Auto Industry Trends 2017 – US…

Auto Industry Trends 2017 – US Market

Innovative strategies for segmenting and targeting auto audiences

Car buying reached record peaks in 2016, but after sales plunged 4.7% in April of this year experts believe the pendulum may be swinging back in the other direction. According to the Wall Street Journal, car sales are down this year, and even the previously dominant SUV sales have flattened.

Nevertheless, the industry maintains sparks of opportunity. Companies like Ford and GM are investing heavily in technology innovation, while the sale of electric and hybrid vehicles increased by 74% year-on- year, and brands like Tesla drive powerful public interest surrounding their Model 3.

As auto brands tighten their belts, it’s more crucial to increase pipeline and sales — especially through digital channels. The buying cycle is long, and almost all car research begins on a screen, whether through search engines, websites or advertisements. This report uses real data from brands like Honda, Toyota and Mazda to break down tactics for advanced segmentation, competitive analysis and audience activation. Learn how to identify unique attributes of your audience and target high value segments before the competition. We will also spotlight Tesla, and the science behind their PR success.

1. Segmenting Your Market: One Brand, Many Audiences

Toyota Audience: Three Levels of Intent

The most fundamental phases of the car-buying cycle can be broken into three buckets: research, intent and ownership. In the chart below, we see that although these groups are all part of the “Toyota audience,” they each have distinct characteristics.

While it’s valuable for Toyota to understand their customers, studying their “pre-purchase” audience can help them speak to aspirational buyers more effectively. The data below indicates that although Researchers and Intenders will appreciate the practicality of their Toyotas after they become Owners, until then they want a car that expresses their personality, has extra horsepower and sports plenty of extra features. These elements should come through clearly in campaigns targeted to a younger “pre-purchase” audience.

US Auto Report 2017: Toyota Audience
Segments built using Hitwise AudienceView, pulled over 4 weeks ending 8/19/2017.

Honda Seekers: Segmenting by Class

Even after you segment by purchase intent, lumping the “Toyota audience” or “Honda audience” together is far too broad. The differences between someone interested in a Honda Fit versus a Honda Odyssey are vast. Segmenting by both make (Honda, Toyota) and class (hatchback, SUV) provides valuable insights for better segmentation, ad strategy and creative.

In the example below, we see how varied Honda Seekers are, depending on which class of car they are interested in. Based on the “Mini-Van” insights, Honda might tailor their Honda Odyssey ad campaigns towards Millennial moms, and depict them buckling in a female toddler in the back seat. Or they might pursue promotional partnerships with or KBB, which Mini-Van seekers are more likely to visit than Hatchback or SUV audiences.

US Auto Report 2017: Honda Seekers
Segments built using Hitwise AudienceView based on people searching for Honda hatchback models, Honda SUV models, and Honda mini-van models. Audience profile pulled over 4 weeks ending 8/19/2017.

2. Competitive Activation: Targeting Unique Audiences

Mazda 3 vs. Chevy Cruze: Competitive Audience Analysis

The reality is, your customers will not be deciding between two models of the same brand (for example, the Mazda CX-9 and the Mazda 3). Instead, they would weigh the Mazda 3 against a car of a similar class and price range, like the Chevy Cruze. Consumers seeking a Mazda 3 or a Chevy Cruze are behaviorally quite similar, but demographic and life stage data paints a picture of two distinctive audiences, which could be targeted with unique ad campaigns:

US Auto Report 2017: Mazda vs. Chevy
Segments built using Hitwise AudienceView based on people searching for variations of “mazda 3” and people searching for variations of “chevy cruze.” Audience profile pulled over 4 weeks ending 8/19/2017.

Future Mercedes Buyers: Reaching the “Soon-to-Be” Luxury Audience

The car-buying cycle is long and the period between awareness and purchase can span many years. The marketing cycle for luxury cars stretches even longer: a successful luxury brand must plant seeds of aspiration very early in a consumer’s life. Reaching the right consumers in this “pre-luxury” state (and sowing seeds of desire with the right audience) can be difficult to do in a strategic, cost-effective way.

Let’s explore how a brand like Mercedes might do just that. If we measure the crossover between the young “College Millennial” life stage segment and several competing luxury auto brand audiences, Mercedes emerges with the highest audience overlap:

US Auto Report 2017: Audience Overlap
Segments based on Hitwise Auto segments (Mercedes, BMW, Lexus and Audi) and LifeStage segment (College Millennials). Audience cross-tabulation pulled over 4 weeks ending 8/19/2017.

Mercedes may have a smaller US presence than the others, but College Millennials are already engaging with Mercedes more relative to other luxury brands: they are researching Mercedes models, visiting and even leasing their cars. If Mercedes wants to take advantage of this edge they have with this age group — where should they begin?

1) Build a desired segment
Based on real, targetable segments we can layer a unique audience for Mercedes to reach:

US Auto Report 2017: Build A Segment

The first two segments are a given. The “Luxury” segment was added to cast a wider net. Ideally the “pre-luxury” audience is interested in Mercedes cars, but expressing a more general interest in other luxury automobiles at an early age also provides an opportunity to poach future customers from the likes of BMW or Porsche by nurturing this relationship early.

2) Understand the Audience
Profiling this unique “pre-luxury” segment reveals that many of them are actually older Millennials (not 18-22 year-old college students at 4-year universities), and slightly more female:

US Auto Report 2017: Understand Audience
Segment based on combination of Hitwise Auto segments, Luxury Auto segment and College Millennial LifeStage segment. Audience profile pulled over 4 weeks ending 8/19/2017.

3) Craft the Campaign
Now Mercedes has the ideal “pre-luxury” segment, and knows a lot about them — next they might build a series of creative display campaigns based on what they know:

Speak to both genders: This group is split nearly 50/50, so Mercedes might want to create separate campaigns tailored to both men and women.
Diversity of audience: This segment is more likely than average to be Hispanic or Asian, so incorporating a diversity of representation in their creative is important.
Focus on flashy: The “pre-luxury” audience cares deeply about appearances, ambition and (of course) having a fast car. Mercedes should ensure the visual creative depicts their cars with head-turning levels of sleekness and horsepower.
Eco-friendly: They are Millennials, after all. Mercedes might consider creating a display campaign to promote their upcoming electric concept car, the compact EQ brand, to this segment. That way they will sow seeds of interest amongst a Millennial audience who is likely to become the main target market for the Mercedes EQ in the future.

3. The Electric Revolution: Tesla Spotlight

The Model 3 Release: A PR Strategy to Follow

While the rest of the auto industry struggles, electric and hybrid vehicles have taken off, with fully electric cars increasing sales by a whopping 134% year-on-year. Nearly every auto maker is playing catch-up and producing their own EV line, but currently Tesla dominates the market. They account for approximately 4 out of 10 electric vehicle sales in the US and recently eclipsed GM and Ford in market valuation, making Telsa the most valuable American car company in the world.

What is the secret behind their momentum? It constitutes a unique blend of innovation, branding, and PR strategy, spearheaded by their prominent CEO, Elon Musk. Since it was publicly announced in 2016, the Model 3 has been showered with publicity. This year, Tesla’s roll-out of the first several car models was expertly crafted to build coverage, interest and anticipation over the entire month of July. As searches for Tesla soared, they appeared to pull search share away from other EV players like the Hyundai Ioniq.

US Auto Report 2017: Electric Vehicles
Searches for top electric vehicles pulled using Hitwise Intelligence from 6/3/2017 – 8/18/2017.

These peaks of interest in the Model 3 over the month of July were mirrored on several auto industry websites, like Car and Driver. Below we break down a play-by-play timeline of the Model 3 subpage rank on over the course of July.

Article Ranking

First Model 3 Produced: Production announcement of first vehicle leads to boost in traffic to the Model 3 product subpage on Car and Driver.

US Auto Report 2017: Model 3 Launch
Sub-domain traffic share for pulled using Hitwise Article Tracker, over 4 individual weeks ending 7/29/17.

Next two weeks: Relatively quiet on the PR front. Model 3 page slowly falls in rank and share.

US Auto Report 2017: Model 3 Progress
Sub-domain traffic share for pulled using Hitwise Article Tracker, over 4 individual weeks ending 7/29/17.

Handover Party: First 30 cars are given to their new owners during an illustrious “Handover Party,” and the subpage jumps back up to second place in Car and Driver.

US Auto Report 2017: Model 3 Handover
Sub-domain traffic share for pulled using Hitwise Article Tracker, over 4 individual weeks ending 7/29/17.

All this hype is great — but does it translate to widespread purchase intent for the Model 3? Perhaps not. During the week when the first Model 3 vehicles were released, searches for “tesla model 3” drove a lot of traffic to technology publications like the Verge and Wired, and less relative share to its own website compared to other electric vehicle brands.

Meanwhile, other EV brands pull a higher share of search traffic to their own websites, as well as comparison sites like Edmunds, iMotors or Car and Driver, suggesting more potent signs of purchase intent. Tesla has captured public attention, but the burden still remains to convert enough interested researchers to make up for the steep financial investment it’s made in the Model 3.

US Auto Report 2017: Downstream Traffic
Downstream search clicks (website traffic) from search terms “tesla model 3” “hyundai ioniq” “nissan leaf” and “chevy bolt” pulled over the week ending 7/29/17.

Top Takeaways

Segment your own audience by buying phase, car class and behavior: Slice and dice your own audience in myriad ways in order to understand their attributes and path to purchase: researchers vs. intenders, sedan vs. SUV seekers — what makes each of these customers tick? Where do they research online? How can you speak to them better, and reach them earlier?

Profile the audience attributes of competing car models to find new targeting opportunities: Compare the audience composition of two competing car models in order to identify characteristics that are unique to your audience. Look for a group that is more engaged with your car model than your competitor’s. Identify unique segments to target, rather than activating the same canned Auto segments that your competitors are likely using.

Leverage the power of anticipation and plant seeds of desire in future customers: Like Tesla, auto brands have the opportunity to stoke early desire among future customers before they are ready to buy; use an overlap analysis to identify segments that are unique to your brand, ideally those who are young and aspirational. This can be a particularly powerful strategy for electric vehicles, where it’s crucial to fight for mindshare early.