Marketers that develop new channels to reach mobile shoppers will be the winners in the automotive space this year as brands boost budgets to establish their identity with on-the-go buyers and hard-to-reach millennials.
With United States retail vehicle sales poised to reach their highest level in years, the auto ad market in the months to come will increasingly reflect mobile’s role not just as a direct response channel, but as a branding platform. The shift reflects the industry’s attempt to connect with buyers whose expectations have risen amid the mobile mind-shift.
“We've seen some interesting uses, for example, of Apple Passbook, which allows auto advertisers to promote special deals and give shoppers a virtual coupon that they can apply at the dealership,” said Michelle Denogean, chief marketing officer with Edmunds.com.
"The bottom line is that there's no tried-and-true playbook for mobile advertisers, especially in the automotive space,” she said. “So, there will be a lot of experimenting in this area, which is a fun and exciting place to be if you're a mobile marketer.”
Embracing a necessity
Market research firm J.D. Power and Associates predicts sales of new cars and trucks at U.S. auto dealerships will climb to 13.83 million in 2015, above the previous record of 13.8 million in 2004. The automotive sector is the second-largest advertising category, with spending of about $35.5 billion, trailing only retail stores.
With nearly two-thirds of shoppers using a mobile device to conduct research while physically on the dealership lot and 80 percent using a mobile device at some point in the car-shopping process, the mobile embrace for advertisers is a necessity, not an option.
“Two areas of focus in 2015 will be related to geo-location and pushing hyper-relevant messaging, although with an eye towards not upsetting the user with too much Big Brothering,” said Simon Tiffen, senior manager of advertiser insights, for Cars.com. “The other consideration is the increase in responsive design, which should also have implications for ad creative.”
The mobile mind-shift means less advertising and more marketing.
“Now that dealers have their own media channel in the form of the Internet, they’re discovering that they need to come up with ‘news’ programming on a regular basis,” said Corey Elliott, director of research for Borrell Associates.
“Specials and rebates are their versions of breaking news. They’re now spending $2,404 per new vehicle — nearly five times what they spend on advertising — in the form of rebates, loyalty programs, contests and incentives,” he said.
“In 2015, we will start to see both email marketing and paid search begin to decrease due to consumer movement to social media and all things mobile. They are no longer searching for things – things now find them,” he said.
Online ads are seen taking up 56 percent of an auto manufacturer’s advertising budget, and 66 percent of a dealer’s, according to Borrell Associates.
Online video, which will top $3.4 billion in 2015, and targeted display, which will reach $4 billion, will be the fastest growing segments of online advertising for dealers, according to Borrell. And that rise will continue through 2019.
The industry’s history as an early adopter of new media and technology innovation gives it a head-start in meeting the challenge of developing new channels to reach mobile shoppers.
“Consider apps and the Internet, built into new vehicles,” said Jake Denny, Juice Mobile’s U.S. vice president of sales. “We saw this adoption with the rise of the smartphone and tablet. Some of the first-ever mobile rich media campaigns were run with automotive clients.
“In 2015, mobile sites have displaced apps as a way for consumers to discover, research and consider purchasing new vehicles,” he said. “That provides a huge opportunity to leverage mobile and tablet media for automotive marketing.”
The months ahead will see marketers refining strategies to find the key to unlocking consumer engagement and driving sales.
“It is easy to acknowledge mobile’s differentiator as a local and personal device that can be utilized to target consumers,” Mr. Denny said, referring to geo-targeting. “This is an important strategy, but on its own, will miss the point,” he said. “Mobile is not just a direct response channel, it is a branding platform that exceeds all others.
“The problem with relying on mostly apps for location, is content,” he said. “Games are where most consumers spend large amounts of time, and represent the majority of all apps downloaded. If automotive marketers are comfortable with advertising across games, then location is sound.”
Although auto advertisers will increasingly shift budgets away from television – the largest recipient of most auto brands’ ad spend – they likely will keep their advertising approach intact.
“For auto advertisers to get the biggest bang for their buck in the mobile space, they will need to follow the same segmentation strategies and one-to-one targeting that they are accustomed to in other channels, like direct mail and addressable TV,” said Brienna Pinnow, product lead for addressable advertising with Experian Marketing Services.
“By fueling their mobile campaign targeting with a combination of predictive offline, online behavioral and even location data for one to one targeting, they are setting themselves up for success in this space.”
Advertisers also need to leverage a variety of inventory options at scale, including mobile video, custom rich media, and native mobile ads, which have been on the rise since mid-2014.
“By doing so, brands are more likely to implement engaging, interactive campaigns that work across devices,” Ms. Pinnow said.
Ultimately, a mobile strategy that is coordinated with other channels and set up for post-campaign analysis is more likely to succeed than other campaigns, mobile or otherwise.
“Keep up with the consumer, and you will win,” said Juice Mobile’s Mr. Denny.
“Consumers are lining up to buy new phones and wearing devices that track their every movement. They have opened the door for opportunity, and when willing, brands can enter,” he said.