AUTOINDUSTRYTRENDSInnovative strategies for segmenting and targeting auto audiences

Table of Contents

Segmenting Your Market: One Brand, Many Audiences

Competitive Activation: Targeting Unique Audiences

The Electric Revolution: A Tesla Spotlight

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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.

Introduction

Segmenting Your Market: One Brand, Many Audiences1

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.

Toyota Audience: Three Levels of Intent

Toyota Audience Segments

Segments built using Hitwise AudienceView, pulled over 4 weeks ending 8/19/2017.

*Based on likelihood to agree (+23% = 23% more likely than average to agree with the statement)

People who research Toyota cars and models

Variety of ages, but skew older, with 45-54 year olds over-indexing

the most

Wider range of age groups, between

25-54

Skew the youngest, between older

Millenials and Gen X (aged 25-44)

“My car should express my personality ”

“The technologies offered in a car’s dashboard influences my decision to buy”

“I’d pay extra for an engine with more horsepower”

People who seek out a local Toyota dealership

People who own or lease a Toyota carDescription

Researchers Intenders Owners

Age

+23% +24%

+15% +11%

+10%+9% -5%

-6%

+1%

Attitude Indexes*

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 Cars.com or KBB, which Mini-Van seekers are more likely to visit than Hatchback or SUV audiences.

Honda Seekers: Segmenting by Class

Honda Seekers – By Automotive Class

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.

Hatchback SUV Mini-Van

Largest Age Group

Marriage (likelihood to be married)

Children(most likely gender and age of children in household)

Top 3 Auto Websites

Surprisingly, Mini-Van seekers skew youngerthan those interested in Hatchbacks & SUVs

Hatchback and SUV audiences are more likely to have a male child at home, while Mini-Van audiences are 31% more likely to have a female child under the age of 2

35 – 44years old

Less likely(-1%)

Male child (+15%)

Under 2 years (+9%)

1. US News – Car Rankings2. Edmunds3. Carfax

35 – 44years old

More likely(+9%)

Male child (+13%)

3-5 years (+13%)

1. US News – Car Rankings2. Edmunds3. Cars.com

25 – 34years old

More likely(+7%)

Female child (+14%)

Under 2 years(+31%)

1. Cars.com 2. Kelly Blue Book 3. CarGurus

Mini-van seekers are more likely to use a more unique set of auto websites for research, like Cars.com, Kelly Blue Book and CarGurus

2 Competitive Activation: Targeting Unique Audiences

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:

Mazda 3 vs. Chevy CruzeCompetitive Audience Analysis

Demographics – Largest Group

Life Stage - Overlap Index .04%

.04%

.03%

.03%

.02%

.02%

.01%

.01%

.00%

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.

Mazda 3 Seekers Chevy Cruze Seekers

Age

Gender

Getting Married

New Parents

Home Buyers

25 – 34years old

Male

35 – 44years old

Female

+130%

+112%

+161%+125%

+96%

+47%

Mazda could launch an ad campaign targeted to Millennial men who are in a relationship, engaged to be married, or parents of young children – frame the Mazda 3 as the perfect car for “new beginnings.” A reliable (yet classy) car for a new family.

Chevrolet might launch a commercial targeted to Gen X women, or their husbands (a gift idea). It could depict a series of milestones: a child on their first day of school, a family home being purchased, and a Chevy Cruze presented as a gift in the driveway of their new home – a car just for mom.

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:

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 Mercedes.com 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 segmentBased on real, targetable segments we can layer a unique audience for Mercedes to reach:

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.

Future Mercedes BuyersReaching the “Soon-to-Be” Luxury Audience

Audience Overlap IndexCollege Millennials & Luxury Auto Audiences

.04%

.04%

.03%

.03%

.02%

.02%

.01%

.01%

.00%

Segments based on Hitwise Auto segments (Mercedes, BMW, Lexus and Audi) and LifeStage segment (College Millennials). Learn more about how to activate these and other audience segments here. Audience cross-tabulation pulled ove r 4 weeks ending 8/19/2017.

College Millennial Index 235 197 168 220

Life Stage:College Millennials

Automotive Make: Mercedes

Automotive Class: Luxury

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:

3) Craft the CampaignNow 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.

Audience Overlap IndexCollege Millennials & Luxury Auto Audiences

.04%

.04%

.03%

.03%

.02%

.02%

.01%

.01%

.00%

Segment based on combination of Hitwise Auto segments, Luxury Auto segment and College Millennial LifeStage segment. Learn more about how to activate these audiences here. Audience profile pulled over 4 weeks ending 8/19/2017.

14% more likely to choose a car on the basis of looks

13% more likely to drive faster than normal traffic

13% more likely to choose methods oftransportation that are friendlier to the environment

39% more likely to be career ambitious

15% more likely to be Hispanic

20% more likely to be Asian

4% less likely to be Caucasian

Mostly olderMillennials(25-34 year olds)

About 50/50male and female

51%Female

49%Male

3 The Electric Revolution: Tesla Spotlight

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.

The Model 3 ReleaseA PR Strategy To Follow

.04%

.04%

.03%

.03%

.02%

.02%

.01%

.01%

.00%

Searches for top electric vehicles pulled using Hitwise Intelligence from 6/3/2017 – 8/18/2017.

0.0040%

0.0035%

0.0030%

0.0025%

0.0020%

0.0015%

0.0010%

0.0005%

0.0000%

tesla model 3 bmx i3

smart carnissan leaf

chevy volt

chevy bolt

hyundai ioniq

Electric Vehicle Searches

6/1/

17

6/7/

17

6/11/

176/

15/1

76/

19/1

76/

23/1

7

6/27

/17

7/1/

17

7/5/

17

7/9/

177/

13/1

7

7/17

/17

7/21

/17

7/25

/17

7/29

/17

8/2/

17

8/6/

178/

10/1

7

8/14

/17

8/18

/17

July 2nd – Elon Musk announces approval of Tesla production on Twitter

July 7th – First Tesla 3 Model Produced

July 28th – Handover party of first 30 cars

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 caranddriver.com over the course of July.

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

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.

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

Sub-domain traffic share for caranddriver.com pulled using Hitwise Article Tracker, over 4 individual weeks ending 7/29/17.

Article Ranking www.carandriver.com/tesla/model-3

Page RankWeek ending July 8th

Week ending July 15th

Week ending July 22nd

Week ending July 29th

2

5

15

Page Rank

2

Page Rank

carandriver.com/flipbook/born-in-the-usa....carandriver.com/tesla/model-3carandriver.com/photo-gallery/2018-mustang...carandriver.com/reviews/2017-honda-civic...carandriver.com/photo-gallery/sleeker-2018...

Rank Article

12345

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.

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.

Tesla MotorsThe Verge ElectrekWiredThe Business Insider

12345

12345

12345

12345

20.80%8.57%7.12%

4.76%4.54%

Hyundai Motor Americadealers.car.comEdmundsYouTubeCar and Driver

36.38%10.39%9.66%6.56%5.52%

ChevroletiMotorsgmauthority.comElectrekCar and Driver

37.44%4.58%4.24%4.00%3.94%

Nissan USAYouTubeChoose NissanTwitterCar and Driver

41.36%5.96%3.86%3.06%2.24%

Downstream Traffic – “tesla 3” Search

Downstream Traffic – “nissan leaf” Search

Downstream Traffic – “hyundai ioniq” Search

Downstream Traffic – “chevy bolt” Search

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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 amongst 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.

Top Take-Aways

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