Sunday, February 27, 2005
The Significance Of Online Promotions Via Simple Math
As my few readers know, we manage a website called MotorAlley, a place where consumers can research new cars and trucks and get price quotes in the comfort of their home; thereby saving time and money (time = money, money = saving time). Even in 2005, many Car Companies leave it to their dealers to carry the weight of acquiring profiles of in-market shoppers. Does this make sense?
Background
As a long time internet marketer, I've watched the development of the online business with fascination. Initially, many of the car companies thumbed their noses at "lead generation" falling back on the more comfortable notion of banner ads, links and promotions. The theory is/was, that a consumer would go to the dealer and buy their vehicle anyway...why pay for opt-in consumers and reward 3rd party sites for collecting profiles that will go to the dealer anyway?
Proposed Advertising Effectiveness Calculus
Of course, one could argue, the same is true for advertising. For example, for a certain Detroit manufacturer, 50% of sales come from the current owner body. Does that mean that 1/2 of ad dollars are wasted because that consumer visits their dealer already and receives their owner magazines, so why advertise to that 50%? Further, 90% of households don't actually purchase a new vehicle in any calendar year...so that math now says.....0.9 x 0.5 = 4.5 percent of households are a potential ad target for the message as a new car buying household that doesn't already get deluged with "owner offers." That means, at best, 4.5 percent actually are open for consideration in typical demographically targeted ad messages.
Interestingly, much of advertising even "misses" that 4.5% of in-market households for a number of reasons:
The ad calculus gets worse. In Allison-Fisher funnel research (as well as hundreds of focus groups), we've noticed an interesting trend. Car buyers can be easily influenced by a well informed product advisor. I've tested this theory on the phone with in-market shoppers. Spoke to a nice gentleman on the phone the other day. He had submitted purchase requests for a Honda CRV, Toyota RAV4 and a Subaru Forrester. He was genuinely unsure about what to do. He submitted at our site because his request at another site went "unrequited." That is, the dealer didn't call him. Because our "lead" was a duplicate to the same dealer, I told him he was out of luck with us as well, because his request would be de-duped, so he would not get a call. He asked my opinion and after some discussion he made his decision. I emailed and called the nearest dealer on his behalf and he bought the car, cash, the next day. His major concerns were, "my wife wants the moon roof and, David, do you think I should get an alarm?" I told him to get the moonroof, lose the alarm. You're in Arkansas.
The question in the aforementioned example (quite common by the way) is, what happened to the Ford, Chevy, and dozen other competitors of the small SUV world? He went straight to the aforementioned products because he was familiar with them and narrowed his decision quickly.
What To Do?
I like to say that it is easy to criticize the status quo. The hard part is to offer a sane, reasonable solution. We do this often but fight up the slippery slope of 80 years of Ad history. Direct consumer contact is expensive. Internet leads are expensive and they are "going to buy anyway." Calling consumers is inefficient. Mass marketing is cheaper on cost/thousand.
My response is simple...what do you do when nothing else works? We continue to educate about the in-efficiencies of both mass marketing vs. direct. Each have their place but properly applied, neither is expensive. Don't use mass to solve one to one ills...and vice versa.
More on this later...
Background
As a long time internet marketer, I've watched the development of the online business with fascination. Initially, many of the car companies thumbed their noses at "lead generation" falling back on the more comfortable notion of banner ads, links and promotions. The theory is/was, that a consumer would go to the dealer and buy their vehicle anyway...why pay for opt-in consumers and reward 3rd party sites for collecting profiles that will go to the dealer anyway?
Proposed Advertising Effectiveness Calculus
Of course, one could argue, the same is true for advertising. For example, for a certain Detroit manufacturer, 50% of sales come from the current owner body. Does that mean that 1/2 of ad dollars are wasted because that consumer visits their dealer already and receives their owner magazines, so why advertise to that 50%? Further, 90% of households don't actually purchase a new vehicle in any calendar year...so that math now says.....0.9 x 0.5 = 4.5 percent of households are a potential ad target for the message as a new car buying household that doesn't already get deluged with "owner offers." That means, at best, 4.5 percent actually are open for consideration in typical demographically targeted ad messages.
Interestingly, much of advertising even "misses" that 4.5% of in-market households for a number of reasons:
- Customer has previous, negative experience with brand. Close friend has a vehicle with a certain un named brand. He will never buy another. You've heard the story from a neighbor or friend, I'm sure. Everytime he sees the ad for his current brand name, his blood pressure goes up and he gets negative reinforcement. He tells many friends NEVER BUY THIS CAR...and NEVER FROM X DEALER
- They don't see the ad...most consumers don't watch TV to watch ads. I'm myself am an inveterate channel surfer...drives my wife crazy. I only watch shows and sports I find entertaining...which is little (e.g. European soccer games, NFL channel, History channel, Hockey, and occassional dramatic stuff like Brothers In Arms). One of my media friends feels strongly that he needs to run a TV ad 17 times before the avg. viewer registers it due to surfing, in-attention, etc. That sucking sound is your ad budget.
- They don't "get" the ad. Remember rocks and trees campaign to launch Infiniti? Or better, humor or avant garde creative that passes the targeted consumer like a ship in the fog (too clever and/or too arcane for the targeted customer).
- Dishonest Ads. "This is not your father's Oldsmobile...this is the new generation of Olds." NOT. It was your father's Oldsmobile...
- Unconvincing Ads. Let's say I drive Brand X. I like Brand X. Brand Y advertises their product. But I don't find Brand Y attractive and/or Brand Y's design and features don't interest me. Or, maybe I read a review somewhere that says Brand Y is not well executed. Bye bye, brand Y.
The ad calculus gets worse. In Allison-Fisher funnel research (as well as hundreds of focus groups), we've noticed an interesting trend. Car buyers can be easily influenced by a well informed product advisor. I've tested this theory on the phone with in-market shoppers. Spoke to a nice gentleman on the phone the other day. He had submitted purchase requests for a Honda CRV, Toyota RAV4 and a Subaru Forrester. He was genuinely unsure about what to do. He submitted at our site because his request at another site went "unrequited." That is, the dealer didn't call him. Because our "lead" was a duplicate to the same dealer, I told him he was out of luck with us as well, because his request would be de-duped, so he would not get a call. He asked my opinion and after some discussion he made his decision. I emailed and called the nearest dealer on his behalf and he bought the car, cash, the next day. His major concerns were, "my wife wants the moon roof and, David, do you think I should get an alarm?" I told him to get the moonroof, lose the alarm. You're in Arkansas.
The question in the aforementioned example (quite common by the way) is, what happened to the Ford, Chevy, and dozen other competitors of the small SUV world? He went straight to the aforementioned products because he was familiar with them and narrowed his decision quickly.
What To Do?
I like to say that it is easy to criticize the status quo. The hard part is to offer a sane, reasonable solution. We do this often but fight up the slippery slope of 80 years of Ad history. Direct consumer contact is expensive. Internet leads are expensive and they are "going to buy anyway." Calling consumers is inefficient. Mass marketing is cheaper on cost/thousand.
My response is simple...what do you do when nothing else works? We continue to educate about the in-efficiencies of both mass marketing vs. direct. Each have their place but properly applied, neither is expensive. Don't use mass to solve one to one ills...and vice versa.
More on this later...
Thursday, February 24, 2005
Hunter S. Thompson...thanks for the Laughs, Thrills and Chills
H. S. Thompson in 1977...with the trademark cigarette and holder...unequalled.
I promised myself that I'd only write about automotive topics in this blog...but every now and then, something happens that has a profound impact and I think H.S. Thompson's passing is one of those. Known to some as Raoul Duke in the Doonesbury cartoons, HST was a larger than life figure with an outsized appetite for life...essentially invented a style of writing known today as gonzo journalism. Whether you like him personally is beside the point; his style has influenced an entire generation of writers. I vividly remember the first time I read my first HST paragraph...the opener to "Fear and Loathing in Las Vegas"
Although he wrote mostly about sports and politics, his most famous screed, "Fear and Loathing in Las Vegas" is actually about....covering the "Fabulous Mint 400 bike race." Although...the race is lost somewhere in the mind-bending prose.
If you don't know him, or have never read him, here's my advice. Go to Amazon...or better, go to your local book store and read the first page of "Fear and Loathing in Las Vegas." If you're not hooked, move on. If the bookstore doesn't have the book...stop going there...the store is a fraud.
One of his last ideas was to change golf.
His most recent piece recommended devising a new golf game that would use guns to shoot balls out of the air rather than hitting them with clubs. - Denver PostUncle Duke...thanks for the ride...R.I.P. - 2/20/2005
Wednesday, February 09, 2005
Will Buick Lucerne Carry The Load?
The New Buick Lucerne
Buick has had a difficult time of late, fighting off encroachment into its entry level premium sedan category. Oldsmobile paid a heavy price...can Buick find increased relevancy among shoppers with the new Lucerne, introduced today at the Chicago Auto Show. Depends on how well this vehicle is executed...especially on the quality and powertrain front...because it's not a styling breakthrough (and...fortunately...it doesn't have to be a styling breakthrough)
On previous rants, I talked about how imports have won marketshare with fewer brand entries and better product execution. GM has more brands than I have fingers (ok...I'm exaggerating...but it's close). Honda, Toyota and Nissan (making a vigorous comeback now) have done very well with 2 or 3 brands, respectively (Scion being the new kid on the block for Toyota). So, Buick has its work cut out...creating distinction in an extremely crowded Sedan marketplace.
I said in the opener that styling doesn't have to carry the day. Ever notice how the Accord and Camry aren't exactly trend setters? Great executions from a quality and powertrain and ergonomics standpoint. They certainly don't overwhelm you with luxury...they beat you to death with some of the best powertrains and quality, year after year after year. So, take a quick look at the Lucerne...does it strike you as breakthrough. No. But it doesn't have to be a 300...it needs to draw level with the better premium executions on powertrain and quality.
The Good News
Buick is drawing level on quality...if the latest surveys are to be believed. On to the next challenge then...powertrain, performance and handling. I haven't driven the car, so I can't speak to that, but guys like Paul Eisenstein will quickly give us feedback on how it performs. Will import buyers drive it and say, "mmm...very nice engine...handles really well...and I've heard great things about Buick's strides in quality...I think I'll take one of these." Or, will they say..."I like it...but my (fill in name of smooth import here) is smoother and rides better." We know the Buick will have good creature comforts on par or better with the imports, so this package evaluation will be critical.
How To Attack The Imports
Although Buick would prefer to compete with Acura, Lexus, BMW and Infinity, reality is they also compete with the more premium "entry" brands like Honda, Toyota and VW. If Buick's Lucerne stacks up well, I'd attack the imports at their core...reputation for reliability and performance. Although it takes years for the market to credit quality (lagging indicator as happy Buick customers tell their neighbors about their good experience), demonstrating it loud and clear via personal experiences can make a difference on the margin...and winning market share back is all about winning at the margin. Marketing can help sway those on the fence. Traditional ads, although nice for a broad message, will not get it done. Experiental, one to one experience is key. Hit them with facts (quality data) and close them with the test drive.
Easier said than done...but as we saw in the NFL playoffs and Super Bowl, throwing deep is easy when you run successfully and your quarterback has protection...shorthand for good blocking and tackling. There are lots of good opportunities for import consumers to get personal experience with an improved Lucerne...you just have to execute when it happens.
Wednesday, February 02, 2005
How Business Gets Done at NADA?
Extensive review of the wine list at TuJacques in New Orleans. Rob Spence and Michael Nemirow consider the merits of various fermented grape products. The selected concoctions enhanced partnership negotiations all over NADA.
Rob Spence consults with me regarding the dessert menu. As you can see, I'm enthused by the possibilities.
Web Based DMS on Bourbon Street
Charles Shamblee, Founder/CEO of NeoSynergy takes web-based DMS to Bourbon Street.
For those that missed it, Charles, a former Reynolds and Reynolds executive and founder of Dealerkid (acquird by Reynolds in 2000), officially announced a new web-based Dealer Management System. What's different? Pure web application with embedded e-commerce and CRM. The evening required a "quiet" cigar celebration. Best of luck to Charles, Brian Hoecht, Allan Green and the rest of the team.
Tuesday, February 01, 2005
The Best Marketer At NADA?
Year after year, one company seems to consistently get great buzz...
Whoscalling
How do they do it? They do a great job entertaining their customers and creating interest in their company. They usually throw the most attended, "interesting" party every year. They also do a nice job promoting the party and connecting it to their business goals. Combine that with an easy to use, useful product that helps dealers save money (call monitoring and measurement) and you quickly understand why they have an aggressive growth curve.
Whoscalling
How do they do it? They do a great job entertaining their customers and creating interest in their company. They usually throw the most attended, "interesting" party every year. They also do a nice job promoting the party and connecting it to their business goals. Combine that with an easy to use, useful product that helps dealers save money (call monitoring and measurement) and you quickly understand why they have an aggressive growth curve.
