based the 2009 Offline Media Report data to principal/joint decision makers, 2007, 2008, and 2009 model year vehicles, and the Midsize Utility Segment. This basing will closely mimic the 2008 Avoider Study since it is based to new-vehicle buyers (i.e. decision makers), 2007, 2008, and 2009 model year vehicles, and the Midsize Utility Segment.

For the media usage example, I’m going to use the top five magazines most frequently read by H3 and Grand Cherokee drivers/decision makers (shown in the chart below). These magazines represent a chance for HUMMER to address gas mileage perceptions, allowing them to reach more potential buyers for the HUMMER H3. Publications like People, Better Homes and Gardens, and Time are opportunities for conquest since drivers of both models are frequent readers. Advertisements in these magazines, emphasizing the H3’s competitive gas mileage, can increase H3 purchase consideration, and thus create the opportunity for the H3 to lure buyers away from the Grand Cherokee. This is one small example of the potential insights that can be gained by using these two studies together.

blog post photo

In the past year, the automotive industry, among many others, has seen drastically reduced advertising budgets. It is now more important than ever for marketing plans and advertising campaigns to be precisely targeted: maximizing the return for every dollar spent. The 2008 Avoider Study gives marketers the ability to determine where consumer perception is misaligned with reality, and the 2009 Offline Media Report is the tool that enables marketers to know where to advertise.

25 Random Things about the Automotive Internet

Online Automotive Review may not have a Facebook profile, but I can still make a “25 Random Things” list for it. Among the sources used were:

  • 2008 J.D. Power and Associates New Autoshopper.com Study (NAS)
  • 2008 J.D. Power and Associates Used Autoshopper.com Study (UAS)
  • 2008 J.D. Power and Associates Dealer Satisfaction with Online Buying Services Study (DSOBS)
  • 2009 Wave 1 J.D. Power and Associates Manufacturer Website Evaluation Study (MWES)

So, here’s our list.

  1. 75% of new-vehicle buyers use the Internet in their shopping process
  2. All types of sites – manufacturer, third-party, and dealer sites – continue to add more and better tools for consumers
  3. Acura’s brand site went from all-Flash to almost all-HTML with its recent redesign
  4. Consumer reviews and ratings have become a central component of online automotive research, utilized by two-thirds of both new- and used–vehicle Automotive Internet Users (AIUs)
  5. Among online buying services, AutoTrader.com ranks highest in satisfying dealers with new-vehicle leads, while Cars.com ranks highest in satisfying dealers with used-vehicle leads
  6. Chat functionality seems to have been quietly removed from the Saturn, Chrysler Group, and Mazda Web sites in the past six months
  7. CarsDirect still offers online chat
  8. In 2008, only 4% of used-vehicle buyers found their vehicle via newspaper classifieds and classified ad magazines
  9. Typically, the first model shopped online is not the model ultimately purchased
  10. Online ad spending by the automotive industry continues to increase, at $2.45B in 2007 and a projected $2.98B for 2008 (eMarketer)
  11. Why aren’t more manufacturers posting their images to Flickr and other social media sites?
  12. Only 40% of dealers provide pricing on the first email to the customer
  13. Honda’s brand Web site was rated the most useful manufacturer site in the most recent wave of the Manufacturer Website Evaluation Study
  14. Kbb.com is the most-visited independent Web site, with 44% of new-vehicle AIUs and 57% of used-vehicle AIUs visiting
  15. The availability of vehicle inventory online continues to increase
  16. In the purchase month, new-vehicle buyers shop three or more models online
  17. Consumers are still wary of being contacted by dealers. Among new-vehicle buyers who didn’t submit an online lead, 50% stated that they just didn’t want to be contacted by a dealer
  18. Last year was finally “The Year of Mobile” and nearly a dozen manufacturers and independent Web sites jumped in
  19. Mobile automotive is heavily used by consumers while they’re out shopping and on dealer lots
  20. As shopper budgets tighten, demonstrating monthly payments and vehicle comparisons becomes increasingly important
  21. Automotive ad spending is down in almost all measured media categories except online
  22. Many third-party automotive sites and fewer than half of manufacturer brand sites offer RSS feeds
  23. Site visitors want interactive maps – they’ve been using them on Google and other sites for years. If you don’t provide this functionality, they are more likely to leave your site for a better experience
  24. According to Foresee, while 91% of online shoppers own mobile phones, only 29% use them to help make shopping decisions
  25. This year’s annual J.D. Power and Associates Automotive Internet Roundtable will be held October 14-16 at the Red Rock Resort in Las Vegas, NV

A Longer Purchase Process for Online Buyers

All new-vehicle buyers reach a set of key milestones during their shopping process, but the point at which they encounter these milestones varies widely. A shopper’s personality, financial concerns, and transportation needs, among many other factors, can influence everything from first deciding to shop for a new vehicle to the timing of the first dealer visit. Some shoppers will condense the entire shopping process into a single weekend, while others will spend 6 careful months deliberating each purchase detail. Understanding the new-vehicle shopping timeline of all AIUs, as well as that of specific shopper groups, can help OEM, independent and dealer Web sites determine the best usage and placement of automotive marketing content.

According to the 2008 J.D. Power and Associates New Autoshopper.com Study (NAS), on average, Automotive Internet Users (AIUs) report that they first decide to buy a new vehicle 15.4 weeks before they actually purchase one. Three weeks later, they begin using the Internet to find information, which is approximately 12.4 weeks prior to purchase. Dealer visits in 2008 begin at 7.4 weeks before purchase, just slightly earlier than last year. And finally, on average, AIUs narrow their vehicle selection down to one model at 5.0 weeks prior to purchase, providing a 7.4-week window of time where the Internet is impacting their model decisions.
blog post photo

New-vehicle buyers in 2008, forced to shop outside of their comfort zones for smaller, more fuel-efficient vehicles, use the Internet in combination with dealerships to test which models would best suit their needs. Shopping for smaller, more fuel-efficient vehicles immediately brings up a number of questions regarding comfort, adequate room for passengers, power vs. fuel efficiency, etc. It is extremely important that manufacturers focus online marketing efforts to attract shoppers so that their brand or model can be added to the consideration sets that they develop and change during this 7.4-week period. However, also focusing on educating shoppers how the brand’s models can meet their needs better than the competition will help in conquesting shoppers online, reducing the need for shoppers to bounce from dealership to dealership to test drive every model on their consideration set.

New-Vehicle Buyers Turn to the Internet for Information As Buying Habits Shift to Smaller Vehicles

New-vehicle buyers are using the Internet more than ever when researching vehicle information, according to the J.D. Power and Associates 2008 New Autoshopper.com Study released today.

The study finds that 75 percent of new-vehicle buyers in 2008 are using the Internet during their shopping process, compared with 70 percent in 2007. This year marks the largest year-over-year increase in online shopping since 2001. The total amount of time shoppers spend online researching automotive information has also increased since 2007—up 12 percent to more than six and a half hours. Meanwhile, the number of Web sites being visited by new-vehicle shoppers has remained relatively flat since 2007, which suggests that consumers have become more engaged with the sites they currently visit.

The current economic environment, coupled with high fuel prices, has given rise to a shift in the vehicle buying habits of U.S. consumers. Shoppers who were once loyal to larger vehicle models are now finding themselves in the market for a compact or midsize car. For many, this is unknown territory, and these shoppers are turning to the Internet for information and education about the vehicles in their new consideration set. The resulting demand for information provides automotive marketers with valuable opportunities to reach out to shoppers via the Internet.

Automotive manufacturers can further engage shoppers through consumer-generated content on the Web. According to the study, nearly 70 percent of automotive Internet users (AIUs) utilize consumer-generated content while shopping for a new vehicle. In particular, vehicle ratings and reviews are the most popular form of consumer-generated content, with 63 percent of AIUs utilizing this resource. Additionally, 95 percent of AIUs who use consumer ratings and reviews say that the information is “helpful.  Dealer ratings and reviews are also popular among new-vehicle shoppers, with 38 percent of AIUs utilizing the resource, and 87 percent of those find the information “helpful.

The collaborative environment facilitated by Web 2.0 is changing the way shoppers research vehicles, driving many to seek the experiences and opinions of other shoppers and owners. The opinions of other consumers are so impactful that we are already seeing distinct purchasing patterns develop between those shoppers who use consumer ratings and reviews, and those who rely solely on expert ratings and reviews.

The study also finds that different types of automotive Web sites have specific benefits that satisfy the information and shopping needs of consumers. For example, shoppers view independent, third-party sites—such as Edmunds.com and Kelley Blue Book (kbb.com)—as being most useful for researching vehicle pricing and for providing ratings, reviews and forums. Conversely, shoppers view manufacturer Web sites as most useful for their information on vehicle model options, features and specifications, while dealer sites are perceived as being most useful for inventory information.

The challenge for automotive manufacturers and dealers alike is discovering how best to get involved in online conversations taking place among consumers in order to shift sales to their advantage. Knowing the strengths of various types of sites and where shoppers are going for their information can enable manufacturers and dealers to manage their site content more strategically and focus on efficiently targeting consumers at each stage of the shopping process.

The study also finds that Kelley Blue Book (kbb.com) is the most visited independent Web site, with 44 percent of automotive Internet users visiting the site. Additionally, Edmunds.com is the most useful independent Web site among automotive Internet users. Edmunds.com shoppers are 42 percent more likely than consumers using other independent, third-party sites to say that the reviews, forums and ratings are the most useful information on the site.

How are Third-Party Sites Generating Traffic to Dealerships?

In the 2008 Dealer Satisfaction with Online Buying Services Study (DSOBS), dealers were asked to provide a breakdown of the traffic generated by their lead service providers (new, used and member), in terms of the percent of traffic that comes in over the Internet, the percent of shoppers who walk into the store, and the percent of shoppers who call in after shopping on the Internet site.

The study finds that dealers have been keeping track of the origin of store traffic. Used lead providers drive the largest share of offline traffic – well over half of all used-vehicle shoppers either call in or visit a dealership as a result of seeing a used-vehicle listed on a site. In contrast, new-vehicle traffic is primarily driven online, with only 1-in-4 new-vehicle shoppers taking the time to call in to a dealership as a result of seeing new vehicles listed online. This makes sense given that shoppers see a used-vehicle online but need to uncover more about it to verify its condition and drivability, and compare it against other used vehicles. In general, the study also finds that automotive Web sites that are more lead aggregators, such as Dealix and Autobytel Inc., tend to have a higher share of online traffic versus their more branded counterparts, such as AutoTrader.com.

Member services, such as Costco Auto Program, are the third category of lead providers; the referred shoppers must also be members of the service. As a whole, this category provides the greatest percentage of online lead traffic compared to the new and used-vehicle lead providers; nearly two-thirds of all member store traffic is generated from the Internet. Therefore, different lead providers generate diverse proportions of customer traffic.

blog post photo

For the dealers that see more online traffic, just how long does it take to respond to these Internet leads? In the 2008 DSOBS study, dealers report it takes about 45 minutes to respond to an online lead with a personalized e-mail or phone call. This excludes the typical auto response e-mails that many dealerships utilize.

Lead notification systems send an e-mail or text message directly to a dealer’s mobile device, alerting them that they have a new lead. This allows dealers to more swiftly respond to customer leads. About one-half of dealers responding to the 2008 DSOBS indicate that they use some type of lead notification program. Especially in today’s market, this type of technology is becoming increasingly important to dealers and their overall profit margins. If they don’t respond to that lead in a short amount of time, someone else will. The time it takes to personally respond to a lead should substantially decrease over the next couple of years.

There has never been a better time for dealers to really keep a close eye on how their lead providers are performing. It’s important to gauge how many leads are provided by each service, the frequency, and overall quality of these leads. This will ultimately help dealers to respond accordingly to the mixture of traffic coming in.

New-Vehicle Drivers – A Small, But Significant Slice of the American Idol Pie

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).
blog post photo
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).

Saving Greenhouse Gas or Cold Hard Cash

Many Americans like to think of themselves as forward thinking, environmentally conscious human beings. But when it comes to buying a new car or truck, the eco-friendly, green feelings often wilt on the vine when it comes to having an impact on our checkbook. In a recent survey, we found that only 11% of new-vehicle buyers are “very willing” to pay more for an environmentally friendly vehicle (2008 Power Auto Offline Media Report). And if a hybrid is the quintessential environmentally friendly vehicle, then they would have to be willing to pay more indeed.

On average, a hybrid version of a model costs $4,700 more than its conventional gasoline powered counterpart according to PIN actual price transaction data. Not only does the hybrid badge cost a great deal more, it will take many years of MPG savings to even recoup this price premium, if ever. But you don’t have to be rich or buy a hybrid to be environmentally friendly – you can simply buy a vehicle that gets better gas mileage, which usually means downsizing. This may certainly be the case as compacts are the hottest segment in today’s new vehicle market.

But, let’s not confuse the issues here. The reason new-vehicle buyers are flocking towards compacts isn’t because they are suddenly eco-aware and drinking the green Kool-Aid. The truth of the matter is, despite what we hear and read in the press, people are not as concerned about reducing greenhouse emissions as they are about saving money on gasoline.

The most recent available data show that gas mileage is the number one reason consumers purchased their vehicle over other models – 34% of all mentions. It is important to note that in 2003, gas mileage was mentioned by only 8% of new vehicle buyers, or the 8th most frequently noted response. Young new vehicle buyers are more likely to be gas-mileage conscious, as this growing expense takes a greater share of their pocket book.

blog post photo

Out of 19 multiple choice reasons buyers could have checked, only 5% noted they bought their new vehicle because of its “environmental impact/friendliness” (ranked 19 out of 20 reasons). One out of four buyers noting this reason was indeed a Prius buyer and many others bought other hybrids as well.

In these times of recessionary conditions, slumping housing market and credit crunch, I believe many in need for a vehicle will commit the ultimate act of environmentally friendliness and recycling – they will buy a used vehicle.