News Analysis: Car makers find value in the web

Marques are responding to consumers' desire to research their purchases on the internet, writes Deborah Bonello

BMW Germany internet marketing director Dr Hans Peter Ketterl told the 51st Cannes Lions International Advertising Festival last week that the marque is to plough 16% of the launch budget for its 1 Series into the internet.

The company is using the medium to target a growing audience of young female consumers who spend much of their time online.

Ketterl's announcement coincided with Peugeot's decision to review both its creative and media arrangements for the medium as it seeks to bolster its web marketing activities (Marketing, 30 June).

Both developments highlight the car sector's growing investment in online advertising. About 8% of car marketing budgets is spent online, according to Nielsen Media Research, which is disproportionately high compared with other sectors.

In the year to April 2004, the automotive sector spent £6.5m on online advertising in the UK, placing it well ahead of sectors such as household appliances, which spent just £50,000.

Research tool

The main reason for car marketers' increasing interest in the internet is that the medium has clearly changed consumer behaviour. Forrester Research has found that one-third of all internet users have researched cars online. And AOL evidence (see table) suggests that almost 80% of car purchases are researched on the web first.

Any automotive brand that has no online presence would appear to be missing a trick.

A major advantage of the medium for car manufacturers is that it allows them to generate sales leads via websites and gather data on potential customers via online advertising and email campaigns. That is not something traditional media could achieve.

Honda marketing director Simon Thompson says that between 4% and 5% of his budget is spent online each year. 'Six or seven years ago, 90% of the interest we attracted came via the phone,' he says. 'Now 99% of the interest we generate is through the internet.'

Gary Birtles, managing director of Initiative Media, which acts for General Motors, says the agency has evidence that many people don't feel comfortable going into bricks-and-mortar car dealerships because they don't feel sufficiently well armed with information.

'As far as cars are concerned, a lot of customers want to do cost-comparison research before going to dealerships,' he argues.

The internet also enables manufacturers to catch consumers 'in the act'.

For example, search engines offer an opportunity for brands to target consumers even as they are trying to get hold of information.

Chrys Philalithes, marketing director of search engine Espotting, says: 'Car brands use paid-for listings and search marketing for two reasons. First, to stay front-of-mind during consumers' research processes. Second, as a direct call to action.

'Car brands are increasingly aware that the internet is a medium where consumers decide which marques interest them,' she adds. 'And online interest will hopefully result in offline sales.'

Alison Reay, UK sales director at Yahoo!, believes that cost-effectiveness plays a big part in luring car manufacturers to advertise on the web. 'You can reach an upmarket audience online a damn sight cheaper than you can via TV,' she says.

At the end of last year, Nissan streamed a TV ad for its 350Z model through the Yahoo! UK home page. As a result, according to Reay, it recorded 43,000 visits to the website and 5000 requests for a brochure in the first week of the campaign.

Creative improvements

The growth of broadband and improvements in the creative quality of online advertising are also raising the profile of web advertising.

Greg Paine, director of interactive marketing at AOL UK, says: 'Car manufacturers spend more money reaching people's hearts than their heads, but online hasn't been good at communicating emotion. Technology and new ad formats have changed that.'

Most agree, however, that despite the growth in online advertising, the future of bricks-and-mortar dealerships is secure for some time yet.

'I think it's really good news for dealerships,' says Nick Suckley, managing director of Media.com, the internet division of MediaCom. 'It provides an extra line of involvement before people get to dealerships, and allows them to drive bookings for test drives and monitor the buying process better.'

Honda's Thompson agrees that marketers' increased use of the internet will help the dealer networks, rather than hinder them.

'When people visit our showrooms they are very interested in buying a car already, which is good news for the dealers,' he says. 'It means that they're not wasting time on people who are only idly interested.'

The growing demand for results-driven marketing solutions that characterises today's marketing industry suggests car brands' investment in the internet will continue to grow.

The challenge will be to balance return-on-investment goals with communications that are as creative and entertaining as they are effective.

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