No doubt, the global COVID-19 pandemic has significantly disrupted industries across America, especially automotive.
While an estimated 30+ million have filed for unemployment since the spread of COVID-19, there are still more than 150 million that remain employed, along with the millions of retirees still collecting social security benefits. Case in point, it has never been more critical to make sure the right data is being used to target and reach potential car shoppers in market for a vehicle.
Even though the economy has shifted, auto marketers are under enormous pressure to maintain market share. However, budget cuts make meeting market share goals more challenging than ever. A recent Interactive Advertising Bureau (IAB) study found that 82% of marketers have adjusted or paused their ad spend for the second quarter. So, marketers are in the difficult position of having to do a lot more with less.
Covid-19 is challenging all marketers – and especially auto marketers who sell highly considered products - to try new, more effective approaches. One way to improve your advertising efficiency is to refine your audience targeting strategy.
Upgrade Your Audience Strategy
Historically, auto marketers have heavily relied upon online intent to target an in-market audience. The current reality is different though. Just because someone is shopping for a car online doesn’t mean they can afford to buy it. With average car prices hovering around $37,000, climbing consumer debt and the Covid-19 impact, marketers must navigate the new consumer financial picture. During this crisis, segmenting based on the consumer wallet is not just best practice, it’s a must-have.
But with job losses on the rise, income data isn’t enough. There are multiple dimensions that determine whether or not a consumer can afford to buy a car. Auto marketers must holistically understand financial capacity. Consumer economics matter, and marketers need to reach car buyers who have a higher probability to weather the storm – those who are in market and have:
- Income and assets: estimate of household wealth based on directly measured data from trusted financial institutions
- Discretionary spending ability: a household’s spending power after accounting for the fixed expenses of life
- Credit capacity: estimated ability to obtain credit to purchase a car
- Propensity to buy: interest in your vehicle segment, make or model
But don’t take data at face value. Now is the time to evaluate the usefulness of your targeting data. Data can be the differentiator, but it must be trustworthy and transparent. It's key to reaching the right consumers with the right offer. If you don’t know the source of your data, or if it comes from surveys that are typically unverified, then you may be alienating car shoppers and wasting your ad spend.
Prepare for a Comeback
The impact of Covid-19 is far from over. But there are positive indicators in automotive, likely driven by the plethora of 0% financing and deferred payment offers. DealerTrack data reveals that declines in new retail sales bottomed out at the end of March and have been showing improvement ever since. And leading indicators such as car shopper engagement on research sites is improving substantially. Cox Automotive reported that visits to Autotrader.com were up double digits during the weekend of May 3, while CarGurus reported that site traffic improved week over week throughout April.
And a new study by Ipsos on automotive purchase intention revealed a silver lining. Almost one third of pre COVID-19 U.S. vehicle intenders stated they are more likely to purchase a vehicle once the crisis is over. They cited their personal safety and protection as the reason for this shift. This compares to the less than 20% of consumers who showed a reduced interest to purchase – reportedly due to financial concerns.
It’s all about finding shoppers with the financial capacity to purchase or lease. While facing unchartered challenges during Covid-19, auto marketers also have an unprecedented opportunity to use data to their advantage. You can win the long game. Spend wisely and use data to reach car shoppers who have weathered the storm. Learn more about Auto Digital Targeting Segments from Equifax.