Automotive sanitizedFunnel Impact survey

April 2006

Communication within automotive sector…

In Automotive, there are several important communication moments…

On-going brand

campaigns

(New) makes/ models

Open doors (entire dealer

network)

Initiatives of dealers

(new showroom, opening, …)

Auto-fair (big –small)

Addressed

Unaddressed

ATL

++

+

+++

*customers prospects

++

+++

+++

++

+++

+

+

++

+++

+

+++

+++

Recurrent customers

relation campaigns

(e.g. winter promotion)

Current media pressure

+++*

-*

-*

Every communication needs a clear objective…

• For almost every communication moment in the automotive sector, addressed mailings are used but less than unaddressed communication or ATL

• However, addressed mailings are the ideal media to attain the following objectives:

• cross-selling of new customers (second car – accessoiries)

• loyalty building

GET

GROW

AVOID LOST

• recruitment of new customers (very specific groups)

• traffic generation

• improve brand perception / product perception

Rei

nfor

ce im

pact

of A

TL

cam

paig

n s

Automotive pilot campaign and market research setup

• Addressed (one model)• Unaddressed (multi models)• ATL: television, radio, affiches, magazines/newspaper

• Test media effectiveness on promoting the brand in the context of the Auto Fair

• Compare the impact of targeted addressed mailing focused on one model to unaddressed folder with general content

• Compare addressed and unaddressed mailing to ATL campaign

• Families with children

• 1500 phone interviews• Group 1 : addressed + ATL (N=500)• Group 2 : unaddressed + ATL (N=500)• Group 3 : ATL (N=500)

Media

Objectives Marketresearch

Methodology

Target group Market research

Key messages

• The market research shows that addressed and unaddressed mailings have clear impact vs. ATL:

1) Addressed mail has significantly higher recall rates than unaddressed and ATL (37% vs. 21% and 26% respectively)

2) Addressed mail increases consideration to buy with 17% compared to unaddressed

3) Both mailings improve brand perception vs. ATL only; unaddressed has highest impact

4) Both addressed and unaddressed are better perceived than ATL

• The ROI calculation shows a positive ROI for addressed mailings

Key message 1: addressed has 76% higher recall rate than unaddressed

"Do you remember seeing a make X ad?" "Where did you see the ad?"

Percentage of respondents

• Addressed has 76% higher recall rate than unaddressed mail (37% vs. 21%)

• Addressed has 42% higher recall rate than ATL (37% vs. 26%)

• * Television, Internet, Radio, Affiche or Magazine/Newspaper

Source: Market research on 1500 Belgian households

• Unaddressed

• Addressed

• ATL only*

21

37

+76%+76%26

+42%+42%

Key message 2: Addressed Mail leads to highest consideration to buy Percentage of respondents

Unaddressed

Addressed

ATL only

Product funnel

Awareness Familiarity Consideration

"Do you know make X?"

"Are you familiar with make X? Could you name some models?"

"Would you consider buying an make X?"

99 65 28286666

99 70 31317171

99 73 24247474

18

+17%+17%

22

17

+24%+24%

• Source: Market research on 1500 Belgian households

• Addressed mail increases consideration to buy compared to unaddressed by 17%

• Addressed increases consideration to buy compared to ATL by 24%

0

20

40

0

20

40

Key message 3 : addressed and unaddressed improve X brand perception on most attributes testedPercentage of respondents

Reliable make

Make for people like me Wide offering

of models

Great designSport car

Innovative make

Young and modern make

Make I know well

Good value for money

"To which extent do you agree with the following statementsconcerning make X"?

Rating on a scale 1 to 4*; Percent completely agreeing (Percent of 4)

ATL only

Addressed

Unaddressed

• Addressed and unaddressed mail improve make X brand perception on most of the tested attributes

• Unaddressed has a higher impact than addressed on several brand attributes

• Possible cause of differences in addressed and unaddressed brand perception: different content in addressed (one model) and unaddressed (range of models)

• *1: I completely disagree, 2: I somewhat disagree, 3: I rather agree, 4: I completely agree

Source: Market research on 1500 Belgian households

I like the ad/mailing

0

10

20

30

40

50

The ad/mailing was

credible

The ad /mailing was

interesting

The ad /mailing was

convincing

The ad /mailing was creative

• * 1: I completely disagree, 2: I somewhat disagree, 3: I rather agree, 4: I completely agreeSource: Market research on 1500 Belgian households

Key message 4 : Addressed and Unaddressed have better media perception than ATL Percentage of respondents*"To which extent do you agree with the following

statements concerning the ad for make X?" Rating on a scale 1 to 4*; Percent completely agreeing (percent of 4)

• Unaddressed is better perceived than ATL on 4 out of 5 attributes

• Possible cause of differences in addressed and unaddressed media perception: different content in addressed (one model) and unaddressed (range of models)

• Addressed slightly better perceived than ATL except on "the ad/mailing was interesting"

Addressed

Unaddressed

ATL

Approach to assess media return on investment

Key principles of ROI calculation

• Assessment based on long-term media impact on purchase rate

• Impact on purchase rate estimated as relative increase in "consideration to buy" vs. ATL only observed in market research*

• Revenue impact calculated on full-year make X revenues

Objective

• Assess return on investment for addressed and unaddressed mail

• Assess impact of changing weight of addressed mail in media mix

• *E.g., 5.7% increase from 17.4% to 18.4% "consideration to buy" leads to 5.7% increase in purchase rate over long termSource: Market research on 1500 Belgian households

Addressed mail has higher ROI and net margin impact than Unaddressed mail

• ROI of addressed mail higher than unaddressed (245% vs. 185% respectively)

• Addressed mail should be leveraged where possible

Unaddressed (+ ATL)

Addressed(+ ATL)

185%185% 245%245%

Margin impact

Campaign cost*

Net margin

impact

23,8

8,3

15,5 71

29

100

ROI= Net margin impact /

campaign cost

Media impact on profit marginAll values are normalized assuming margin impact addressed = 100

• *Based on X mails per year Source: Market research on 1500 Belgian households

Conclusion

It is interesting to send more addressed mailings (in the context of the Auto Fair because)

• Addressed mailings lead to the highest content recall• Addressed mailings lead to the highest consideration to

buy • Addressed mailings improve brand perception• Addressed mailings have better media perception than ATL• Addressed mailings generate the highest ROI