j d power and associates online automotive marketing review

© 2008 J.D. Power and Associates,

The McGraw-Hill Companies, Inc. All Rights Reserved.

Automotive Online MarketingReview

Gene Cameron, VP Marketing/Media Solutions

Scott Kane, Senior Research Manager

October 7th, 2008


The McGraw-Hill Companies, Inc.

All Rights Reserved.2

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1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008*

2008 U.S. new vehicle sales will total about 14million, the lowest annual result since 1993

Source: J.D. Power and Associates *JDPA Forecast

Total U.S. New Light Vehicle Sales

Record Year - 17.4 Million Units

To

tal N

ew

Lig

ht

Ve

hic

le S

ale

s (

Millio

ns

)




With higher gas prices, cars are now out-sellinglight trucks by a substantial margin

Car and Light Truck Share

0%

10%

20%

30%

40%

50%

60%

2000 2001 2002 2003 2004 2005 2006 2007 2008*

% o

f U

.S.

Ne

w L

Igh

t V

eh

icle

Sa

les

s

Car Share Truck Share

Source: J.D. Power and Associates *August YTD




Compact vehicles have gained share at the expenseof both Midsize and Large vehicles

Mix Based on Vehicle Size

0%

10%

20%

30%

40%

50%

60%

2000 2001 2002 2003 2004 2005 2006 2007 2008*

% o

f T

ota

l U

.S.

Ne

w L

Igh

t V

eh

icle

Sa

les

Compact Share Midsize Share Large Share

Source: J.D. Power and Associates*August YTD




80

20

264

344

0

50

100

150

200

250

300

350

400

2005 H1 2005 H2 2006 H1 2006 H2 2007 H1 2007 H2 2008 H1

OEMs Dealers and associations Top third-party sites

Online budgets are being reigned in this year. Reachingshoppers efficiently is more important than ever

Source:

Automotive Internet Advertising Spending

Ad

Sp

en

din

g (

Millio

ns

)




Automotive Internet usage (AIU) rates rise rapidlyas shoppers change their purchase behaviors

64% 64%67% 68%

70%

75%

47%

54% 53%

59%

60%60%

54%

40%

61%

26%

33%

43%

47%

10%

20%

30%

40%

50%

60%

70%

80%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

New Used

Automotive Internet Usage (AIU) Trends

New1 Vs. Used2 – Vehicle Buyers 10-Year Trend

1Based to new-vehicle buyers. Source: J.D. Power and Associates 1999-2008 New Autoshopper.com Studies2Based to used-vehicle buyers. Source: J.D. Power and Associates 1999-2007 Used Autoshopper.com Studies




When do buyers begin shopping for vehicles?

89/87days before

First shopped for any model

62/29days before

First shopped for the model they

ultimately purchased

74/56days before

First shopped for a model within the

vehicle segment which they purchased

Average/Median days

prior to purchase

Based to AIUs. Preliminary Unweighted Data

Source: J.D. Power and Associates 2008 Auto Buyer Clickstream Study




Number of Models Shopped Increasesin Month of Purchase

3.1Purchase Month

1.51 Month Prior

1.22 Months Prior

1.13 Months Prior

1.14 Months Prior

1.05 Months Prior

Number of Models

Shopped per BuyerTimeframe






Use of Search is also growing, fueled by growth inthe use of Google

Used Search for Automotive Information

81%

84%

70%

75%

80%

85%

90%

2007 2008

% U

sin

g S

ea

rch

Based to AIUs. Source: J.D. Power and Associates 2007/2008 New Autoshopper.com Study




Online NVBs Increased their use ofAutomotive search terms the month of purchase

0 %

5 %

1 0 %

1 5 %

2 0 %

2 5 %

3 0 %

3 5 %

4 0 %

4 5 %

5 0 %

5 Months Prior4 Months Prior3 Months Prior2 Months Prior1 Months PriorP u r c h a s e

M o n t h

Retail Automotive Social Networking Search/Portal Directions

Categorized Search Terms throughout the Vehicle Purchase HorizonPercentage of the top 100 search terms by AIUs

3X Increase






In 2008, use of Mobile access grew by 21%versus 2007

Mobile / Cell Phone Internet Access

15%

18%

0%

5%

10%

15%

20%

25%

30%

2007 2008

% W

ith

Mo

bil

e A

cc

es

s

Based to AIUs. Source: J.D. Power and Associates 2007/2008 New Autoshopper.com Study




Mobile should be on some OEMs’ top priorities,but of less concern to others

Based to AIUs buying each brand. Source: J.D. Power and Associates 2008 New Autoshopper.com Study

*Caution: Small Sample. Land Rover (n=85), Jaguar (n=61)

Land Rover* 50%

Porsche 43%

BMW 37%

Jaguar* 36%

Audi 35%

Suzuki 13%

Mercury 11%

Buick 11%

Hyundai 10%

Kia 8%

Mobile / Cell Phone Access

to the Internet

Top 5

Bottom 5




Consumer-generated content (CGC) remains animportant part of the online shopping process

Use of Consumer-Generated Content

69% 69%

50%

60%

70%

80%

2007 2008

% U

sin

g C

GC

Based to AIUs. Source: J.D. Power and Associates 2008 New Autoshopper.com Study




Vehicle Ratings and Reviews are by far the mostused type of CGC

Consumer-Generated Content Usage

10%

12%

18%

22%

38%

63%

0% 10% 20% 30% 40% 50% 60% 70%

Videos/Podcasts

Blogs

Online Forums/Chat

Rooms/Q&A Sites

Enthusiast Sites

Dealer

Ratings/Reviews

Vehicle

Ratings/Reviews 95%

87%

81%

78%

69%

66%

% Finding

Helpful*

*Based to AIUs who used each type of CGC

Source: J.D. Power and Associates 2008 New Autoshopper.com

Study




The model purchase decision is impacted byExpert and Consumer Ratings & Reviews

Based to AIUs using either Consumer or Expert Ratings/Reviews, but not the other.

Source: J.D. Power and Associates 2008 New Autoshopper.com Study

Model Purchased Share Model Purchased Share

Toyota Camry 3.9% Honda Accord Sdn 3.7%

Honda Accord Sdn 3.3% Nissan Altima 3.6%

Nissan Altima 3.2% Toyota Camry 3.2%

Toyota Yaris 2.8% Honda CR-V 2.9%

Toyota Corolla 2.6% Toyota Prius 2.5%

Toyota Prius 2.3% Honda Civic Sdn 2.1%

Honda Pilot 2.2% Chevrolet Silverado LD 2.0%

Ford Focus 2.2% Ford F-150 LD 2.0%

Honda Civic Sdn 2.2% BMW 3 Series 1.9%

Ford F-150 LD 2.1% Toyota Corolla 1.7%

Shoppers Using Consumer

Ratings/Reviews (Not Expert)

Shoppers Using Expert

Ratings/Reviews (Not Consumer)




Online NVBs are avid users of Social and Video Sites

37120%74%go.com

1841%1%hulu.com

3471%3%twitter.com

1,5411%12%abc.com

26119%49%facebook.com

19635%68%myspace.com

21034%71%youtube.com

NVB Reach/IBP Reach IBP NVB

Index% Reach

First 6 months 2008

Based to Online New Vehicle Buyers. Preliminary Unweighted Data

Source: J.D. Power and Associates Total Online Media Behavior




As a percentage, online submissions hold relativelysteady year-over-year

AIUs that Submitted Request for Quote

29.3%31.7%31.6% 32.1% 31.0%

0%

10%

20%

30%

40%

50%

2004 2005 2006 2007 2008

% R

eq

ue

sti

ng

Qu

ote

Based to AIUs. Source: J.D. Power and Associates 2004-2008 New Autoshopper.com Study




Realistically, 1 of 5 AIUs will never submit aRequest for Quote

Based to AIUs. Source: J.D. Power and Associates 2008 Follow-Up Study to NAS

29%

49%

22%

Submit Request

May be open to Quote Process

Not Likely to Submit a Quote• Prefer to negotiate price

in person or by phone

• Already have

relationship with dealer

and know where they’ll

next purchase

• Use alternate

purchasing/discount

program

• Etc…




Reasons Why Shoppers Did Not Submit a Request for Quote

50%

29%

15%

7% 7%

0%

20%

40%

60%

Did not want to be

contacted by

dealer

Wouldn’t get

valuable / accurate

information

Privacy or Identity

Theft concerns

Wouldn’t get a

timely response

Tried it before and

didn’t like it

Fear of dealer contact and doubts about receiving valuableor accurate information deters shoppers from submitting requests

Based to AIUs that did not submit a request for quoteSource: J.D. Power and Associates 2008 Follow-Up Study to NAS




Request for Quote - Dealer Response Ratings

6.4

7.2

0 2 4 6 8 10

Completeness of

Response

Timeliness of

Response

Satisfaction Score

Providing quality responses to requests is at theheart of the problem

Based to AIUs that submitted a request for quoteSource: J.D. Power and Associates 2008 Follow-Up Study to NAS




Active Online Shoppers have a relatively limiteduse of sites within type

2.6Dealer Sites

3.1OEM Sites

3.3Third Party Sites

Average Number of Sites Visited

Active Online New Vehicle Buyers in

6 Months Prior to Purchase by Type

of Site






Pricing/Incentives/MSRP 40%Research Info/Options, Features,

Specs43% Inventory Locator 44%

Reviews/Forums/Ratings 21% Pricing/Incentives/MSRP 20% Pricing/Incentives/MSRP 35%

Compare Vehicles 17% Equip a Vehicle 17%Research Info/Options, Features,

Specs14%

Research Info/Options, Features,

Specs12% Navigation/Easy to Use 15% Navigation/Easy to Use 10%

Navigation/Easy to Use 11% Inventory Locator 7% Request Quote/Contact Dealer 7%

Trade-In Value 8% Vehicle Images/360 Tool/Video 7% Find a Dealer 6%

Vehicle Images/360 Tool/Video 2% Compare Vehicles 4% Vehicle Images/360 Tool/Video 4%

Request Quote/Contact Dealer 1% Find a Dealer 4% Compare Vehicles 2%

Find a Dealer 1%Monthly Payment

Calculator/Estimate3%

Monthly Payment

Calculator/Estimate1%

Monthly Payment

Calculator/Estimate1% Request Quote/Contact Dealer 2% Equip a Vehicle 1%

Top 10 Most Useful Content by Type of Site

Independent Web Sites Manufacturer Web Sites Dealer Web Sites

What do shoppers find most useful about differenttypes of sites?

Based to AIUsSource: J.D. Power and Associates 2008 New Autoshopper.com Study




Online New Vehicle Buyers Visit a “Long Tail” ofThird-Party Sites

Top Third Party Sites Share of Total Third Party Sessions



0 %

2 %

4 %

6 %

8 %

1 0%

1 2%

1 4%

autot rad

er .co

m

edmunds .co

mkb

b.com

car s. com

autos .msn. com

autos .yahoo.com

consumer repor ts .org

autos .ao

l .co

m

carm

ax. com

nad

aguides .co

m

car sdi rec t. com

dmv .org

automot ive

.com

autobytel .co

m

car fax .c o

mvehi x. com

autoweb

.com




Independent

Site VisitorsEdmunds.com

Kelley Blue

BookCars.com Vehix.com

Pricing/Incentives/MSRP 40.2% 47.9% 53.7% 28.5% 7.8%

Reviews/Forums/Ratings 20.9% 29.6% 8.4% 13.5% 5.3%

Compare Vehicles 17.4% 16.1% 7.0% 24.3% 59.3%

Research Info/Options, Features, Specs 12.1% 12.5% 6.0% 9.8% 13.5%

Navigation/Easy to Use 11.0% 8.4% 7.4% 27.6% 16.3%

Trade-In Value 7.8% 4.4% 27.0% 1.9% 0.0%

Vehicle Images/360 Tool/Video 1.5% 0.6% 0.1% 8.1% 5.3%

Request Quote/Contact Dealer 1.5% 1.6% 0.2% 2.9% 1.3%

Find a Dealer 1.4% 1.0% 0.2% 8.4% 3.4%

Monthly Payment Calculator/Estimate 0.8% 0.7% 0.8% 4.7% 1.2%

Top 10 Most Useful Site Content

Carving out a niche is important to growing andsustaining a useful site

Based to AIUs visiting each site who thought that site was most usefulSource: J.D. Power and Associates 2008 New Autoshopper.com Study




Getting more traffic to the brand site is great, aslong as it’s the right traffic

Visitation: Based to AIUs. Close Rate: Based to AIUs visiting each site.

Source: J.D. Power and Associates 2008 New Autoshopper.com Study

Top 15 Visited OEM Sites—Year-Over-Year Analysis

-15%

-10%

-5%

0%

5%

10%

15%

20%

-40% -30% -20% -10% 0% 10% 20% 30%

% Change in Close Rate

% C

ha

ng

e i

n V

isit

ati

on

SaturnNissan

Volkswagen

JeepHyundai




Summary Observations

• Difficult market

– Tighter sales

– Major shifts in purchase patterns by Segment

• Increasing Internet use with shifts in patterns, fragmentation

– Consideration counts are not expanded for models or sites used for shopping

– Third Party Sites exhibit long tail, suggesting fragmentation

– CGC, Mobile, Video, ?

– Shoppers/Buyers in new territory, use of internet

• Request for Quote is only effective if it responds to shoppers, is

complete, not just rapid




Summary Observations

• Challenge to become more efficient and effective

• Targeting more important than ever, customize targeting

– Join the conversation

Common interest

Add value

Build engagement

Relevant traffic that converts

• Understand shoppers, position your site and marketing to give

them a reward

• Leverage information throughout the organization

j d power and associates online automotive marketing review

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aius visiting