Social media influencers and automotive ads: A 50-50 marriage proposition?

Social media influencers and automotive ads: A 50-50 marriage proposition?

Social media influencers are the new trend for product marketing, be it small-ticket purchases like mid-range smartphones, or the big-ticket purchases like automobiles. In the last couple of years, with the boom of social media marketing, several automobile OEMs are roping in social media influencers for their vehicle promotion, going off-road from the traditional reliance on movie stars or sports stars. Is this strategy helping auto companies? Autofintechs tries to look for the answer.

“Stopping advertising to save money is like stopping your watch to save time.”

This was said by Henry Ford, the founder of the Ford Motor Company.

The modern-day automobile industry follows this religiously and spends billions on their marketing and advertising campaigns. With social media becoming a key component of automotive marketing, top automobile brands across the world have turned to platforms like Facebook, LinkedIn, Instagram, Youtube, Twitter etc to reach their core demographic.

Let’s take a small slice of the global automotive advertising picture to understand the growing importance of social media marketing and advertising for the automobile industry.

As a study by the eMarketer reveals, the US automotive industry’s digital ad spending in 2019 was around $15.91 billion, which was 15.8% higher than its 2018 spending of $13.74 billion.

Automotive Digital Ad Spending in the US, 2016-2020

Automotive ads accounted for 12.3% of total US digital ad spending in 2019. It was the second-highest digital ad spending vertical in the country last year.

In India as well, the digital ad expenditure of the auto companies are growing rapidly. The Indian auto industry’s ad spending on digital advertising has increased from 12% in 2018 to 16% in 2019, reveals research by Statista. However, the Indian auto inc’s ad expenditure was still ruled by the print media and television ads at 46% and 28% respectively in 2019.

Digital influence on auto buyers
Source: Bain & Company

Maruti Suzuki, the biggest carmaker of India, allocates 35% of its marketing budget on the digital domain, as revealed by Shashank Srivastava, Executive Director, Marketing and Sales at MSIL in an interview. He also said that, nowadays, 84% of potential customers come with preliminary online research. So, the automobile OEMs need to plan their strategy for a seamless transformation as online advertising is a key to bring new leads into the dealerships.

Among the digital advertising formats, video is a strong growth area for automobile companies. The US automotive digital video ad spending grew by around 21.7% to approximately $5.19 billion in 2019. In 2020 as well, the US auto advertisers were projected to spend $6.22 billion on the video ads. However, the Coronavirus crisis has changed this picture in 2020.

Digital influence on Indian auto sales
Source: Bain & Company

When we talk about the digital media advertising, social media platforms like Facebook, LinkedIn, Instagram, Youtube, Twitter are playing a key role for the automakers to target and influence both their potential and existing consumers. In the last couple of years, besides posting regular advertisements, the automakers are also roping in a new clan for their ad campaigns.

Rise of new clan: Social media influencers

Gone are the days when movie stars and sportspersons used to dominate the ad arena for the brands across different domains, including the automobiles. There is a new clan called social media influencers, including Tiktok stars, Instagram stars or Youtube stars; who are dominating the digital space, not only with their unique contents but with promotional videos for different brands as well.

Social media influencers have come up as the new trendsetters, as the consumers, in general, treat them as more trustworthy, approachable, and interactive as compared to the tinsel town stars. Realising this trend, the automakers are increasingly including these social media influencers in their marketing strategies to reach the current and new customers.

Social Media Influencers
Automakers like Hyundai, Renault, Nissan, BMW Motorrad have been seen roping in Instagram stars, Youtube stars to promote their vehicles like Venue, Captur, Kicks or the G310 series motorcycles respectively.

More than 73% of car buyers research online and on social media when considering a car purchase and many of them already know several details about the vehicles. Instead of putting a popular face from film or sports fraternity for a 50 seconds commercial, a drive review with a commoner and more relatable face does the trick to make an advertisement more trustworthy to the potential buyers.

In the recent times, automakers like Hyundai, Renault, Nissan, BMW Motorrad have been seen roping in Instagram stars, Youtube stars to promote their vehicles like Venue, Captur, Kicks or the G310 series motorcycles respectively.

Avik Chattopadhyay, former head of marketing, product planning and PR at Volkswagen India and founder of Expereal India, says, “These influencers assure three things to a marketer – accessibility to a prospect, relevant engagement with the prospect and 24×7 engagement. Therefore, using them to promote a product works better as the campaign can be targeted, measured, and constantly improved upon.”

The rise of this celebrity clan is fueled by two trends that are working in parallel and feeding into each other. These trends are the increasing content consumption on digital social media platforms and decreasing credibility quotient of celebrities endorsing high-ticket products like automobiles.

The extensive usage of traditional celebrity figures by multiple brands in the past have lowered their differentiation potential. This too has played a key role behind the rise of the social media influencers and their marriage with automotive brands’ marketing campaigns. Besides that, higher cost efficiencies, higher local reach and impact of a regional influencer, easier navigational capability in crisis scenarios like controversial backlash, effectiveness and benefits of a fresh face are the other reasons that are driving the auto companies to tap this new influencer clan to promote their products and services.

Effectiveness of social media influencing strategy in India

If we look at the domestic sales numbers of the Hyundai Venue, Nissan Kicks and Renault Captur, only the Hyundai Venue compact SUV has been able to fetch a significant sales number, after being launched in May 2019. On the other hand, the other two models Renault Captur and Nissan Kicks that used the social media influencers have been in the Indian market since November 2017 and January 2019 respectively, couldn’t cross a yearly sales number of 4,000 units even.

Owing to the flagging sales, Renault India has discontinued the Captur, which was projected its flagship SUV in the country during its launch. The Renault Captur never really got a foothold in the Indian market.

ModelsLaunchFY18FY19FY20FY21 (YtD)
Hyundai VenueMay 2019NANA93,62420,372 (- 78.20%)
Nissan KicksJanuary 2019NA2,6913,141 (+ 16.70%)424 (- 86.50%)
Renault CapturNovember 20172,3573,542 (+ 50.30%)719 (-79.70%)No Sales
BMW G310 R/GS *July 2018NANANANA
* Granular data of BMW G310 R and G310 GS not available.

Hyundai Venue has sold 1,13,996 units in the domestic market cumulatively, since its launch in India. Nissan Kicks SUV has sold 3,565 units so far, since its introduction in India. On the other hand, the Renault Captur SUV had sold 6,618 units in the Indian domestic market before being discontinued.

These numbers certainly raise the question, how effective was the strategy to rope in social media influencers to promote these cars, especially for the Nissan Kicks and Renault Captur.

Social media influencer vs Celebrity: Economic viability

Social Media Influencers
More than just economic viability, it is the effectiveness and the perceived genuineness of the entire trend.

For the auto brands, roping in social media influencers for their advertising campaigns is much more viable economically rather than spending on ads featuring a celebrity. While a single tweet by a celebrity campaigner could cost the marketeer between Rs 10-25 lakhs, a regional or social influencer may charge between Rs 10,000-1 lakh for the same.

Also, more than just economic viability, it is the effectiveness and the perceived genuineness of the entire trend. Therefore, the returns on such investment is definitely higher than the conventional celebrity endorsements, say experts.

Rahul Singh, Head – Marketing Transformation (Automotive), Nomura Research Institute, said, “At a tactical level, one is not able to calculate which worked better apart from a comparison of reach, but influencer marketing is not just about reach, but about convincing and aiding in consideration.”
He also said that this strategy also helps in micro-targeting basis geography and to drive lower-funnel objectives.

Return on Investment (ROI) factor

Despite the better economic viability, Return on Investment (ROI) is an important part at which the automotive OEMs look while roping in a social media influencer for its product promotion.

money, grow, interest
Influencers can be considered as a tool to boost the ROI of overall marketing expenditure.

While a direct ROI of social media influencers is difficult to ascertain, the conversion of leads or prospective buyers connecting with a specific influencer can be measured. Brand association, advocacy and other brand objectives depending on the campaign as well as the auto brand can be considered as part of ROI.

Each influencer creates a funnel of interested people, who may turn out to be a potential buyer of the specific vehicle. There is a major role of the OEM to engage with the interested people touched by the social media influencer and convert them into a prized consumer.

So far, the influencers can be considered as a tool to boost the ROI of overall marketing expenditure. This is because the majority of OEMs don’t have a system in place to understand causality or even the impact of each medium in the decision-making journey.

Talking about the ROI of using social media influencers for the marketing campaigns, Nomura analyst Rahul Singh said, “Influencers are used to enhance customer trust and awareness. People find advice from auto experts, enthusiasts important in purchasing a vehicle. Especially millennial target groups who do not believe in traditional ads would rather go by influencer reviews.”

He also added that the ROI of social media influencers ranges from 10-50% in short or long term brand surveys. “If the OEMs have robust Martech solutions implemented and uses tools tracking the entire consumer journey, then it’s possible to determine ROI not only for influencer but entire marketing mix,” says the Nomura analyst.

Bottomline

social media marketing strategy
Car sales , the use of laptop orders

Social media influencers have become a key part of the product or service promotion strategy for different companies across domains, be it a small startup or a major conglomerate. The large-ticket products like automobiles too are not out of this changing tide. In that case, it can be surely said that considering all the aspects, social media influencers will surely take a key role in the auto companies digital marketing strategies in the coming days.

Also Read: Tesla in India: Key facts you need to know

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