Time for Auto Marketers to Step On the Digital Video Gas Pedal

As J.D. Power and Associates holds its 2012 Automotive Marketing Roundtable this week, I thought it would be timely to  share insights into consumer behavior patterns that are causing marketers to shift more of their advertising dollars to digital video. 

With consumers spending more time on Internet-connected devices, this gives auto marketers a huge opportunity to leverage the digital screens to deliver richer, more interactive and more targeted video ads. There is also evidence that traditional beliefs about the digital auto purchase cycle are flawed, incentivizing auto marketers to move additional digital ad spend into video.

Consumers today watch massive amounts of video content on their PCs, smartphones, tablets and connected TVs, but auto marketers will still spend roughly 20 times more on TV than on digital video in 2012 (based on overall ad spend from eMarketer, April 2012). While significant, this spending gap is closing.  eMarketer estimates that digital ad spending in the auto category will increase nearly 20% in 2012, and video is the fastest growing vertical within digital advertising.

There are some clear benefits that digital video advertising presents to auto marketers looking to reach audiences beyond traditional TV. Interactive video ads on PCs, tablets and smartphones take the user’s experience to the next level. Examples of interactive video ads could include designing a custom version of the vehicle featured in the video ad, sharing on Twitter or Facebook, exploring a map of dealers near a user’s current location, or, if the video ad is on a smartphone, clicking to call the dealer nearest to your current location. All of these actions can take place on top of the video ad itself so the user’s flow is never interrupted.

Digital video ads are also more targetable and measureable than they are on TV. Auto marketers can utilize the audience reach of an ad network or exchange and layer on either first- or third-party data to ensure that their video ads are shown to users who have demonstrated an intent to purchase a particular make, model or type of vehicle.  All of this is being done with ease and at scale today.

I predict that additional auto marketing spend will shift into digital video from digital display, as flaws in traditional beliefs about the automotive purchase cycle become exposed.  Consider the following studies addressed at AutoTrader.com’s Interactive Advertising Summit this past June:

 

  • AutoTrader.com tracked the online behavior of 865 new car buyers from the first time they visited AutoTrader.com to their actual in-store purchase of a vehicle, and found that 79% of new buyers bought something different than their most-shopped vehicle (the switch between minivans and coupes was not uncommon). (Source: 2012 AutoTrader.com)
  • J.D. Power found that, on average, the number of vehicles considered by shoppers five months from purchase is two; three months from purchase is 2.3; and during the last month before purchase is 3.5. (Source: 2009 J.D. Power & Associates Web Site Performance Study)

These studies demonstrate that a “click” to an auto manufacturer or dealer website essentially means nothing. I believe auto marketers that have traditionally spent the majority of their digital budgets on direct response or performance-based digital display advertising will begin to realize that the branding power of video is far more effective in driving sales.

If car buyers are ripe for persuasion right up to the point of purchase, what better way to influence an undecided buyer than through the branding power of video? In his recent keynote at the BRX Video Summit, Luma Partners CEO Terrance Kawaja extolled the dynamism of video advertising’s sight, sound and motion by asking the audience the question: “How many times has a banner ad made you laugh or made you cry?”

Tags: automotive, video
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