Eight Trends Shaping Digital Marketing in the Auto Industry

Automakers were among the first to recognize the value of an online presence, creating Web sites and car configurators to attract the digerati. But in more recent years, many original-equipment manufacturers (OEMs) have fallen behind when it comes to systematically reaching their customers online, instead still focusing the bulk of their marketing and managerial resources on offline marketing spending or unsystematically tapping digital opportunities. Eight trends are compelling the industry to sharpen its online game; in view of these trends, companies should take an integrated approach to fully leverage the opportunities of the digital age.

1.       Digital is key to driving premium perception. Burk analyzed 24 customer touchpoints for more than 9,000 new car buyers to better understand which touchpoints drive customers’ premium perception and hence willingness to pay. A factor analysis identified 7 core touchpoint dimensions of customers’ willingness to pay. Of these, digital experience ranked second most important, just behind live experience. Thus, while the focus on traditional dimensions such as product and retail experience remains key, OEMs need to step up their online game.

2.       The digital value chain is becoming a reality. Digital offers opportunities for OEMs throughout the value chain, going far beyond traditional marketing. For example, OEMs can and should use digital tools to gain insights into their product development and revolutionize their retail environments. Moreover, digital will play a key role in generating new leads. Clearly, leveraging digital needs to become a reality throughout the value chain; the vast majority of OEMs have opportunities to do even more than they’re doing now.

3.       Digital channels dominate the purchasing “journey.” The process of purchasing a car involves a number of phases. From awareness to consideration, shortlisting, purchase, service, and ultimately repurchase, the “consumer decision journey” (CDJ) framework describes the way car buyers move from an initial consideration to their final purchase. Throughout their journey, customers increasingly rely on digital channels, for example, checking brands’ Web sites, reading reviews, and visiting social networks and community forums in the consideration phase. Recent insights have revealed that more than 50 percent of customers make their decision online, emphasizing the importance of managing the online channel for car makers.

4.       Digital customers demand seamless integration. Our research shows that a new phenomenon is changing the landscape: customers who research online but purchase offline. These customers compare brands, obtain advice, and often also check pricing online before they move offline to the traditional retail channel to buy their car. This heavy, and growing, reliance on online information sources requires marketers to pursue an integrated marketing approach that cuts across different channels and customer touchpoints. In the future, it will not be sufficient to understand customer needs; companies must also grasp their channel behavior.

5.       Digital products can secure loyalty. The digital age is also changing the products that appear in today’s cars. Many OEMs are introducing new levels of digital content and services in their products, with an eye toward integrating the car into consumers’ increasingly online lifestyles. Given that consumer-electronics alternatives are moving into the market, OEMs are developing solutions that allow the integration of external digital solutions yet enable them to keep their position as integrator and gatekeeper.

6.       Digital sales are bigger than expected. Traditional physical retail channels still dominate sales of cars, but digital sales are becoming more of a reality, especially when it comes to used cars. In Germany, for example, five million of the country’s six million car sales (new and used) are triggered online (that is, the sales are driven primarily by online platforms). New-car sales are still a very small share of this type of transaction given the perceived risk, as well as the limited ability to negotiate prices. Even in the new-car domain, however, 25 percent of purchasers stated a preference for moving toward online channels in the future.

7.       Digital communities influence decisions. Car buyers increasingly rely on the opinion of others when purchasing a car. They go into communities and read neutral online reviews before making a decision. Therefore, it becomes essential that OEMs actively manage their presence and discussions in various online communities. Many OEMs have already realized this opportunity and educated teams to follow the discussions and provide input when needed.

8.      Digital communication needs to be strategic and comprehensive. While many inspiring examples of digital-marketing success exist in the automotive industry, only a few players have begun to approach the online opportunity from a holistic perspective. Although having a YouTube channel or an innovative app is a good starting point, in the end, only a systematic approach will allow companies to capture the full potential.

As these eight trends demonstrate, digital interactions increasingly influence consumer decision journeys when it comes to shopping for and buying a car. In consequence, OEMs need to address this new behavior systematically. In addition to these eight trends, going digital can significantly reduce an automaker’s channel costs and its expenses associated with loyalty programs and customer-relationship-management initiatives. Given their advantages, digital media have overtaken traditional options with respect to effectiveness, and OEMs are using them heavily. During the next few years, we believe digital-marketing budgets in the automotive space will experience the largest increases in the industry.


Executive Leadership

Mr. James Moore

Mr. James Moore

Mr. David Solomon

Mr. David Solomon

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