Negative Buzz Increases Post Launch of “Cash for Clunkers”

In the two months prior to the official launch of the CARS (Car Allowance Rebate System) program, 10.5 percent of all discussions were positive, while an additional 10.7 percent of the discussion focused on actual intent to purchase a car through the Clunkers program. On the other side of the argument, 7.9 percent of the discussions were negative, containing sentiments like this New York Times blog comment:

“The worst part about this program is that the government is encouraging people to take on more debt. Those clunkers are mostly PAID FOR. Why on earth are we telling U.S. citizens to go and take out another big loan on a depreciating asset? It’s absolutely ridiculous.”

While positive sentiment around the U.S. government’s program outweighed the negative in the weeks prior to the launch of the program, bloggers began to shift their opinions in the week following the official launch, with negative buzz increasing to 10.1 percent of all discussions and conversations that focused on purchase intent fell to 7.1 percent. As the program quickly ran out of money, negative buzz again increased, growing to 11.4 percent while intent to buy continued its downward trajectory, this time falling to 6.1 percent of all CARS discussions online.

CARS.gov Attracts the Wealthy

Online visitors were also heading over to the government Web site created specifically for the program, www.cars.gov. Month-over-month, unique visitors to the site increased 733 percent, from 287,000 unique visitors in June 2009 to 2.4 million in July. Unique visitors between the ages of 35 and 49 were 35 percent more likely than the average Internet user to visit cars.gov. Contrary to what many may assume, visitors to the site also over-indexed among the wealthy. People who make between $100k and $149k were 33 percent more likely to visit the site, and visitors who earned over $150k were 36 percent more likely to visit the site in July.

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Findings & Analysis:

• Total diesel buzz decreased 28% from June ‘08 to June ‘09, while diesel fuel fell by $2.15 per gallon or 45%
• Domestic trucks and German cars are most prominently mentioned within diesel buzz
• Mercedes-Benz and BMW are gaining share of diesel discussion
• Some consumers believe there is more potential opportunity for diesel in the U.S. market, particularly if original equipment manufacturers repurpose their small, fuel-efficient European offerings.

For more, download Nielsen’s Automotive Industry Overview: Diesel Focus

Julie Enzweiler,  Automotive Research Director, The Nielsen Company

SUMMARY: In economic terms, the auto industry was hit by the perfect storm: high gas prices, tight consumer financing, plant closings, brand reductions, dealership pruning, employee layoffs, longer vehicle retention, surplus inventory, manufacturer bankruptcies and waning consumer confidence. Despite a 37% decrease in total auto sales over 2008, bright spots persisted: the redesigned Forester revved up Subaru sales while price leaders Hyundai and Kia gained traction from new models. Online media has changed the rules of the road for auto marketing by placing consumer generated media squarely in the driver’s seat.

Unprecedented. Unbelievable. Unfathomable. The state of the auto nation is shaky at the moment, but all is not lost. Offsetting the unrelentingly negative news are 2009 highlights like a 69% spike in Sorento model sales, a 48% increase in Sedona sales, and the successful launch of the economically-priced Hyundai Genesis and Kia Soul, both targeting younger drivers.

Conversely, luxury vehicles that attract middle-aged consumers managed to outpace the market, although the category experienced a long tail effect, a two to three month delay from shopping to closing the sale. Only one domestic car manufacturer—Lincoln—outperformed the market, even though sales remained in negative territory on a year-to-year basis.

Fueling sales

The Nielsen online panel, comprising 250,000 individuals representing the U.S. online population, detected another hopeful sign for new vehicle sales based on Internet new vehicle shopping patterns. While online new car shopping downshifted by 9%, this represented a mere fraction of the precipitous 37% sales decline, suggesting the existence of pent-up demand. Consumers sought out roadworthy vehicles like the new Ford Fusion, proven gas sippers like the Toyota Prius and Honda Civic, or buttoned up their wallets and opted to maintain their current car or buy used.

Foreign automakers benefited disproportionately from escalating gas prices because of the consumer perception that their vehicles—especially hybrid and diesel models—are more fuel-efficient. German and Korean automakers realized the largest gains in online vehicle shopping activity, posting 1.7 and 2.2 percentage point share increases respectively, while their U.S. counterpart slid 5.5 percentage points. The Volkswagen Jetta and CC models, BMW 1- and 3-series and Mercedes-Benz E class were among the variants driving shopping inquiries.

Model behavior

Sport utility vehicles, with some 61 models available, continue to hold the “most shopped” position and rank number one in the U.S. for share of new vehicle shopping. Although activity waned with rising gas prices, consumers appeared to be hedging their bets, shopping longer in the hopes that gas costs would plummet and justify the purchase. And while the government is putting pressure on automakers to reduce these larger vehicles from their fleet, demand at the moment is not supporting this mandate.

The biggest disappointment among model types proved to be the basic economy vehicle, which peaked with a nearly 30% online shopping share in May 2008 when gas prices were at the highest (around $4.00/gallon), and dropped to half that a year later when gas prices declined to about $2.00/gallon.

Upper middle car models like the Fusion, Camry, Accord and Altima maneuvered into the second most shopped segment by April 2009, with hybrid variants moving the sales needle. Hybrids remain an exciting, but emerging segment, as consumers wrap their heads around the concept and take their time investigating the genre. Luxury entrants cruised along with steady sales, experiencing a boost from the Hyundai Genesis introduction. Luxury models attract aspirational buyers who savor the shopping experience and take their time to consider price before taking the plunge, elongating the buying cycle.

Trading places

Rankings of the Top 25 automakers based on online shopping activity wheeled in some interesting changes, with Kia jumping 11 slots from number 24 last April to number 13 in

April 2009. Volkswagen leapfrogged seven spots from number 15 to number eight courtesy of the CC—their most-searched vehicle on the Internet. The redesigned Forester sparked consumer interest as well and elevated Subaru to the number 22 slot, up from 27.

Saturn fell out of orbit, dropping 13 spots to number 23, followed by Buick’s 12 point decline, GMC’s six point downslide and Pontiac’s five point plunge. A heads-up to Volkswagen, the beneficiary of online buzz over the curvy CC: while initial online interest spikes rapidly, it can quickly taper off. The trick is to sustain interest over time and keep the vehicle top of mind with prospective buyers.

Setting your sites

The auto industry enjoys a relatively unusual electronic landscape, with a host of powerful, established third party shopping sites available to consumers like Yahoo! Autos, Kelleybluebook.com, AutoTrader.com and cars.com to name a few. Manufacturer or OEM web sites need to maintain a polished look and feel with robust content to stay in the game, offering complementary information and highly interactive features like build-a-car customization tools, 360° rotating car views, dealer information, engaging games that keep customers returning to the site, virtual experiences, testimonials and incentives.

While 86% of online shoppers rely on third party sites for price information, OEM sites are the preferred source for visualizing build-outs, researching special offers and obtaining financing information about tax incentives, special offers and government programs. The combined use of both third party and OEM sites actually enhances the consumer shopping experience, providing complementary rather than competing information.

Value of video

Kia Soul, one of the year’s most successful launches, earned kudos for an exciting web site that features techno pop music, robot animation, a personalized video from the chief designer about his “rhino with a backpack”  vision, a floating picture gallery, build-a-soul feature and “Escape from Hamsterdam” game, which leverages the primary advertising visual—hamsters. Of course, the under $14,000 price tag and 31 MPG green angle helped jump start things.

Video streaming is playing out across the computer screens of America, with 124% annual growth overall, and a turbocharged uptake rate of almost 200% for Ford videos. At last count, there were more than 80 million videos available on YouTube, and that video library is growing by some 200,000 clips per day. Nothing engages consumers like real-life clips from owners and test drivers sharing their experiences. In addition to posting videos on OEM sites, manufacturers can enhance both reach and impact by pushing out digital clips to social media outlets like YouTube, Hulu, iTunes, Facebook and others.

Ad impressions

Nielsen data show local magazines, national newspapers and local radio taking the biggest hit with shrinking ad budgets, accounting in large part for the precipitous 31% downtrend in total first quarter auto ad spending from 2008 to 2009. Online ad impressions ramped up during Q1 of 2009, stabilizing at approximately five billion impressions per month during the March to May period, with a correspondingly constant spend rate of $35 million per month.

Following a classic advertising paradigm, exposures may indeed be rekindling demand. Nielsen surveys suggest that “intent to buy” is rebounding from an all-time low in the Spring of 2009 to a more historic level as seen in summer’s past. It seems that consumers have been kicking the tires, but doing so via virtual showrooms.

Listen and learn

“Listening” is the new marketing. To succeed in a multi-media world, automakers will need to engage and interact with shoppers, delivering a complete experience from initial contact through post-purchase. In the process, they’ll need to leverage the power of search and social media, developing a cadre of independent reviewers and product evangelists willing to spread the word about their cars, without filters.

Search engines represent the first point of contact for many shoppers, and carmakers would do well to influence the tone of the conversation and their placement on the page one rotation. Deploy the power of Web 2.0 on OEM sites, incorporating quotes, surveys, reviews, testimonials, buyer videos, interactive games, audio and video feedback loops, special offers and incentives that hook the consumer and give them a reason to keep coming back.

The report, released this month, found many consumers were still looking, but just not buying during the first four months of the year. However, 12 percent of the U.S. population said they will probably or definitely buy a new car or truck during the next six months, per the 250,000 U.S. adults that make up the Nielsen MegaPanel. That was up slightly from 10 percent in the spring.

Continue reading at Brandweek.

“These estimates help manufacturers and marketers better understand the markets that have ‘green’ potential, and help them focus their resources,” said Bruce Wilkinson, Vice President of Media and Communications for Nielsen Claritas. “Additionally, it helps them to plan media campaigns and determine inventory levels for each model, market-by-market.”

The research looked at the national ownership rates of high-mileage vehicles including the Honda Fit, Toyota Prius, Toyota Yaris and Mini Cooper. Using auto registration data from RL Polk and Nielsen’s PRIZM segmentation, the percentage of each segment owning these vehicles was calculated. Individual market potential then was calculated based upon the segment composition of each market.

The top ten was made up primarily of coastal metropolitan area, including Boston (4th), San Diego (5th), Chicago (6th) and Los Angeles (9th), all with populations of over one million. Two exceptions were the relatively small areas of Monterey-Salinas, CA (7th), which has a population of 234,000 and Honolulu, HI (8th), with a population of 442,000.

Places where gas guzzlers still rule the road tended toward the south and Midwest, with the states of West Virginia and Mississippi holding seven of the ten areas that had the lowest rates of green auto ownership.

Learn more about Segmentation & Targeting.

On the eve of General Motor’s bankruptcy, New York Times blog writer, James G. Cobb, asked consumers to share their experiences with GM vehicles. His personal contribution relates to family vehicles, from deep pride in his parents’ first new Chevy to a later Biscayne exhibiting various quality issues that would ultimately be cited as a reason neither he nor his family have owned GM products since.

This experiential theme resonates among consumers responding to the blog post. Within the 57 percent of consumers expressing mixed to negative experiences, many speak to excitement in their new GM family car tempered or soured by various vehicle problems.Others speak to watching vehicle quality decline over a series of GM vehicles they, family, or friends once owned.

Sentiment breakout from NYT Wheels blog post (May 31 – June 2, 2009)

With nearly half of the stories relating to childhood and family-related experiences, the power of first and early impressions appear to play a large role in shaping the current buying behavior of consumers. Seeing family members disappointed with a GM vehicle or experiencing their own frustrations with a GM model make very powerful impressions on potential buyers.

• 18 percent of memories contain first new car experiences.
• More than twice as many consumers state that they no longer buy GM products (36 percent) than those who mention currently owning or a willingness to consider owning one (16 percent).

While consumers state various reasons why they no longer buy GM – including lack of models that interest them or fit their needs – past experiences with poor quality factor heavily into this decision. Two in five experiences contain some type of quality issue, often including frequent or sometimes expensive maintenance. While these quality problems ranged in severity, several consumers also mention the dealer service experience did little to mitigate the irritation of taking the car to the shop – and sometimes made it worse.

Perceptions extend beyond experiences, and the GM bankruptcy generates significant levels of discussion outside of personal vehicle experiences. Peripheral buzz from the broader spectrum of GM bankruptcy reactions also indicates how closely consumers are monitoring the situation and if they might be more susceptible to brand advocates or detractors.

• 13 percent express hope that GM will emerge stronger and have success in the future, which speaks to opportunities for connecting with advocates as GM moves into “Chapter 1” of its new beginning.
• 10 percent discuss dealership/plant closures and other aspects of bankruptcy that impact current and former employees. Some mention knowing employees or retirees whose income or benefits have been affected.
• 19 percent state opinions about what factors were driving GM to bankruptcy.

Both personal experiences and overall perceptions shape the entire customer experience. Understanding both aspects via listening to online buzz and acting on those findings can help brands toward the goal of improving consumer perceptions.

Thanks to raves about its quality, size, style and dealer experience, Toyota achieved the highest rating of 69 followed by Honda (68), Lexus (68) and Acura (67).

Creating a positive brand image online has grown in importance because that’s where most consumers go to research their purchase decision. “Before people buy a new vehicle they are looking to the Web and social media sites,” said Julie A. Enzweiler, automotive research director, Nielsen Online.

“Auto marketers have to understand that the positive and negative comments people say will impact the sale. It can either pick up a brand up or weigh it down.”

Despite Hyundai’s new offerings and extensive advertising efforts, the brand’s rating falls lower than many other automakers because of quality issues and poor dealership experiences among survey respondents. It scored a 46. Only Isuzu (39), Suzuki (41) and Jaguar (43) ranked lower.

Kia, meanwhile, found itself in the middle with a score of 52. Price and value drove its advocacy, which is common among lower priced brands, however quality concerns dragged down Kia’s overall score.

For brands to be successful and gain advocates, Enzweiler said, “their brand pillars must resonate with consumers. If you want to be known for great quality vehicles, your top consumers need to perceive you that way. The BAQ is a snapshot in time for brands to see the lay of the land and adjust accordingly.” — Kenneth Hein

Q: An article in the latest BusinessWeek explains how program engagement and advertising effectiveness measurements are changing the way companies place their ads. How is Nielsen helping to change the game of TV advertising?
Lois Miller: Nielsen’s TV ratings have always been – and still are – an important tool in measuring how many people are watching any particular show. But those numbers alone can’t measure how engaged an audience is with that show, or more importantly, with the commercials. Understanding a need for these measurements, Nielsen’s IAG product has emerged as an industry leader for measuring program engagement and advertising effectiveness. This has helped advertisers target buys where the spots are most likely to be recalled by the audience. We’re essentially changing the currency for how ads are bought and sold.

Q: How exactly does your data help advertisers target their buys?
LM: Let’s say there are competing shows on Network A and Network B. Both have similar ratings and both cost the same. But our data indicates that the audience engagement with the program is 30% higher on Network A than Network B. Because there is a strong link between how closely viewers watch the program and their recall of the ad, airing an ad in the show with higher audience engagement will help ensure higher ad recall. In this scenario, that’s going to tip the advertiser’s purse strings toward Network A.

Q: Can’t networks use the data to their advantage to boost ad sales, too?
LM: Of course they can. While the IAG product was initially designed with the advertisers’ interests in mind, this new currency of ad data has helped to level the playing field for the networks. If a show or network might be struggling with lower ratings, it can point to our effectiveness data and argue that its audience has a strong base of attentive viewers. The network can also offer guarantees that its audience will be engaged with the show at a particular level. Not only does this help the network but is also ensures the advertiser will have attentive viewers that are more likely to recall their ads.

Q: You’re the President of IAG Automotive. How important are these effectiveness metrics for car and truck advertisers?
LM: In a time when the auto industry is under tremendous pressure, it’s more important than ever. Car companies need to make every dollar count and that’s exactly what makes our metrics so useful. If a company can spend less money on a spot that they know will be seen by a more engaged audience, then it’s an efficient use of its ad budget.

Our data can also help these car companies develop compelling and memorable ad campaigns. In 2008, for example, we saw 50% more airings for car and truck sales event ads than the previous year. That leads to a lot of ad clutter on a viewer’s TV screen and it can make it hard for that viewer to remember which automaker is offering what. That’s when effectiveness becomes the name of the game. Advertisers can use our data to see which creatives were most effective in connecting with the audience.

Just last month, Lois Miller presented the 3rd annual Nielsen IAG Automotive Ad Awards at the New York International Auto Show. A video recap of the awards can be seen here.

Some insights on the Insight

The 2010 Honda Insight is having a tough time breaking out of the Prius’ shadow as the majority of consumers often compare the two vehicles. However, keep in mind that the Honda Insight just came on the market in March 2009 while the Toyota Prius has been around for roughly 10 years. Buzz generated by the Insight’s release in March was no comparison to the attention it gained at the Paris & Detroit Auto Shows.

Shoppers, Buyers and Rejecters are turning to Twitter to tweet about their intentions and experiences. Thus far, the 2010 Honda Insight is outpacing both the 2010 Prius and 2010 Ford Fusion on Twitter.

Which hybrid has the most “positive” charge?

2010 Honda Insight online discussion is driven primarily by comparisons to the Toyota Prius. Price is frequently referenced as the Insight’s selling point; however, some do not feel that the difference in price makes up for the Insight’s lower MPG rate (compared to the 2010 Prius) or perceived lack of features. When diving into the topics surrounding the conversations around the Insight and Prius to gauge sentiment, the Insight created a more polarized view.

If consumers regularly evaluate the Insight as a potential “Prius Killer,” the Insight may fail to emerge with a unique reputation, divorced from the Prius. The perception that the design of the Insight is too similar to that of the Prius highlights the belief that the Prius is the gold standard to which all other hybrids must aspire. Insight and future hybrid cars will have to keep an eye not only on the road, but also the web to help shape the conversations of the new breed of hybrid shopper.

Recently, several online automotive enthusiast blogs have taken unique opportunities to directly engage with their audiences via live, combined chats, integrating commonly utilized platforms such as Twitter.com and the blogs themselves. This type of direct engagement shows the continually evolving potential for such enthusiast channels to form new “touch points” and influence online consumers in new ways.

On February 18, 2009, editors of the blogs Autoblog.com, Jalopnik.com, and KickingTires.com joined up for a live chat with online automotive enthusiasts to facilitate discussion and field questions regarding the viability plans of GM and Chrysler. Via their Web sites and Twitter, editors John Neff (Autoblog), Ray Wert (Jalopnik) and Dave Thomas (KickingTires), actively engaged audiences in conversation regarding this very hot topic. Again on March 18, 2009, the trio of site editors took a similar approach, but this time invited Jon Lauckner, GM’s Vice President of Global Program Management. This gave enthusiasts and consumers the chance to communicate with an industry executive responsible for a controversial and highly anticipated product – the Chevrolet Volt.

For the social media managers and marketers, as well as traditional print media, this level of direct engagement between non-traditional information sources and audiences raises significant questions regarding the power of influential blogs as a new currency for information and opinion dissemination.

- As enthusiasts and consumers gain exposure to these types of live chats with influential editors of major blogs, how can brands – automakers in this case – leverage social media effectively to equip these influencers with the right information at the right time? What type and degree of engagement is appropriate, if any?

- Does evolving communication between influential bloggers and online enthusiasts act as a harbinger for decreased influence of traditional media venues in the automotive industry? Will the opinions of traditional media editors, such as magazines, lose significance?

Consider too, that in the past year, Autoblog.com has consistently seen Web site traffic above that of MotorTrend.com, the Web site incarnation of the widely circulated monthly publication of the same name.

Over the course of the twelve month period Autoblog.com traffic trends slightly upward, due in part to strongly received coverage of the 2009 Detroit Auto Show in January. As measured by unique audience, MotorTrend.com does not show similar strength as an online information disseminator, even during the Auto Show.

Source: Nielsen NetView, U.S., Home & Work

In any case, there are growing indications that what used to be more niche information venues are now making new efforts and potentially gaining traction among consumers and enthusiasts online. For social media marketers and managers, the question becomes how to understand and leverage opportunities with these influencers. For online versions of traditional print magazines, the question may be how best to compete.