Here's Why Automakers Are Ahead of the Game in Digital

Great article form AdWeek a few weeks ago regarding direct response auto advertising. ~CM

For years, automakers were synonymous with branding-based advertising, but the shift to digital has steered more of them toward direct-response marketing. Of course, sizable ad budgets help, but there’s more to why automakers are first movers on practically every new type of digital promo.

Honda’s Chicagoland and Northwest Indiana dealer group (which includes roughly 30 Midwest dealerships) announces that it is the first brand to use a new tool from Blinq Media—one of Facebook’s Preferred Marketing Developers—that targets in-market car shoppers with local promos. By squarely focusing on in-market car shoppers, the campaign only uses direct-response messaging to drive conversions.

With the help of agency RPA, Honda will begin using the new tool to buy Facebook’s right-hand rail and newsfeed ads on desktops, plus sponsored posts on mobile, programmatically. The ads target two types of prospects: Consumers who are near dealership, or people who have interacted with Honda’s content before—such as filling out an online sales lead form.

Nichola Perrigo, associate director of digital marketing at Honda’s agency RPA, described the social promos as a way to "optimize and rapid-fire test different ad units" by pulling in dealership-specific offers in real time.

Ad creative will change on the fly, too. "We’re going to be able to create very dynamic, custom ads that hit each one of those audience groups," explained Perrigo. For example, if a person has shown a past interest in a Civic sedan, he or she won’t be served an ad for an Accord. Clicking through on any ad drives consumers to a website with more customized information based on the Facebook offer.

Since GM’s famous exit from the social platform in 2012 (and its subsequent return in 2013), Facebook has made significant efforts to win back auto brands.

To Facebook’s credit, GM-owned Chevrolet was among a small handful of brands to test auto-play video ads earlier this year while Ford and Lexus have also forked over cash to the social platform.

Marc Poirier, co-founder and evp of business development at Acquisio noted the newest local ads may also pay off for other direct-response marketers. "The new local ad offering for Facebook is in theory very well-suited to direct-response local advertising, especially when the measured goal is something such as generating requests for test drives."

Moving Down the Purchase Funnel
Honda’s decision to home in on digital to target low-funnel consumers follows a string of similar investments from automakers.

In September, Toyota Central Atlantic—a group of dealerships along the East Coast—claimed a 45 percent increase in foot traffic from a mobile campaign.

The ads targeted in-market buyers who had previously visited a competitor’s lot and linked to car registration data, indicating if a consumer actually bought a car as a result of seeing the re-targeted mobile ads.

It’s easy to chalk up the emphasis on hyperlocal marketing to the fact that automakers typically have sky-high marketing budgets. But it also indicates that digital is working for brands to do more than branding.

"U.S. automotive [brands] have usually a 60/40 split between direct-response and branding," said Guillaume Lelait, general manager at Fetch.

In With the New, Out With the Old?
Even as more automakers employ direct-response advertising, not all brands are ready to ditch branding efforts. Instead, marketers like Mercedes are pulling double duty with social ads.

Mercedes recently released a case study from the first campaign to run Instagram and Facebook promos simultaneously. The German automaker’s effort claims a 54 percent increase in Web traffic. But there’s also an interesting branding data point: The Instagram ads by themselves increased brand awareness by 14 percent. The idea was to test which types of creative work best on each platform.

"We're not just throwing money at the platform—we're really trying to see what's going to break through and get engagement from our audience," Eric Jillard, general manager of marketing services at Mercedes, told Adweek during Advertising Week.

Lauren Johnson - AdWeek 10.21.14