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Digital marketing and opportunities in the automotive industry

OMMAX managing partner Dr. Stefan Sambol recently had the honour to speak at the 2017 BMW Group Marketing & Product Conference; he talked about the potential for car manufacturers to drive sales with data-driven marketing and a customer-centric tracking environment. We asked him a few questions after his talk.

Mr. Sambol, at the BMW conference you spoke about the impact of digital marketing in the automotive sector and its trends. Isn’t purchasing a car still rather an offline process?

I see already a trend where people start buying cars online, even though it is a high involvement and very emotional product. The majority of customers still however purchase the car at a local dealership, that is correct. The question is how much of the customer journey today is driven by “digital” touchpoints with brands until the customers actually goes to a dealership. My argument is that many car brands totally underestimate the power of digital in order to shape the customers buying decision. There are many industry examples, where incumbent players underestimated it in a same way and suddenly the industry was disrupted and companies who have been existent for a long time were wiped out in less than 5 years.

 

"Companies, who do not embrace the power of digitization will be wiped out very soon and not exist any more"

One industry where this relationship is crystal clear is the music business. Not long ago, the only role of the customer had was to buy a copy of the latest product (a CD or LP). To sell their products, record labels relied on a few mass channels for promotion (such as radio, MTV) and distribution (record stores etc.) Today, customers expect to listen to any song at any time, streaming from a variety of services on a variety of devices. They discover music through search engines, social media, and the recommendations of both friends and algorithms. Musicians may skip the record label and go directly to the customers themselves. They ask customers to fundraise for an album before it is even recorded, to share it on their playlists, and connect their favourite bands to peers in their social networks. The claim of Spotify for example is “Music for everyone”, but actually based on the data and my user behaviour, songs are suggested to me.

 

"Six out of 10 car shoppers enter the market unsure of which brand to buy"

I believe there are many parallels from the music industry to the automotive industry. I tried to highlight the following questions: How will the journey of buying a car look like in the 21st century? What are the digital touchpoints that we can identify, and how can we use this information to generate new leads for car dealerships and turn them into clients? In a case study that I presented at the conference we followed “Stacy”, a potential customer who is looking for a new SUV. During her way to purchase a new car, not less than 900 digital touchpoints over a period of 3 month were tracked – that means 900 chances for an automotive company to address this customer and shape the customer buying decision. From research, we know that that six out of 10 car shoppers enter the market unsure of which brand to buy. Imagine how many opportunities are out there to shape the customers’ buying decision with a sophisticated approach.

 

900 digital touchpoints – what are examples of these?

These interactions take the form of searches (e.g. what car is the safest, which will fit a family of five” etc.) visits, video views and clicks and take place on Google, YouTube, manufacturer websites, dealer websites and review websites. Initially Stacy explored 14 brands with at least five interactions with each of them, she later considered six brands with at least 20 interactions each, and in the end decided between two brands with over 100 interactions each. Throughout the course of her research, Stacy conducted 139 Google searches. Those are 139 instances where she intentionally sought out information.

 

What does that mean for the automotive digital marketing?

As mentioned above, six out of 10 car shoppers enter the market unsure of which brand to buy. In the end, Stacy leased an SUV that met the criteria she was searching for in her micro moments. While Stacy is just one person, she is one of many car shoppers looking to find the answers to their question in micro moments. Each of her 139 Google searches and the hundreds of interactions that followed represent a series of opportunities for auto marketers to be there and to provide useful content that could shape her decision.

 

As a car manufacturer or dealer how do I use these digital touchpoints in order to drive sales?

As a starting point for your brand, think about how you‘re meeting potential car buyers like Stacy across the key auto shopping moments: Is your brand there? Does your media plan make it easy for someone like Stacy to find answers, especially in search? Is your brand useful? Does your brand answer the needs of your costumers about safety, seating capacity etc? As the majority of Stacy’s car buying journey happened mobile, are those answers optimised for a good mobile experience? As a result, you will probably have to optimise your positioning on search engines, your search engine advertising strategy, use retargeting, revise your website content, include influencer marketing in your strategy, show more activity on social media and implement a useful business intelligence model to monitor your KPIs amongst other things.
 


"80% of the car buying journey is already digital"

This sounds like a big challenge for marketing departments in the automotive sector.

It is, but I’d rather see it as a big opportunity. Look at how car buying worked before the digital age: People just had a few touchpoints until they bought a car – they looked up local dealerships, visited a couple of them for a test drive and bought a car. Those few touchpoints led to more customers dropping out of the sales funnel and fewer opportunities for personalised interaction in order to remember the brand or specific car model. On the sales journey, it was almost impossible to target the customer again or win them back, which meant lost revenue potential. Now in digital automotive marketing you can conduct your customers starting from brand building over providing useful information along the whole process up to personalised after-sales activities. In addition to that and with the right IT infrastructure, you can have real time KPI monitoring in order to adjust your strategy at any time. The automotive industry should really use this digital potential. During my visit to The United States I met the Chief Marketing Officer of a big automotive company in New York. He was talking about the rebranding and marketing activities. I asked him about his opinion of how much of the customer journey today happens online. He responded 80%. Then I asked him, what was the share of “digital” in his media plan and he said 30%, and added outright that his company really must work on that. This might be the same for many other customers in the automotive sector.

 

To summarise, what do you think are the big trends in the automotive industry with regard to data-driven marketing?

First, I believe that the online penetration in the automotive industry will grow significantly within the next 5 years, similar to other digital industries. Brands, which underestimate this will have serious problems to drive revenue and attract new customers. Second, the online and offline Customer Journey will merge. Brands must provide a premium customer experience along the whole customer journey, from its first touchpoint to the actual purchase and afterwards as well. Third, brands must identify the key “micro moments” of their target groups and car models to provide useful content in the moment when potential customers are looking for answers. Fourth, brands need to invest in their IT, Business Intelligence and Marketing infrastructure to set up the base for data driven marketing and retargeting campaigns. That is from my point of view one of the biggest challenges.

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