Automotive marketing in China: Time for a re-think

From IoT to autonomous-driving, technological disruption is an inevitability in the automotive category.  Meanwhile, similar disruption in marketing communications has increased the sophistication of paid, owned and earned channel touchpoints, providing greater consumer interaction than ever before. What are some of the affects and implications?

China’s upgrade culture accelerates growth

China is the world’s largest luxury car market, driving 32% of all global sales and growing at 15% in 2017. Unit sales are expected to double to 5.3 million by 2022. Whilst various sources responsible for growth exist, one key factor is the mindset of ‘upgrade’ among Chinese—driven by the unwavering desire for social recognition—which has now become a fabric of consumer culture. In fact, 75% of mass car owners (purchasing at RMB200,000 or above) look to upgrade when replacing their existing car. All luxury car growth is from SUVs, attracting 300+ launches of new SUV models, with super luxury growing at 54%. With this context in mind, communicating with consumers—when and where—become even more important. It's crucial not only to chase those with the upgrade mindset but also to do so in the proper occasions and environments.

Changing buyer profile impacts key decision criteria

The largest source of growth is the first-time luxury car buyer. The profile of this new buyer is different from that of existing owners, with a higher share of younger, female and lower-tier buyers. Currently, 61% of luxury car buyers are first-time buyers; in the next two to three years this number will be around 47%, with 60% being millennials, 42% women and 60% from lower-tier cities.

This changing consumer profile has led to an evolution of purchasing-decision factors. With more than half of the consumers being first-time buyers of luxury cars, the importance of branding has grown by 20% over the last year. However, with increasing sophistication, brand is not the only criteria; craftsmanship emerges as a critical factor, especially among younger buyers.

The consumer journey for first-time luxury buyers is also unique. One factor is the expectation of a test drive up front in the decision-making process, with the experience amplifying the attraction for a luxury car. This is a key step where the emotional meets rational. A final decision is now typically accelerated.

The consumer journey becomes shorter, faster and less planned

The consumer journey has become shorter, with total time taken declining from an average of five months to three months. So has decision-making, with the final stage taking just one week, compared with one month when measured four years ago. This reflects a change in consumer mindset. Car purchases are less comprehensively planned, as illustrated by the actual volume of cars bought being much higher than intent to buy (in the next year). In fact, those with no purchase intent have the highest share of luxury-car purchases.  

Nor are traditional life stages dictating car purchase. Current trends suggest consumers are deciding emotionally on purchase and then finding rational justifications, such as price or mileage efficiency. The real challenges in exploiting growth potential for brands, therefore, are to:

1. Be the top-of-mind brand even among the non-buyers
2. Win every stage of the consumer journey
3. Deliver customised experiences that move consumers across the journey.

Evolution before disruption: the impact on touchpoint effectiveness

Newer forms of automotive marketing communications include shopping mall showrooms and mobile communication interactions, as well as e-commerce automotive film content. Luxury cars in China, in particular, continue experiencing rapid growth. The role of paid, owned and earned touchpoints across the consumer journey continues to be a critical factor to driving awareness, interest and, ultimately, purchase. Specifically, touchpoints which have the ability to deliver a brand experience beyond static images show greater improvement. Example include brand zones found via search and experiential events.

Effectiveness of touchpoints declines, roles become more fluid

To cater to the new consumer paradigm, the roles of paid, owned and earned experiences require close re-examination. Publicis Media’s Luxury Automotive Touchpoints research of key influences to purchase shows a decline between 2015 and 2018 in touchpoints generating recall or influencing purchase. 

The implication of such a decline has an impact on investments. In the past, focusing investments on top touchpoints such as automotive verticals, television and outdoor was sufficient. Today, however, at least five additional touchpoints are required to generate a similar level of overall brand impact, recall and influence.

Key touchpoints have become important across the journey and are less confined to specific stages of the journey, such as WeChat for interactive content and conversion push. For instance, automotive verticals rank among the top three touchpoints across every stage of the journey. Television and search do move, but not more than a few ranks across the journey. This would mean the touchpoint mix would not vary much for the task. However, there would be variance in investments.

Experience delivery impacts touchpoint effectiveness

To effectively deploy touchpoints in the changing consumer environment, analyzing the strength of touchpoints' influences and the ability to build brand recall is required. Three core influence groups are created: 

1. Performance: Primarily deployed to maximise conversions

This group is led by automotive verticals, which have maintained their top influence to purchase of 94% in the category. Automotive verticals are key across the consumer journey, and therefore require a customised approach in terms of content and paid ad placement optimisation. Paid search, advertising across new verticals, and hero apps are seeing a decline in recall-building capabilities. However touchpoints that are able to deliver wide experiences, such as brand zone on search, paid social and promotional ads on mobile, witness an uplift of more than five points on influence.

2. Scale: Maximise reach across markets and audiences to build demand

This continues to be led by TV. With 13% recall, though the gap between OTV is minimal. Office LCD and cinema show potential for further improvement. Overall the key for these touchpoints is identifying the right mix to maximise reach and recall depending on the audience, market and task.

3. On-the-ground: Deliver image and real experiences

Touchpoints with the ability to deliver real experiences, such as mall showcases, as well as airport and office-building events and test drives, are proving effective, with 89% plus influence to purchase. More general out-of-home channels, such as airport light boxes, billboards and bus shelters, have witnessed declines of now less than 75% plus influence to purchase, highlighting a key to effective on-the-ground strategy in deploying integrated communications with interactive experiences. This can be amplified with traditional out-of-home media and supported by mobile for conversion.

Overall, brands must find the right balance across the consumer journey, with greater emphasis on performance channels for existing models and strong brands and greater scaled delivery for new models or challenger brands. Given this, reach amongst potential automotive buyers as a KPI becomes critical. 

Whilst this KPI is generally less used for automotive, it becomes critical given the infusion of data into plans, which allows us to differentiate between potential buyers for the category versus non-buyers. This is an important distinction to make between audiences with very different sets of views and, hence, required communication strategies.

Sources:

• Publicis Media Luxury Auto touch Points 2014, 16, & 18
• PICC Car insurance data 2016-17 & Mintel 2017 China Luxury Car Study.
• H3 China New Rich Study 2017 Demo breakdown & Future predictions from Mintel 2017 China Luxury Car Study
• Search volume from Baidu Index Jan-Dec 2017, buzz data from monthly health report, media spend from monitor tracking data (AC Nielsen + iResearch + CODC)
• Attribution study based on actual spending, last click leads from tracking database, for key auto clients.

Sameer Singh (pictured) is head of business integration, intelligence and technology practice with Publicis Media China. Chris Maier, head of intelligence and connection, and Silver Duo, head of research, both with Publicis Media China, also contributed to this piece.