Google Says The Old Sales Funnel Theory Is Dead For Car Marketers

Posted by: David Kiley on September 20, 2007

Google is out to change the way automotive marketers think about their basic business, and they have new data that just may do the trick.

Ask most garden variety auto industry marketing executives about the “sales funnel” and they will talk to you about a six month process during which a car buyer typically starts the cycle of buying a new car: from the first time they decide that there is a new car in their near future to the time they take delivery. This six-month cycle idea influences the way car advertisers “flight” their ad campaigns in the media, and allocate brand building ads versus retail ads meant to drive people to the dealership.

Google’s automotive practice, though, led by former Chrysler advertising executive Bonita Coleman Stewart, says their research shows that the sales funnel isn’t six months at all, but more like one month. Thirty-percent of car buyers start the search for a new car less than a week before they make a purchase. Seventeen percent start just two weeks ahead. Nineteen percent start a month in advance. That’s almost 70% of the car-buyers starting the process no sooner than a month in advance.

While it is a self-serving piece of research for Google, the conclusion, says Stewart, is that car companies should be spending a bigger chunk of their marketing dollars online than they are today.

This is especially the case with online video. Again, it is perhaps self serving for Google to be pushing online video since they own Youtube. But any fool can see that doing dynamic things creatively with online video should be a growth area for any marketer. All you need do is compare the dreck that passes for most car advertising on TV with the often funny and witty stuff you find on youtube if you search on a brand or model, and it’s obvious.

According to Google, an astonishing nine billion videos were viewed on Youtube in just the month of July. Of those, 382 million were automotive related, either created by amateurs or uploaded by car companies.

These glaring data lead Stewart to believe that as car marketers grasp the implication they are going to quickly marry up search advertising with more online video opportunities. One thing is for sure: car marketers understand, and have always loved TV, because they know people want to see and hear the cars in ads. And that’s where more online video comes in.

Stewart, a former car company “client” says that most car marketers have been looking for data that will compel them to radically move dollars out of TV and into digital. Consider that consumers are spending 21% of their media consumption online. Advertisers are only spending about 7% of their dollars online. And auto companies are only spending 4%.

“The funnel is show short that car marketers need to be engaging 24/7, and you can only do that online,” says Stewart.

Reader Comments

cad

September 22, 2007 9:16 AM

yah

Gregory

September 22, 2007 3:42 PM

Most of this market research is based on purchase requests, where, most often, three of the four options are "purchase in less than 1 month," as the lead generator needs to qualify "ready to buy" consumers. Our firm found that over 60% of customers spend over 2 months from beginning to purchase.

Regardless of the results, automotive companies are encouraged to devote more resources online as the majority of auto buyers do begin their research on the net, especially due to the pricing and cost info availability.

For a recent client focused on gen x/y demographic, our consulting firm recommended a strategy that incorporated online R&D, consumer outreach and web 2.0 marketing. There are many ways to increase effectiveness and not all of them require advertising spending with Google. Gregory is a partner at strategy consulting firm caswellsmith.com

Art Spinella

September 23, 2007 10:00 AM

As the source for the six-month sales funnel (which really isn't six months, more on that later), CNW Research has been tracking this for about 20 years. Bonita should know better because here's the reality that Chrysler was well aware of when she was there:

1. They are "stages" not "months." The use of a "monthly industry average" was devised because auto company marketers were quite thick headed in the 1980s and couldn't wrap their brains around the notion of the purchase-decision making process.

2. Some brands take far longer than others when it comes to first-thought of buying a vehicle to actual acquisition. In Porsche's case, for example, it takes only a few weeks. In a minivan buyer's case, upwards of 8 months.

3. "Why?" to point 2. Simple: It's called the family budget. You may need a new vehicle, but somehow you have to justify that $30,000 purchase and work it into the family budget.

That begins the entire process from determining what type of vehicle is needed to shopping online and off-line to reading comparisons of the vehicles to visiting a dealership to determining how much can actually be spent on a monthly basis.

ANYONE who thinks the average American spends only a couple of weeks doing this is fooling herself. Few people can afford to make a big ticket decision without some forethought. Certainly more than a week or two.

4. What Google has tracked and is attempting to use as the entire purchase process is only the final stage (of six). While this may be, in fact, a short period of time it fails to include the major battles for brand and model attention that go before it.

For example: General Motors has regained some significant ground at the beginning of the funnel but continues to lose badly at the end.

Of those people who put a GM product on their shopping list early in the process only 30 percent or so acquire a GM product.

Of those who put a Toyota product on their shopping list early in the process, better than 60 percent acquire a Toyota.

5. The Internet is used in different ways during the process.

Early on, manufacturer sites are heavily visited while third-party sites (www.kbb.com, Edmunds.com, etc.) dominate the middle stages. During the final stages, sites such as Consumer Reports, local newspaper (yes, newspaper) sites and dealer sites are heavily visited to get a fix on LOCAL pricing of the vehicle desired.

6. One major Japanese auto brand elected a few years ago to put a giant portion of its ad and marketing budget into the Internet. It suffered a whopping and "unexpected" decline in sales. Reversing course and putting more back into traditional media resulted in a turnaround in sales. The newest Jetta was introduced a couple of years back with virtually all marketing on the Internet. It was a sluggish seller until VW decided to pump up mass market media.

7. The Internet is absolutely essential in automotive marketing today. But to purposefully misstate where it fits in conjunction with other media is deceptive, shortsighted and brainless.

Is spending four percent of marketing dollars on the Internet enough or sufficient? Probably not. But Google is being self-serving rather than honest and Bonita knows it.

Again, this is a very quick overview of nearly 25 years worth of monthly tracking in REAL TIME surveys.

briangoeslive

September 23, 2007 1:00 PM

And how about the vehicle after sales service business (dealer selector, repair and parts, etc)

SAM

September 25, 2007 3:59 PM

MARKETING

doug

September 27, 2007 12:38 PM

I've been in the car business just about 25yrs!!! I'ts been my contention all along that we are in an emotional sales business. The majority buyers have an idea but will be motivated to buy on the spot!! (thats why i'ts called autmotive sales NOT clerks)

Shaun Kniffin

October 3, 2007 10:02 PM

Customers are spending more time in the funnel of more than one brand and in as many as six different manufacturer funnels. However, once they make the decision to move into dealer-land they are moving quickly and they are sending fewer and fewer inquiries to dealers early in the process like they once did. We track the time from date of inquiry to date of sale and it has declined over the past few years.

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