Online buzz crucial to China auto sales

A recent study by R3 and CIC, tried to give a quantified an answer to that question by analysing the auto sector.

The study ranks brands and models by a new metric: "revenue per buzz" (RPB). The Audi A6L model, which registered an estimated sales of US$8.2 billion and 306,000 web mentions, topped the chart with an RPB of US$26,765. Volkswagen's Passat Lingyu and the Nissan Teana, were in second and third place, resepctively.

According to the China Association of Automobile manufacturers, China has already overtaken US to become the largest auto market in the world. In 2009, auto sales surged by 46 per cent from the previous year to 13.6 million.

Georgia Zhuang, head of auto research at Nielsen China, points out, though, that the majority of Chinese auto customers are still first-time buyers without any first-hand experience, and usually put the opinion of other car owners ahead of the dealerships.

In this rapidly growing market, R3 and CIC claim internet word of mouth is important because of the "intense competition and a cultural climate of skepticism and distrust that advertisers face."

The study also looks at the sentiment of internet word of mouth (IWOM), and finds that there is a high correlation between positive and negative views. Those who are active online tend to be neutral.

Interestingly, Zhuang says negative reviews do not necessarily influence sales negatively. In some cases, they actually helped promote brands' visibility. "Cars are not like toothpaste or soap. Potential buyers in China tend to be extremely cautious in their decision-making," she says.

Having realised the importance of electronic word of mouth, many auto companies have already started tap into the bustling online communities to monitor or even create online buzz.

Autumn Guo, associate director at Ogilvy Public Relations, says last year the agency helped Volkswagen promote its new engine and transmission technology through IWOM and achieved "some fantastic results."

Bryce Whitwam, GM of Wunderman Shanghai, says the car industry can really innovate online. "It's where the automotive opinion leaders share their views., he says. "In China, which is now the world's biggest car market, cars are the number one discussion topic online. Anyone who can work out how to take advantage of that is going to be in a seriously strong position."

This article was originally published in the 26 August 2010 issue of Media.