The automotive industry faces a unique set of challenges caused by major changes in global markets and consumer demand. Those changes mean it’s more important than ever for automakers to have a command of the levers they can control.
Because the industry is grappling with a variety of demand uncertainties and pressure on margins, it’s important for auto marketers to measure and optimize their return on media investments. As a result, many auto OEMs have adopted marketing analytics — specifically marketing measurement and attribution — to improve budget allocation among various media channels.
Marketing attribution is the process of assigning credit to different marketing channels based on which one most likely led to a conversion (e.g., website visit, dealer visit, or car sale). When a customer sees an ad, visits a website, and ultimately shows up at a dealership, we assume the advertising played a role in the subsequent conversion. With marketing attribution, we aim to quantify the impact of each media interaction to ultimately drive better decision-making on media budget allocation — allowing us to maximize our return on investment.
For automakers and dealerships, the customer journey is increasingly complex. It’s difficult to track the customer journey — the ultimate purchase is offline, but many of the steps between awareness and consideration take place in a digital environment. It’s rare for a buyer to visit a lot, test drive a car, and rely solely on a salesperson for detailed information about the vehicle.
Most consumers conduct extensive online research before they even consider going to a dealership. In fact, one study found that two-thirds of consumers research products online before they make an in-store purchase. The customer journey is no longer linear — it zigzags from “clicks to bricks” by moving between online and offline experiences, where the ability to collect data and track behaviors are very different.
Despite this complexity, it is imperative for marketers in the auto industry to gain a better understanding of how their media channels are performing. Accurate marketing measurement through attribution and statistical modeling is incredibly important. Through sophisticated attribution models, advertisers gain useful insights into which media resonated with different audiences in terms of driving conversions. This insight allows them to improve the efficiency and efficacy of media over time — but not without challenges.
There are four key takeaways to overcome some of the most pressing marketing attribution challenges in the auto industry:
- Find opportunities for analytical insight.
Even with an abundance of data, marketers still struggle to craft strategies and tactics around where to allocate their media spend properly. By developing an analytical framework and bringing decision science into the marketing world, you can more easily sift through the data and begin to see areas of opportunity amid the complexity.
- Align your organization behind data.
Considering the increasing amount of rich data available, sales and marketing teams should incorporate any findings from your marketing attribution analysis into their strategies. It’s important to make sure your organization is aligned to understand what you’re trying to quantify.
All the analytics in the world won’t do you any good unless you align your company behind data-driven insights. You must be aligned on how marketers will make decisions based on data and insights, but you also should consider how marketers will use data to build a better picture of customers and where they are in the buying cycle. You need companywide buy-in — including with your agencies.
- Ask the right questions.
Savvy marketers recognize the questions they need help answering, and then they find the data necessary to bring about a resolution. Ask yourself how you’ll build a strong enough brand story to make people think of you when they’re in the market again. Research from AAA suggests people buy a new car every five years, on average, so it’s important to make sure your brand is top of mind when they are in the market again.
Different brands will have different questions, but all marketers should focus on today and tomorrow. Questions like “How do we get units to sell today?” and “How do we build consideration for tomorrow?” will help guide strategy, while thinking along the lines of “How much money should we allot to our total ad budget?” and “How much do we spend on paid search versus display?” will help guide tactics. Ask the right questions, then look to the data and analytics for the answers.
- Establish a strong analytical program.
As you move toward science-based decisions, it’s important to move away from vanity metrics like engagements or clicks and instead build a data-driven model for outcomes that are as close as possible to the sale. Actual vehicle sales at the dealership or dealer visitation data can help you measure and optimize media investments wherever possible.
Despite the complexity and challenges in the automotive industry, there is plenty of opportunity in the chaos. It all comes down to looking at the data already available and adding an element of decision science with a more analytical approach to the systems already in place. It can feel overwhelming, but establishing the right measurement framework will provide your business with a much better vantage point.