Roundtable Recap: Current Trends In Automotive Advertising

Presenters
Libby MacDonald and Jon Swallen, Kantar Media

• In 2010, automotive display advertising spending has rebounded—though, realistically, it is comparable to the level of spend in 1999
• OEMs’ share of automotive ad spend is growing since the 2008 downturn, offsetting dealer declines
• The industry has consistently scaled ad spending to match sales levels—the ratio of ad spend per vehicle sold is virtually flat over the past decade.
• In 2010, lease activity is rebounding—and so is lease advertising
• Sales event advertising continues to expand and is literally a year-round phenomenon.  There are shorter time intervals between major sales events and summer and year-end events are running longer
• For OEMs, national television ad spend is still accounting for over 50% of the total media channel allocation, with digital at 10%
• National TV and Internet display advertising are gaining share of budget at the expense of spot TV, magazines, and newspapers
• More and more automotive campaigns are using social media elements to integrate online and offline, though in different ways.  Some ad creative directs consumers to the web (such as to Facebook), while other content creation can yield creative elements for use on TV and web (such as blogs). QR tags are also increasingly being incorporated into advertising in magazines and, with reproduction quality improving, in newspapers as well

Roundtable Recap: Beyond Buzz—Social Media Driving Consumer Insights

Moderator
David Howlett, J.D. Power Web Intelligence Division

Panelists
Doug Frisbie, Facebook
Adam Boalt, GOSO, LLC.
David Schoonover, Kia Motors America
Steve Patrizi, LinkedIn
Linda Gangeri, Volvo Cars of North America

Doug Frisbie: We believe the web is being rebuilt around people.  It’s shifting from an information-centric web that’s about the “what” to a social-centric web that’s about the “who.”

Adam Boalt:  It’s about managing expectations.  If you start use social media to channel customer service complaints, you open up Pandora’s Box, and customers think that’s the place where they need to come and complain.  But if it’s a place where you can provide them with resources, it can be very valuable.

David Schoonover:  When someone comes to your website and configures a vehicle, they’re thinking aspirationally.  You’ve got to be careful how you ask the question.  Are you saying, “Please select from A, B, or C” or are you taking a more open-ended approach?  If you’re taking an open ended approach, they’ll probably give you more aspirational answers.

Steve Patrizi: If you look at the social media stream in an unfiltered way, you may end up making the wrong decisions.  On the basis of listening, understand not just what is being said but where those sources are—and how do those sources map against who you are trying to influence?

Doug: People are the best source of filtering all of that information.  People can help alter our decisions.  That can impact intent and demand, and pure information can’t necessarily do that as easily.

Adam:  There is a misperception that Tier 1 ultimately dictates brand consideration.  I think Tier 3 doesn’t realize how much power they have with their customer and with their CRM.  They can really use their existing customers to influence their peers on their different social networks.

Q:  How do your dealers measure the ROI for your social media efforts?

• Adam:  Social media can increase your closing ratios.  You can think of direct response efforts as hunting for customers for today.  In social media, you’re cultivating tomorrow’s customer.
• Linda: The ROI question is a tough one.  It really is about relationship building, and from that, comes brand consideration, and from that comes purchase intent, and from that comes more car sales.
• Steve: We could see an evolution from “follow us” to “recommend us.”  We can start to activate our customers to acquire our new customers for us.

Q:  You mentioned that dealers can leverage the OEM message at the local level.  How do you answer the OEM’s concern about protecting the brand overall?

• Linda:  We provide assets or content for any level or for any channel of marketing to our dealer body on an asset site that they can then take and repurpose for a Tier 3 level.  The risk to the brand is always managing that social environment.  We now have a governance model that is centralized to start.  It’s a self-monitoring type of environment and we find that it works.
• David S.:  “How do you protect your brand from your own dealers?”  That doesn’t make any sense to me.  Your dealers are your partners.  Help the dealers with materials and resources so that the content they are putting out in the marketplace is aligned and consistent.

Roundtable Recap: Fallacy of the Click

Moderator
Carolyn Crafts,Cars.com

Panelists
David Cohen, Universal McCann
Jason Deal, Initiative USA
John Gray, Team Detroit
Libby Murad-Patel, Jumpstart Automotive Group

John Gray: The funnel is not dead.  How shoppers shop is different, but their thought process and decision making process is the same as it has been.

Jason Deal: Conversion success is dependent on the primary marketing objective.  It’s different as you move down the funnel.

David Cohen:  We have relied on the lead as the holy grail of indicating a purchase, but there are a wide variety of touch points (events, CRM, e-mail, TV) that contribute to the sale.  We don’t have the fidelity around that type of information that we need, but I think it’s where we are heading.

Jason: We’re still focusing on such a tiny piece.  For example, TV drives a ton of search behavior, and we know it has a huge impact.  Everything is still display and search centric and social is probably not going to get any credit for the sale.  What’s the attribution model for that?

Libby Murad-Patel: The value of friends and community and family—the level of influence from people around you—is another major aspect that is not captured through advertising.

John:  We have a macro value of social, such as in the Fiesta Movement.  The challenge is getting that micro view that we can manipulate and optimize.  That is where you can amplify social media in a predictive way.  We’ve become data masochists; we are slaves to our data.

Libby: “We have very little intelligence about what’s happening at the dealer level.”  Harder to learn about how people drop out of the funnel.  Using the data we know about a person to help us understand, is this the right time to send them to a particular level?

Carolyn Crafts: Even in the analytics, there’s some art in drawing the conclusions.

John: At the top end of the funnel, it’s much more difficult to get the metrics.  The feedback loop on attitudinal change is still pretty long.

David: The click is by no means an indicator of moving business results (in any category.)  High click through rates have no correlation to sales.

A few weeks ago I wrote about the growing use of social media in launching new vehicles and challenged that its benefits–mainly in cost and targeting–when measured against traditional vehicle launches could tip this burgeoning launch methodology into the predominant mechanism for launching a new vehicle.  With the recent launch of the 2011 Ford Explorer on Facebook one thing is certain –  we’ve had an excellent opportunity to take a look at how social launches have evolved into a rich and engaging experience for fans.  I’ve taken note of some of the most engaging and interesting moves Ford has made with this launch:

• Live chat with Chief Engineer, Jim Holland
• Mike Rowe (of Dirty Jobs fame) and Alan Mulally had a candid interview in Time Square that paints Mr. Mulally as one of the most accessible CEOs of recent times.  In fact, one woman posted the following on her attendance of the NY City debut:

“I was one of the five women that were introduced to Mr. Mulally by Mike Rowe at the unveiling of the new Explorer in NYC on Monday. This was my first experience meeting a CEO, and I have to comment on how down to earth and personable Alan (may I call you Alan? ) was. Even though only one of the five of us actually… owns a Ford vehicle, he graciously took time to share with us the details of the new Explorer, as well as giving his reasons as to why he declined to take the bailout money last year. And he made us feel that our opinions on both subjects were of importance to him.
Thank you, Alan, for spending time with us! It was an incredible day!”

• The nature of the Facebook reveals prompted people to check back in, mention it to their friends, and post pictures/stories about their Explorer’s durability and longevity.

201,398 miles on odometer
199,999 miles on odometer

In my opinion, Ford provided a downright neighborly experience throughout this launch.  They provided a space to engage consumers on a very personal level, but they did so with class.  What makes this social launch different from the ones we’ve seen in the past is the sheer volume of exposure.  Ford Motor Co. reported the following numbers to Automotive News (August 2, 2010) in response to the Facebook unveiling of the redesigned Explorer on Monday, July 26:

• “The 2011 Explorer site had more than 500,000 visits, compared with about 7,000 a day for the 2010 Explorer.
• The number of Facebook Explorer page fans grew to 54,000 from 30,000 two days before the launch.
• Users completed 48,600 price-and-build forms for the 2011 Explorer on the Ford Web Site, compared with about 700 on an average day for the 2010 Explorer.”

Ford has taken the traditional launch paradigm and turned it on its head.  Jim Farley Ford’s new approach in a speech at the 2010 Ad Age Digital Conference (excerpt runs 4:33).  Mr. Farley challenges the old vehicle launch marketing pattern where there is a huge inflection of targeting taking place at launch followed by a gradual petering out (as seen in Figure 1)

Instead, Mr. Farley favors emphasizing the importance of pre-launch programs (e.g. the Fiesta Movement) with new partners and content while maintaining engagement during post-launch.  It’s about engaging  the right people and focusing on the experience.

What is most interesting about this concept is that if you start serving the potential customer early and stick with them longer, consumer interest seems to steadily increase through and beyond post-launch activity.

I don’t think that Ford will be canceling traditional auto show launches anytime soon, but considering the palpable success of the 2011 Explorer Facebook Launch, I think we’ll see many more of these to come.

Social media has become more important than ever before.  You need not look far to see signs of this, from last year’s Fiesta Movement and the “Meet the Volkswagen’s” Facebook page to the 2010 Volkswagen GTI iPhone.  Automakers are in the game and here to stay.  But why social media?  Charlie Taylor, general manager of VWs digital marketing, was asked “Why Facebook?” in an interview for USA Today last year to which he responded, “More and more consumers are selling products for us … Social media and word of mouth is much less about brochure downloads and more about brand awareness.”

When VW launched its 2010 GTI solely on a free iPhone game, Tim Ellis, VP of marketing, said the following in an interview with ABC News, “… we tasked ourselves to rethink the way we launch vehicles in order to engage our consumers in a meaningful way … Launching the all-new 2010 GTI via the Real Racing GTI App allows us to connect with this savvy GTI consumer within his or her everyday life in a way that no 30-second spot ever could.”

Through social media, manufacturers are attempting to leverage “the law of the few.”  To quote Malcolm Gladwell’s Tipping Point “It’s not necessarily how many people you engage with, but the quality of engagement you have with a select few –Mavens, Connectors and Salesmen.”

Manufacturers’ budgets are constrained and their product teams are being forced to create more global products, putting pressure on distribution of marketing budgets across the fleet –begging for a new and more global solution.  What is more globally accessible than the Internet?  Could social media prove to become the predominant way to launch a new vehicle?  Certainly marketing costs could be greatly reduced using this approach, so then isn’t it more a question of reaching the right people at the right time?

The Ford Explorer used to be the king of SUVs.  At its peak, annual sales topped 440,000, but with the tire fiasco, higher oil prices, general market fragmentation, and recent recession, the Explorer has essentially become a niche vehicle.  In fact, only 50,000 were sold in 2009.

Rather than unveil the new Explorer in typical auto show fashion, Ford has decided to slowly reveal their latest All-New Explorer CUV on Facebook.  Interestingly enough, according to J.D. Power and Associates 2010 Prospects Current Behavior June release, 56% of new vehicle buyers can be found on Facebook in a given month.

Christopher Baccus, author of The Auto Marketing Blog has some interesting insight regarding Automotive Facebook Fan Page Strategies.  In the case of the Ford, they have decided to set up vehicle fan pages.  Ford has been gradually updating the Ford Explorer Fan Page with teaser photos instead of the typical gallery or even buff magazine shots.  Ford is also engaging fan questions on the page.  One fan asked whether a particular engine would be offered because he wanted to make sure it could tow easily.  The page manager had this to say, “Eric. More news to come soon on exact specifications on powertrains.  As you know, we are making sure that towing is assisted as much as possible for Explorer, not just in terms of absolute numbers but also how easy it is to tow and hitch up which is equally as important. Jay”

Between now and the Facebook unveiling, said to take place in July, Ford will show us bits and pieces, teasing its visitors and its 5,000+ Fans.  But as Mr. Baccus’s monthly report on Automotive Facebook Fans recently noted, there seems to be a shift away from the “become a fan” ad buys that were extremely popular last year.  It is uncertain however, whether Facebook has a new and more targeted method that is more difficult to measure or if manufacturers are moving toward accepting more organic fan growth.  If this is due to a shift to a more organic approach, the cost savings toward the campaign could be significant.  Also realize that the page will likely have many more visitors who don’t become fans, substantially increasing the reach of the Fan Page.

While Ford may have saved some money with this new approach, is it going to reach enough people and ultimately sell Explorers?  Certainly subsequent marketing will be TV and Print heavy, however in my opinion the formula seems to be set up for success:

• Facebook = 56% of New Vehicle Buyers
• Facebook and social media in general is made up of a great deal of Mavens and Connectors

Facebook certainly has two of the three pieces to create a tipping point.  Can Ford capture enough Mavens and Connectors through a Facebook unveiling to cancel future auto show unveilings?

Update: Chris Baccus recently wrote about the soft launch of Saab’s 9-5 via iTunes.

The modern automotive dealership has be on top of its game just to compete effectively: good lead management processes, regular inventory updates with sufficient pictures, high quality and usable Web sites, search engine keyword purchasing, etc.  For dealerships that don’t have those basics in place, diving into social media must seem completely overwhelming and quite frankly, unnecessary.  After all, what’s the point of conversing with a few hundred followers when your lead response rate is low or your vehicle pricing isn’t optimized for the market?

But social media can more tangibly create more sales.  It’s not about friends and followers jumping on your current promotion – instead, a blog can bring quality links and traffic to your primary dealer Web site.  Blogs provide inbound links, are updated frequently, and are generally published via platforms that adhere to Search Engine Optimization (SEO) standards.  Facebook and Twitter are good mechanisms to publish your blog activity and bring people to the blog, which improves its authority and further aids SEO performance.  But don’t expect unauthentic updates and Tweets to have any impact.

The content CANNOT just be about the latest deals!  If that’s all you have, then don’t bother.  Talk about your dealership and your involvement in the community.  Talk about the vehicles.  Be creative – Courtesy Hyundai of Georgia (@HyundaiAtlanta) tweets car care advice.

Marlboro Nissan offers a great case study on how to do it right.  The dealership is active across many forms of social media, particularly blogging, Facebook, and Twitter (@marlboronissan).  The range of content (up to ten blog postings per month) includes fashion, recipes, product updates, and dealership info.

It works.  Try typing in “nissan dealer” into Google and you’ll see www.marlboronissan.com show up in the top 10 no matter where you’re located.  Vehicle shoppers around the country can get linked to this one dealership in Massachusetts and may find the right vehicle for them, even if they’re hundreds or thousands of miles away.

Third-party leads used to be the primary means for dealers to generate online sales but organic traffic has become increasingly important.  SEO is critical to driving that organic traffic, and social media – when done correctly – can play a substantial supporting role.  The case of Marlboro Nissan demonstrates how a dealership can take even greater control of its online destiny.

Morgan Stanley recently released a report on the state of the Internet containing the most thought-provoking conclusion “Mobile will be bigger than desktop Internet in 5 years.”

The report defines mobile as including phones, PDAs, iPads, car electronics, entertainment devices, appliances, etc.  Morgan Stanley identifies five converging trends that are contributing to the mobile Internet explosion:

• 3G
• Social networking
• Video
• VoIP
• Impressive mobile devices (thank you, Apple)

3G went globally mainstream in 2010 (finally!) when it crossed the 20% penetration threshold, creating a path for the delivery of even more advanced content.

Social networking has been increasing in importance, as evidenced by the recent news that Facebook surpassed Google as the most-visited U.S. web site for the week ending March 13 (source: Hitwise).  And these users often want to be able to connect from wherever they are, whenever they want, which spurs further mobile Internet usage.

Mobile video has grown slowly to this point but is projected to explode over the next five years, once again driven by the consumer desire to watch what they want, whenever they want.

Taken together, it is unsurprising that mobile Internet growth has far outpaced the earlier growth of the desktop Internet.  The slide below uses iPhone+iTouch sales as a proxy for mobile Internet and AOL/Netscape usage as proxies for desktop Internet.

The implications of this change are almost innumerable.  The future of desktop and laptop computing.  The relative positioning of the current technology giants and the possibility for new entrants.  Continued pressure on traditional telecom companies.   New services such as location-based tools and mobile commerce.  And so on.

Within automotive, some OEMs and third-party sites have committed to mobile, but even these leaders are only scratching the surface by offering stripped down Web sites for small screens.  Eventually, we will see entirely new services that were unimaginable before the mobile Internet became a reality.  Until then, we’ll have to be satisfied with baby steps.

Last week I looked at Ford Motor Company and General Motors in the context of creating an integrated social media presence.  This time I decided to survey which OEMs use which social media channels.

Chrysler LLC, like GM, starts with a corporate blog (shown below) while also utilizing Twitter, Facebook, YouTube, and Flickr.  I like the way Chrysler cross-posts blog entries to its Facebook page, but the “conversation” is pretty one-sided since it has only 1,100 fans.

Below is a chart of the social media channels being actively used by automotive brands as of mid-March 2010.  I excluded any involvement that only supports a launch campaign, since these are frequently abandoned shortly after the vehicle hits the streets.  I also included the Big Three, since they are involved at the corporate level.

Most OEMs use Facebook in some way, although the level of commitment varies tremendously.  Some, such as Honda and Ford, actively participate on different pages for the brands and individual vehicles.  Others largely ignore Facebook unless they’re driving traffic as part of a specific marketing campaign.  Chris Bacchus of Team Detroit does a great job covering OEM involvement with Facebook, including an update at the beginning of every month, on The Auto Marketing Blog.

The luxury German marques – Audi, BMW, Mercedes-Benz, and Porsche – focus on putting out their video via as many channels as possible:  OEM site, .tv site, Facebook, YouTube, and video podcasts.  The widespread availability is great, but there seems to be a missed opportunity to really engage consumers using this great content as a starting point.  For instance, while Audi is on Twitter, it’s primarily a news feed and not utilized to engage with consumers.

It’s also notable that youth-oriented brands such as MINI and Scion are minimally involved with social media.  This may be more of a resource-driven constraint than anything else.  With relatively small budgets, these brands must focus their efforts and social media may be lower in the pecking order.  Also, consider that many of the largest automotive brands are the ones most active in social media – in other words, larger marketing budget = more experimentation.

Note that quantity does produce quality.  Instead, it’s the level of engagement that companies create via however many channels they use.

We all know that we’re supposed to be involved with social media in some way and it’s easy enough to create a blog, build a fanpage, start tweeting, etc.  The greater challenge is maintaining that commitment across multiple channels in a strategic manner.

General Motors jumped into social media years ago with its Fastlane blog, which offered a semi-direct line to GM’s leadership, including Bob Lutz.  Blogging remains the central element to GM social media presence, with frequent updates and webchats with GM executives, and additional blogs (also accessible via GMblogs.com) for Europe, Cadillac and The Lab (from GM’s Advanced Design team).  The site also includes feeds from and links to GM’s presence on other social media outlets.  I was disappointed by the lack of an obvious RSS link, since it’s an easy way for some consumers to keep on top of new postings.

For some reason, the site doesn’t link to other official GM blogs.  FacesofGM, which is operated by three members of GM’s communication team, brings a more personal touch to GM’s online presence.  But it’s run on a separate platform that’s disconnected from GMblogs.  Then there’s GM Behind the Scenes on yet another blogging platform.  This blog reports on GM events with images, video, and audio.  The overarching goal of all these blogs is undoubtedly similar – establish a dialogue with consumers.  But there’s no interplay between these disparate entities.  People who are truly interested in GM products would benefit from being able to find all of them easily and then follow the one(s) most relevant to them.

GM also participates in other social media channels.

• Twitter (@GMblogs, 13k followers).  46% of tweets are replies (source: tweetstats).  Frequently links to FacesofGM and GM Behind the Scenes.  Other GM-related accounts include @GMNewsUS, @GMCustomerSvc, @facesofgm, @Buick, @Cadillac, @Chevrolet and @ThisIsGMC.
• Flickr.  Still actively adding images.
• Facebook.  120k+ followers.  GM seeds some conversations and occasionally participates.
• Delicious.  Seems to have been abandoned in 2009 after seeding 9 links

Ford’s social media strategy is fundamentally different.  Notably, Ford does not operate a corporate blog – instead, the company puts its resources toward other social media channels.  Scott Monty, Ford’s head of social media, recently comment on his own blog that “We use all sorts of forms of social media because, let’s face it, people are using all sorts of forms.  We try to be where the mainstream are.”

Those social media channels include:

• Twitter (@Ford, 27k+ followers).  More conversational than @GMblogs, with 64% of tweets as replies (source: tweetstats).  Other accounts include @FordDriveGreen, @FordCustService, @FordLatino, @FordRacing, @FordMustang, and @FordFiesta.
• Flickr.  Ford actively posts images, but many come across as complete marketing spin (see screenshot below).
• Facebook.  94k+ followers.  Ford posts topics but rarely participates in the resulting conversations.  There are other specific Facebook pages, with the Ford Mustang (423k fans) being popular.
• Delicious.  Ford continues to actively seed links.
• YouTube.  Also several other active channels, including Mustang and trucks.
• Scribd.  106 documents with over 285k reads.  Examples: product sheets, financial statements, corporate info (“fact sheets”), owner manuals.  Ford also participates in conversations about the documents.

Ford brings these disparate channels together in part through www.thefordstory.com, which carries its own content (articles, chat transcripts, video, etc.) and also links to social networks.  Unfortunately, these links are often problematic.  For instance, the YouTube tab only lists three Ford accounts, even though others (such as Ford Trucks) are still active.

Meanwhile, the Flickr links require an extra click because Flickr doesn’t allow frame embedding.  Even worse, the Facebook links don’t work at all, returning a “Page Not Found” error.

Both Ford and General Motors are among the automotive leaders in utilizing social media.  But to gain a greater understanding of a truly integrated social media presence, we can consider Whole Foods.

The Whole Story blog is a comprehensive resource for all Whole Foods social media efforts.  The blog entries themselves frequently link to recipes and embed video or audio.  The video section is powered by YouTube and includes chiclets to share the content.  The Whole Body podcasts in the audio section are available via iTunes.  And there are clear links to other social media channels.

This cross-channel behavior continues across other social media.

• Twitter (@WholeFoods, 1.75M followers).  Extremely conversational with 84% of tweets as replies (source: tweetstats), some of which direct users to Whole Food blog articles that address their specific issues.  Whole Foods also has ~240 other Twitter accounts to address specific consumer needs, e.g. cheese, wine, recipes, metro areas, and individual stores.
• Facebook.  215k+ followers.  Video, Flickr pics, feeds from blog and podcasts, and wall posts that often point to the Whole Story blog or YouTube videos.
• Flickr.  Photos are mostly about the stores which helps personalize this massive company.
• YouTube.  Over 200 videos, many of which demonstrate recipes.

Whole Foods doesn’t just sell organic products – it sells an organic lifestyle and a food lifestyle.  The company engages directly with hundreds of thousands, if not millions, of customers daily in its stores, so social media is a natural extension of that engagement.  Even so, the company’s coordinated social media presence is impressive.

As more OEMs accept and even embrace social media, a few have taken steps to bring that content into their brand Web sites. The Chrysler Group continues to show the greatest commitment which is evident from its YouTube and/or Facebook callouts on the home pages and model pages.

The Chrysler and Jeep sites go deeper with Experience sections that feature news and social media content. Chrysler’s section is unchanged from a year ago, but it remains the most complete social media showcase on any OEM site. On the downside, it feels as though Chrysler filters the content, which dramatically diminishes the authenticity that people expect from social media.

Jeep takes a different approach by focusing on several key content areas – the Jeep Experience page is comprised entirely of Flickr photos, while another displays a feed of Jeep-related tweets. The latter doesn’t feel real, either, especially given the lack of time stamps associated with each tweet.

Ford has a great central repository (separate URL linked from the OEM site) with direct links to its channels on Twitter, Facebook, etc. Ford is perhaps the most active social media OEM and it’s great to see a single access point. Unfortunately, there’s no similar venue for the Mercury and Lincoln brands.

Links to social media content don’t have to be complex. Suzuki uses unobtrusive chiclets that are always available in lower right, while Scion links to RS Connect, a Facebook campaign for Scion’s Release Series. Chevrolet and Cadillac link to Facebook from the home page and model pages and Cadillac also has a simple page of social media links.

OEMs are understandably reluctant to integrate content that they can’t control into their brand sites. But the OEM site is an ideal place to link consumers to further information – including social media – about the brand and its vehicles.

Editor’s note: Last week we published an analysis of online conversations regarding Toyota recall situation using freely available tools. This allowed us to measure the volume of conversation, but not what people were actually saying. The following analysis from the Web Intelligence Division of J.D. Power takes a deeper look into the line chatter regarding Toyota from August 2009 to the end of January 2010.

Overview
In the wake of multiple recalls, hundreds of news reports and an impending investigation by the NHTSA – the Toyota brand is in the midst of a crisis. In order to better understand how consumer attitudes and behaviors have developed and changed over the past several months, the Web Intelligence Division of J.D. Power has analyzed over 22,000 blog and message board posts from July 1, 2009 through January 31, 2010. The following results reflect the quantitative and qualitative results of that conversation analysis – a conversation that is just now gaining momentum online.

Conversation Volume: Consumer Interest Sputters before Taking off Late January
The following chart shows the comparative conversation volume between boards and blogs in the critical months starting just before the recall. Prior to the week of 8/16/09, Toyota recall conversation volume held steady at under 200 posts per week, typically regarding old recall topics and lingering consumer issues. The conversation picked up just before and after each major Toyota announcement and then typically fell back to near normal levels within a week or so of the announcement. The pedal recall and subsequent news of sales suspensions, more models being added to the recall and NHTSA investigations pushed conversation to peak the final week of January.

Toyota Brand Sentiment is More Negative by Late January
The chart below compares consumer sentiment toward the Toyota brand for the overall time period against the last week of January. Neutral conversation consists of participants sharing recall news, events and information which is reduced in the last week of analysis as more negative conversation around the Toyota brand emerges.

• “This just can’t be real. I have to say, that at this point, I feel sorry for Toyota. Granted, they deserved a good deal of what they are getting right now after their stubbornness and poor handling of the whole recall thing.
  

Discussion Regarding Toyota’s Reputation Jumps in Volume while Consumer Intent Isn’t Yet a Major Topic
At this stage, the majority of consumers participating in the conversation are not yet discussing their intentions regarding their current Toyota or future purchases; they are more focused on sorting out the details and assessing Toyota’s reputation in general. Current owners are somewhat fearful of the possibility of having a bad situation occur while they are driving, but very few seem to have a more negative view of Toyota at this stage. The majority are simply trying to weigh the facts and determine what, if any, action to take.

• “I would refuse a toyota rental for the next year or so, along with any Pontiac Vibe. Toyota tried to cover up the problem blaming floor mats. They ruined their credibility.
  
• “I’ve been driving Toyotas for 25 years and I will probably keep buying a Toyota. The unfortunate thing is that the media blows thing up and Toyota sales will be hurt. Honda, GM and Ford must be eating this up!”

The good news for Toyota is that most consumers making negative or harsh comments toward Toyota typically had a negative opinion of Toyota prior to the recall situation – this is the kind of situation that supports their existing beliefs about the brand and they are happy to be proven “right”.

• “I’ve been saying this for 4 years….Toyota has sucked ever since the new millennium. I’ve told people…they refused to believe me.
  

More Bad News for Toyota Spurs Toyota-Bashing and Questions of What Will Come
After Toyota suspends the sale of all models in the recall, Consumer Reports withholds their rating for Toyota, and big names like Steve Wozniak publicly shares his Prius problems, participants are quick to jump on the anti-Toyota bandwagon as they realize the situation is going to have industry-wide ramifications. More conversations around consumer intent start to emerge along with inflammatory remarks against Toyota.

• “I agree with the previous post, these recalls are a by-product of Toyota’s recent corporate goal to grow very fast to #1 volume car manufacturer. Hopefully the recession and these recalls have forced the Toyota corporate planners to change their priorities. Because if Toyota starts consistantly building crappy cars, after 35 years of Toyota ownership, I’ll be the first one to drop ‘em and buy a Hyundai.
  
• “Dear Toyota, you’re f***d. Best regards, Your friends at Jalopnik…PS. thanks for the lesson in how NOT to handle a defective product and subsequent recall properly.
  

The coming weeks and months should be monitored closely to provide a greater understanding of the short- and long-term implications for the brand, sales and the industry as a whole.

Appendix

Given Toyota’s frequent presence in the news, I thought it would be interesting to see what the chatter looks like online. It’s easy to trend the volume of Toyota-related conversations occurring on blog posts, message boards, and Twitter with freely available tools. In doing this analysis, I focused on three key dates (Source: Wikipedia):

• November 2, 2009: 3.8M Toyotas and Lexuses recalled for driver’s side floor mats
• January 21, 2010: 2.3M Toyotas recalled due to faulty accelerator pedals
• January 27, 2010: 1.1M Toyota added to floor mat recall

Blog posts mentioning “toyota” spiked in late November, 2.5 weeks after the first major recall. The accelerator pedal recall in January caused toyota-related posts to rise to a consistently higher level.

On message boards, the amended floor mat recall seems to have been the catalyst to really get the chatter going. It also caused discussions regarding “toyota recall” and “toyota safety” to rise, reflecting perhaps more widespread anxiety.

Toyota-related volume on Twitter follows big news stories, with huge spikes that last one or two days. Lately, however, that chatter remains consistently higher than in the preceding six months.

Of course, this only shows that Toyota is being discussed. In order to gauge negative sentiment, we can use the phrase “Toyota sucks” to see how the company is faring against other brands. For this comparison, I chose General Motors, which had consumer image issues even before receiving the government bailout. The chart below shows that Toyota’s negative sentiment on blogs in late 2009 trailed that of GM, even after the initial floor mat recall. By January, however, as additional recalls were issued, Toyota’s negative sentiment matched that of GM.

The story get worse on message boards, where the phrase “Toyota sucks” has recently far exceeded that of “GM sucks.  This is astounding – GM’s negative sentiment was created over nearly two decades of poor product followed by the government bailout. In only a few months, the consumer vitriol leveled against Toyota has far exceeded that of the battered domestic company.

It wasn’t the first recall. It wasn’t even the second recall. It was continuous bad news emanating from Toyota finally drove a groundswell of online conversation, some of which is clearly negative. If the company can truly get a handle of its issues, we will probably see the chatter die down as consumers move on to something else. But any more problems will keep everyone talking, both online and offline, and that’s not a good thing for Toyota.