Jupiter Research expects US automotive online advertising spending to nearly triple between 2002 and 2007, according to eMarketer calculations. Automotive should continue to be a dominant category in online advertising, though note that leading auto manufacturers tend to currently spend only about 1% of their ad budgets online.
Even with small budgets, automakers are stretching each dollar through strategic alliances and developing their own Web sites. One in particular, Volvo, has been marketing online for nearly 10 years. I called up Volvo CRM and E-Business Manager Phil Bienert to discuss Volvo's ever-growing commitment to the Internet.
Berkowitz: What's Volvo doing with MSN Autos?
Phil Bienert: With MSN Autos, we are in the middle of a long-term agreement with them. There are two main components of that agreement.
One is the Volvo Digital Garage, which essentially is a combination of content on MSN Autos specifically geared toward either Volvo owners or people who want to get into more depth with the Volvo brand than you would just get from the typical car comparisons and things like that. It allows somebody who doesn't own a Volvo to get a little bit of a glimpse as to what it's like when you own a Volvo, to get deeper with the brand.
This is the second version, sort of version 2.0, of the Digital Garage. Version 1.0 was quite successful for us, and I think that version 2.0 offers a lot of improvements over that.
Berkowitz: What kind of improvements did you make?
PB: A lot of it had to do with a better-branded look and feel and adding more content to it than we had before. In a lot of cases, it's about bringing together elements that might have already been on MSN but might not have been brought together in a consolidated way before. In some cases, it means us making sure certain kinds of content gets sponsored and presented on MSN. That's one component, the Volvo Digital Garage.
The other component would be the Volvo Virtual Showroom, which we also were the first to do with MSN, which is a much more interactive way of presenting our entire lineup than just sort of searching through the drop-down lists of Volvos. It allows somebody to see the full lineup, which for Volvo is important because we have expanded our lineup significantly over the last few years.
We went from essentially a 4-product line company to a 9, 10, 11-car line company. We've also been going through a nomenclature change over those past couple of years.
To get the message across about the breadth of models that Volvo offers has been important to us, to communicate to people, "Look at this full range of cars that Volvo offers. Look, there's new styling at Volvo that maybe you weren't aware of before. The virtual showroom was quite important for us."
Berkowitz: That's got to be a big shift for the consumer mentality, when they think they know Volvo cars and can list the cars off the top of their heads, and now all of a sudden there are a lot more options.
PB: That's exactly right. You can always say, "boxy wagons," but we have multiple wagons, we have cross-over vehicles, we have sedans, all with entirely new style.
Berkowitz: And you've got a convertible.
PB: And we've got a convertible, and oddly, the convertible is the oldest car in our lineup. That one's only about four or five years old. It just gives you an indication of the degree of change we've had at Volvo. Being able to present our vehicles in a sort of online showroom environment on MSN has been very important to us.
Berkowitz: How were you able to tell that version 1.0 and the things you've been doing so far were successful enough that you want to keep doing them?
PB: One of the reasons Volvo's been consistently successful and in the forefront in things online compared to our automotive competitors is because we do back up everything with very specific metrics up front.
When we went into the Digital Garage concept, we identified right up front what it is we were trying to measure, such as measuring how long somebody's engaged with the content, usage patterns, click-through patterns, watching the behavior and ultimately, what has the impact been of those users on sales with sales matches. Across multiple metrics, we've been able to prove out that the concepts work for Volvo, although we're not releasing those specifics right now because it is competitive information.
Berkowitz: Are those all internal metrics you track yourself, or do you bring in any third parties?
PB: We get the tracking that comes from MSN themselves, which we believe. A click-through's a click-through.
But there are a lot of ways we can back it up with metrics on our own side. All of our Web sites are backed up with a fairly complete suite of metrics, and by basically watching the usage patterns of somebody's who coming to our site from an advertisement on MSN or coming through the Digital Garage, who is that person, tracking the anonymous session, giving them the opportunity to opt in to communications, which means at that point we can know exactly who this individual is, ultimately doing sales matches against those people who have come in from MSN.
We're able to do it pretty much with our own internal metrics and MSN's metrics.
Berkowitz: How well can you track those who are just shopping around online and then don't give any information up front but use that information from MSN Autos and volvocars.com when they go into the showroom?
PB: Essentially what we do is we intentionally build in metrics for the entire chain of what we call the purchase funnel, which is basically as somebody goes from awareness to consideration to intention to purchase.
For each one of those different stages, we build in different relevant metrics. So, yeah, to measure somebody from day one contact with a Volvo advertisement all the way to sale is virtually impossible. We build in different mechanisms to allow customers or prospects to choose to engage as deeply as they want to with the brand.
What we find, especially for a brand like Volvo, where we find a lot of people have a lot of trust for our brand and for the integrity of our company, we do get people who choose to opt in to communications at a fairly high rate compared to numbers we've seen from competitors.
We do get people who want to get more involved with the brand, who do want to pass on their information to us and begin a dialogue. It's never perfect, but you can use different metrics throughout that purchase funnel as sort of a proxy for what's going to happen at the end.
We've been doing this since 1994. We've been actively online, marketing online, so we have enough experience to be able to understand that if this type of activity's happening at the awareness level, at the very top of the funnel, we know that pretty much it's going to end up having this type of effect at the very bottom when we're into actual purchase. Backed up constantly by the opportunities we do have to do real sales matches, that makes sure that our assumptions and our models are working the way that we think we should.
It's not 100% closed-loop, but it's good enough to drive our business, to make assumptions, to make investments in the online space.
Berkowitz: Do you look into branding and those kinds of metrics?
PB: Definitely. We are constantly doing surveys on awareness, on consideration. So yeah, those things factor in as well.
Berkowitz: Since you bring it up, do you recall what Volvo was doing online back in '94?
PB: In '94, we were the first automotive and maybe the first of any type of company to do banner advertising on Hotwired, with phenomenal click-through rates. To put it into context, some of the metrics that we've gotten from the Digital Garage are close to some of those metrics we were getting back in '94 when it was us, and maybe IBM had a banner ad somewhere too.
Berkowitz: It was a lot simpler then, wasn't it?
PB: Oh yeah.
Berkowitz: Where else is Volvo marketing online?
PB: We have agreements right now with MSN, we are doing business with AOL and Yahoo!—so, the three portals. Plus, we're on a number of the auto-specific sites, which primarily are handled in our annual up-front media planning. But our really big strategic types of deals tend to be with the portals.
Berkowitz: Why's that?
PB: Generally, they can bring more things to the table because they're not specifically just about an auto transaction. They can bring both a wider audience that is maybe not necessarily specifically focused on purchasing a car in the next three months. We can leverage the expertise they have about their audience, and generally they can bring more variety to the table.
Berkowitz: Taking a look at volvocars.com, what are the most popular things visitors are doing there?
PB: For us, we know that the two things that customers come to our site for are fast access to accurate information, so they go to specs a lot, and they want us to facilitate the transaction. Those tend to be the two things that people gravitate to the most, so that's what we tend to focus on—not to say that we don't focus on other things.
Certainly, branding is important, as is getting across the appropriate messaging for each vehicle, but we do know the key is to get those basics done first.
