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Sunday, November 09, 2008 

Volume 4  No. 10

The JD Power Automotive Internet Roundtable 2008…Once Again the Best Event of Its Kind This Year

Or, My Tribute to ‘Gil the Crab’


Due to time constraints and lots of other activities, I’m a bit late with a blog entry on the JD Power Automotive Internet Roundtable which happened October 7-9 (once again in wonderful Las Vegas, NV), but it was, again, one of the most significant events focusing on the automotive industry and emerging Web technologies.  Indeed, given all of the carnage in the financial and automotive world, I am happy to say that both the attendance and the program topics were as populated and vibrant as ever.

The effects, influence and ways to harness the power of social media and mobile communications, also once again this year dominated the topics discussed, but this time took on a closer, more discriminating “ROI” type examination.  This year, it seems uniformly accepted that MySpace, Facebook, and social networks in general can attract attention, but in the “bottom line” thinking one would expect when very survival depends on cash flow, the question was “does this attention sell cars?”

The Wisdom of "Gil the Crab"

Given my time constraints, and the late nature of this entry, I’ll skip the overview of speakers, panels, etc. (that’s best to be found on the very comprehensive run down and video on JD Power’s own blog anyway), and get down to what was, to me, the best part of the entire event and what is representative of the current “state of the industry” as well as anything that could be discussed.   Specifically, this was when Tom Peyton  from Honda, on stage with the leaders in the social media world, recounted how, when his advertising firm introduced a comical animated “Gil the Crab” character spoof, within 24 hours the crab itself had 100,000 MySpace friends -his pointed question (which I paraphrase), “How do 100,000 losers with obviously too much time on their hands, that would befriend an animated crab, help me sell cars?” 

The fact is, while obviously the mavens of MySpace had opinions, this question was never fully answered.  How could it be, when, in fact, over 50% of the folks on MySpace are under 18 years of age, and another 15% are their parents, monitoring these minors activities.  The truth is, while questions as to visibility, brand recognition, impressions, etc. can be well documented with metrics, no one seems to able (or want ) to drill this buzz down directly to true vehicle sales caused by the buzz –that is, I guess one would assume that in this assemblage of the “best and the brightest” in social media, if they “could have” they “would have” and I can tell you that they didn’t…

So what does this observation mean?  Does it mean that the social media/social network wave has already crested?  Certainly not, as the industry continues to grow both in volumes and varieties of media and members (from the giants Facebook and Myspace, to the much more professional and specialized focused sites in various industries), its visibility and influence on adults will only increase, and so the automotive industry will only increase their present spend (indeed, it was said more than once, by more than one manufacturer, that, with overall collapsing advertising and marketing budgets, the only area that will see any increase in spend in the shrinking pie will be Internet expenditures, and of that the area that is projected to have the highest percentage increase in spending is the social media and mobile categories).   Also, what has become painfully obvious is that there is a whole new generation of consumers coming down the road a few years from now who, by there very experience, will garner most of their information from the Web (not from television, newspapers, etc), and in that, mostly from social media platforms – so experience now in how to reach these folks is of value for many reasons.

No, what I think it means, in these very challenging times, is that new marketing and promotion campaigns focused on social media, will overall, take it slow, test frequently, and require a “cleverness factor” in it all; in this new environment, it is not who can come up with the most witty, or even the most “watched,” campaign, but the institution that can mark the most provable ROI, that is, those players or institutions that can design the most effective mechanism to track metrics around a social media campaign, down to the number of “walk-ins,” “test drives” and “sales” (if that is the end objective). 

This is no big revelation or surprise really, its what everyone ought to have been doing all along, right?  But in the age of new media, large institutions in particular tend to get carried away with the hype (remember the “real estate grab” theory of the VC’s in the first Internet bubble at the turn of the new millennium) and tend sometime not to hold their folks accountable in the strictest sense of the word.  [By the way, I would hazard that the small car dealer is much less susceptible to this malady than the larger institutions, even in “free cash flow” times every promotion expenditure is designed to pull immediate traffic, and, if it doesn’t its shut down without too much delay]

At any rate, I think this new focus on direct accountability (albeit brought on by the necessity of the extreme financial circumstances), is good for the car industry, and the social media industry as a whole…it eliminates unrealistic enthusiasm, and grounds everything into a healthy reality.  “Irrational exuberance” or “tulip bubbles” help no one in the long term, and, in fact, set progress back when they inevitably fall down to earth (we are experiencing that now all too well in the credit and housing industry, no?).  

Tier 1, Tier 2, Tier 3 - Can/Must it all Work Together in Social Media?

At any rate, this current examination of ROI with a microscope may be a bit painful and impede some dramatic spending surge numbers on social media growth, but in the long run I’m confident that the picture these metrics present will, overall, as compared to other media, be correspondingly dramatic and clear.  The fact is, ROI is factor of two things, “return” and “investment,” and, relatively speaking, the investment dollars required to have an impact in new media are so small as compared to traditional advertising that the impact of a well placed effort, with a traceable mechanism in place, I think, can not help but justify itself many times over.  The question I would have liked to ask Mr. Peyton at Honda on the effect of “Gil the Crap” is this one, how much did the crab campaign cost relative reaching that many interactive responses in a more traditional media campaign?  If there are 100,000 “friends of the crab,” generated from what I’m sure was a comparatively small investment, is it not incumbent upon Honda to then have a system in place to reach out to those active participants in the humor and continue, leverage and expand the dialogue to, in fact, see just how many car sales can be grown from these seeds of a relationship.  From my perspective, the activity in generating the interaction was the beginning of the process in identifying just how many MySpace “friends” are at the bottom (as opposed to the top) of the funnel in the car buying experience (by the way, “the funnel” metaphor was used so many times throughout the Roundtable, that the term itself was theoretically “banned” by presenters mid way through the second day).  Indeed, social media means, at best for advertisers I think, that active relationships are seeded, but that, in turn, means that more effort and attention has to happen after interest generated to identify an effective ROI (or how many car sales a campaign has generated).  I would imagine that under these circumstances for the most effective end results, and accountability of ROI, automotive retailers have to be brought in from the beginning, and the traditional division of “Tier 1” (manufacturer), “Tier 2” (regional advertising association), and “Tier 3” (automotive retailer) advertising sectors have to merge together, so that while manufacturers can initiate the social media relationship campaigns, dealers would be brought in to follow-up on the emerging relationships/communications that results.  ‘Gil the crab’s” friends on MySpace can all be regionalized, so, for instance, each Honda dealer in a designated market area could have “befriended” or follow-up up on the program to maintain the identity/communication of the program, which, in turn, would have identified how many ready buyers where influenced in the mix.

But that brings up new issues and ideas, for a new blog entry… 

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As you note toward the end, the ability and will to follow up is key.

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