Poor Sales: Is it time for automobile industry to take the digital advertising route?

As sales continue to slide and the industry looks at ways to reverse the trend, will automobile makers now turn to digital advertising versus the more expensive traditional mediums? We ask experts

e4m by Shikha Paliwal
Updated: Jul 18, 2019 8:13 AM

It’s been a dismal year for the automobile industry, as sales continue to fall on the back of severe liquidity crunch and an overall drop in demand. According to the Society of Indian Automobile Manufacturers (SIAM), the combined sales of all automobiles fell to 1.9 million units in June against 2. 2 million units a year ago.

exchange4media recently reported on what ails the automobile Industry and how the decline in sales could have an impact on their advertising spends. While some in the industry felt a cut on advertising was inevitable, others said if sales need to be pushed, spends should go up.

This further prompts a question – Is it time for the automobile industry to shift their focus on digital advertising instead? After all, digital advertising can target the right audience, thus maximising relevance. Also, it is measurable, far reaching and a perfect avenue in times of austerity.

Industry leaders and experts believe that in certain aspects of sales, traditional media had an important role to play but the potential of the digital space now needed to be explored further.

According to a spokesperson from Mahindra & Mahindra, digital does help to personalise as well as deliver better leads at a time when the internet penetration is on the rise in both urban and rural India.

“For new brands such as XUV300, Marazzo and Alturas, we will continue to invest across medium as they are in the awareness and brand building stages. However, for existing brands, the strategy is different as they need to be salient in consumer’s mind while they are making a decision in their buying process. Hence, digital or traditional local could be the right medium, where the consumer is usually present. For example, in smaller towns, local dailies and local activation works well even today. Having said that, digital does help to personalise as well as deliver better leads at a time when the digital penetration is on the rise in both urban and rural India. Hence, it is a good option for brands to explore more than ever before,” says the spokesperson.

Perhaps, the most important aspect to take into account is how today’s consumer makes a final purchase. The annual Google and Kantar TNS report findings say that 90 per cent of automobile buyers research online to make a final decision, and in this process, video is an important aspect. The study also highlighted that 87% of those who watched online videos visited the dealership, 52%, asked for a test drive and 45% even requested a price quote. In fact, several studies have reported the co- relation between online advertising and its conversion into a sale. Therefore, the digital space could also help optimise spends.

Shamsuddin Jasani, Group MD Isobar, South Asia, agrees. He feels it makes more sense for companies to put more money on digital.

“You’ll do lesser of the big bang TVCs. You still do advertising on television but I think a lot of it is shifting towards digital, especially if you are looking at the more mass categories. Video of course makes more sense because video consumption on digital has blown up. So it will shift. Also from a performance marketing perspective, it totally makes sense when you want to test drive and people walk into your dealerships,” says Jasani.

“The sales for the last two quarters have been falling, so it only makes sense for them to optimise their spends. After optimising their spends, they will look at digital in a big way. Not only does it drive the agency, but also the performance. It can be used for both. So you will see more spends shifting towards digital,” he adds.

The DAN-e4m digital advertising report states that digital advertising industry in India is expected to grow at a rate of 32% to reach Rs.14,281 crore in 2019. The sectors with the biggest digital spends were BFSI, consumer durables and e-commerce, followed closely by the telecom sector. The automobile industry doesn’t figure on the top spenders list for digital advertising. And it seems despite some very successful online campaigns and creatives from the auto industry, there is still scope for much, much more.

Vishal Chinchankar, Chief Digital Officer at Madison World, explains in detail the clever balance that needs to be made. “While there may be a bit of turbulence in the auto industry, I believe when sales start to decline, companies shouldn’t panic and alter a brand’s fundamental proposition. Brands need to balance the communication objective between long term & short term. Though from a short-term perspective, performance & lead funnel optimisation becomes critical, but depending on the brand lifecycle, broadcast media still remains important for building long-term brand equity,” argues Chinchankar.

He further adds that the digital space is an important point of contact for consumers from the beginning to the end of a purchase. “Digital becomes critical and it’s important to cover the critical stages of the car buying journey, whether it’s the encounter stage (finding out about new launches, features), explore stage (benefits, reviews), buy stage (close the deal, start of after sales) and the share stage (creating brand advocates). And here all platforms, be it search/autoportals, social, programmatic or owned assets, have a role to play with the proportion of spends changing depending the life stage of the brand. The fundamental principal should be - allocate for long term & plan efficiently on the short-term investments,” he says.

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