In a recent Compete blog, we discussed the cash for clunkers government program CARS (Cars Allowance Rebate System) and the amount of online attention it drew from new vehicle prospects, both in terms of unique visitors to the cars.gov site and to OEM sites. That attention, combined with attractive incentives to junk an old gas guzzler and replace it with a newer, more fuel efficient model contributed to a July sales surge of more than 15% month-over-month. While sales remained down compared to a year ago, the program proved to be a much needed shot in the arm for an industry struggling to get back on its feet.

But how much of that increase in OEM site traffic can we tie to back to the cash for clunkers program? Taking a deeper look at Compete’s online panel of consumers, we were able to track the number of consumers who searched for information on cash for clunkers (or some variation of clunkers) during the month of July. Not surprisingly, the number of searchers sky-rocketed during the last two weeks of the month with 1.2 million searching for information during the last week alone.

As the number of clunker searchers was going through the roof, a significant proportion of those people also visited an auto OEM site. In fact, more than one-third of overall searchers also visited an OEM site during the last two weeks of July, reaching 400,000 the final week. But the lift among OEM visitors was not as great as the overall lift among clunker searchers in general. That suggests there was a lot of curiosity in the program that did not translate into engagement with an auto manufacturer, meaning the sales contribution may have been less than it could have been.

So who benefited from all that clunker traffic? Certainly, you’d expect those automakers known for their fuel efficiency such as Toyota and Honda to get the attention of clunker searchers and in fact that was the case as those two brands led the way. A whopping 42% of clunker searchers also visited toyota.com, nearly three times the rate of Honda. But that’s not too surprising since when someone googled “cash for clunkers” the number one sponsored link was toyota.com/cashforclunkers. And as a measure of Toyota’s success, they had 3 of the top 5 models purchased as part of the program – #1 Corolla, #4 Prius and #5 Camry.

Taking it a step further and comparing clunker search share to a brand’s Share of Market Interest (a Compete measure of a brand’s share of market-wide shoppers) Toyota and Dodge interest associated with the program outperformed on their ability to attract clunker searchers. Honda and Nissan performed on par while Ford underperformed versus its shopping share

Dodge’s performance is of special interest since it doesn’t necessarily have a reputation for fuel efficiency and it doesn’t offer any hybrid models. However, Chrysler offered incentives that matched the cash for clunkers incentives which allowed them to effectively piggyback on the program. This likely helped drive consumer interest in Dodge as well as the other Chrysler brands as both Chrysler and Jeep searches also exceeded their SMI.

Ford is a different story. Its SMI has been driven to a record high 22% on the growth of the 2010 Fusion and recently launched Taurus. Yet just 15% of clunker searches also visited fordvehicles.com. It appears that while clunker searchers where interested in fuel economy, Ford shoppers have been more interested in the company’s new models.

While cash for clunkers is no doubt having a short term impact on auto sales, the real question going forward will be around its long-term effects, especially now that the program has been extended. These programs – like the assurance programs launched earlier in the year - tend to have their greatest impact in the first month of two and then taper off. And while July sales were up month-over-month they still trailed compared to a year ago. The industry’s struggles are far from over but cash for clunkers provides a needed boost. As buyers are pulled forward and inventories continue to fall, keeping the sales momentum going through the end of year will be a challenge. To best capitalize on cash for clunkers and similar tactics, automakers need to monitor overall brand and model demand as well as keep pace with search dynamics and how it drives that demand.

Suzuki ran an ad for its SX4 Crossover in 2009 that compared it to the Mini Cooper. “Mightier Than the Mini” the ad proclaimed as it spelled out how the SX4 was superior to its small car competitor. The mission was to create new demand as well as tap into exiting Mini demand (i.e., funnel pre-existing Mini demand to SX4). The ad ran once in Q1 and again in June and received significant air play. Compete analyzed whether the ad drove drive more SX4 shoppers and if so, whether it was able to capture the Mini shoppers Suzuki was targeting.

The ads appear to be generally successful in increasing SX4 Crossover demand, with some caveats. The “Mightier Than The Mini” campaign ran in Q1 2009 and SX4 Crossover shopper counts reached a period high 16,000 in March. That SX4 shopper count best occurred near when Mini shopper counts reached a period high (February). The Mini lift may be the result of Mini advertizing, though both models were recovering from fourth quarter 2008 demand lows, driven in part by the economic meltdown which drove market-wide shopper counts to historic lows. When the ad ran again in June, SX4 Crossover shopper counts improved 10% month-over-month from May, but this time Mini shopper counts fell to a period low 21,500.

While the campaign timing coincided with higher SX4 Crossover demand, the second test is the extent to which it drove more Mini shoppers to consider an SX4 Crossover. To reveal that, Compete analyzed cross-shop behavior of those same Mini and SX4 shoppers. In general, cross-shop levels are very low, suggesting that the Suzuki campaign, if successful, would generate new behavior (rather than re-enforcing existing behavior).

Cross-consideration of the two vehicles reached a 2009 high in March (the same month SX4 Crossover shopper counts peaked). The combination of more shoppers and higher cross-shop with Mini suggests the ads were successful on both target measures—the first time. In June, when the ad ran the second time) cross-consideration continued a downward path. Success is a relative term: Even at that March high, fewer than 3% of Mini shoppers also shopped a SX4 Crossover. And the period high cross-shopping came in November 2008. Mini may represent an attractive aspirational target to position SX4 against. Unfortunately, consumers don’t necessarily share that sentiment.

Instead, SX4 Crossover is shopped against other Asian small car models such as Fit, Versa and Yaris, in addition to the SX4 Sedan. Those models are consistently in the top 10 cross-shop set of SX4 Crossover shoppers. In June, SX4 Crossover shoppers cross-shopped 117 other models more than the Mini.

Suzuki SX4 – Mightier Than Versa? Suzuki SX4 – Mightier Than Honda Fit?

Mini may be an aspirational target for Suzuki to position the SX4 Crossover against. Its demand is consistently ahead of SX4’s, though Mini demand has softened of late. However, SX4 is not naturally on the radar of most of SX4 shoppers. Hence there are some additional business questions that can be used to further refine the understanding of the success and refinement of the campaign, with a goal of cost-effectively driving sales:

• If the SX4 campaign’s greatest success (March 2009) was due to Mini advertizing driving Mini demand coupled with “Mightier Than” ads channeling some of that demand to the SX4 Crossover, it would make strategic sense to time future runs of the same ad around specific instances when Mini is advertizing (such as around launches of new versions and packages). To validate, compare Mini ad spend with Mini shopper counts.
• With SX4 shoppers pre-disposed to cross-shopping other small Asian brand models, Suzuki may want to consider targeting one of those vehicles in future ads. Because cross-shop levels are already relatively high, the ads could focus on the reasons to buy an SX4 Crossover. Good targets would be vehicles with high demand, such as driven by launch-related ad spend (such as the recently launched 2010 Mazda3) and/or models with poor conversion of shoppers to buyers. Track shoppers, conversion, and sales over time to stay abreast of the best targets.

While the economy begins to show some signs of a recovery, including modest gains in consumer confidence, the auto industry continues to struggle as sales remain at historic lows. As more and more car and truck owners opt to keep their vehicles longer than originally planned, the need for auto service has grown. Among the many things that need to be replaced on an aging car are its tires. To quantify the business ramifications of this trend, Compete analyzed consumer behavior on the top tire sites as well as the search behavior of consumers that contributed to site visits.

As the economy worsened and people decided to put off buying new vehicles the need to maintain their current ride increased as seen in a rise in traffic to tire sites. Traffic to the 4 major tire manufacturer sites has increased across the board year-over-year. The biggest gainer has been Michelin whose site traffic is up 67% from a year ago. At the same time, the most visited site – goodyeartires.com – is up 19% while Bridgestone traffic is up 31% and BFGoodrich is up 6%. Traffic definitely jumped in the 4th quarter of 2008 just as the auto industry and the economy began to nose dive.

We also found that search plays an integral role in driving site traffic, but more for some tire makers than others. Nearly half of all the traffic to the Michelin and BFGoodrich sites is referred from search (Google, Yahoo!, MSN). But what’s going on with Goodyear and Bridgestone? Why does search play less of a role in driving traffic to those sites? It could be because Goodyear and Bridgestone do a better job of navigating traffic between their corporate sites and their tire sites. In fact, the bulk of tire manufacturer referrals to those two sites come from goodyear.com (to goodyeartires.com) and firestone.com (to bridgestonetire.com). For these two tire manufacturers, managing intra-brand site traffic may be as important a marketing tool as search.

So what happens after someone reaches a tire site? You can shop and you can find out where a retailer is but you can’t buy a tire at any of these sites. So it’s important to understand where prospects go once they leave the manufacturer site. Michelin and BFGoodrich visitors go right back to search, but Goodyear and Bridgestone prospects are as or more likely to visit a tire retailer site. Again, this suggests a multiple site strategy for those two brands. The primary destination site for Goodyear visitors is goodyeardealers.com and for Bridgestone it’s firestonecompleteautocare.com. Retailer destination sites for the other two, Michelin and BFGoodrich, are spread out between Tire Rack, Discount Tire, Sears, Wal-Mart and Costco. Goodyear and Bridgestone appear to do a better job of keeping customers engaged with their brand.

The ability of Goodyear and Bridgestone to drive traffic to their own retailers may mean a greater potential for driving tire sales. Both tire manufacturers need to maximize that potential by turning that opportunity into sales while Michelin and BFGoodrich need to understand how they can more effectively drive online shoppers to remain focused on their brands.

Evaluating consumer online shopping behavior is always critical but it’s especially important now as the economy begins to slowly recover. As it recovers, consumers may buy fewer replacement tires. On the other hand, there may be a bank of consumers that have even postponed tire purchases and who will re-enter the market. Staying on top of consumer behavior dynamics is the best way to effectively manage your marketing strategy and drive sales.

Recently Ford Motor Company announced an online promotion in which contestants have a chance to win a new 2010 Fusion Hybrid along with a trip for two to NASCAR’s Championship weekend in Miami. Contestants register at a site developed by Ford called weraceyouwin.com. Ford is promoting the sweepstakes on social networking sites Facebook and Twitter.

Certainly this promotion plays off Ford’s heavy involvement in racing, but is the Fusion prospect that in tune with what’s going on in the world of NASCAR? And to what extent does leveraging Facebook and Twitter further the cause?

Assuming Ford is targeting mid-size car intenders, people who recently bought or shopped for a mid-size car, Compete was able to assess the extent to which this consumer segment visits nascar.com and the extent racing enthusiasts are on social networking sites like Facebook and Twitter. And if they are, will social networking sites reach them?

As the result of a collaboration with JD Power and Associates, Compete has been able to match our panel of online consumers and their behavior with vehicle purchase data from JD Power. One result of this collaboration is the Online Media Behavior Study which tracks the current online activity of recent new vehicle purchasers. With this tool we are able to isolate mid-size sedan purchasers to determine their propensity to visit nascar.com as well as other sites like Facebook and Twitter to see if the weraceyouwin.com promotion has the potential to effectively reach the right prospects.

At first glance, one could get the impression that this promotion might be better suited to another group of prospects than mid-size car purchasers. Using January 2009 data, indexing mid-size car purchasers’ propensity to visit nascar.com against the internet browser population, we find they are less likely to visit the racing site. However, December and January is the off-season for NASCAR, with no racing until the season opening Daytona 500 in early February.

Take a look at what happens when we use data from Summer 2008, the height of the NASCAR season. The mid-size car index jumps to 167 suggesting that just maybe mid-size car purchasers need to hear the roar of the engines and the smell of racing fuel to get their interest up. When they do, look out. They’re big fans.

In fact, interest in NASCAR increases as the season progresses for many new vehicle purchasers. Not surprisingly, Full-Size pickup purchasers are fans all year round but their interest really picks up in the summer. The same is true of domestic purchasers in particular while import purchasers don’t show as much interest - which is something Toyota should take a closer look at given their recent NASCAR involvement with Camry.

Mid-size car purchasers are also on Facebook, and not just during the summer but in the winter, too. That means a Ford/NASCAR promotion could effectively reach the right prospects with the sweepstakes message even before the NASCAR season revs up. Twitter doesn’t reach mid-size car purchasers as effectively as Facebook but that could be driven by the fact that most people Tweet via their mobile devices and don’t return to the site very often. As further proof of Facebook’s potential to reach this target, over half of NASCAR enthusiasts in general (those people who visit other sites with NASCAR sub-domains such as CNN and Fox Sports in addition to nascar.com) also visit the social networking site.

Understanding your prospect’s online behavior is critical to developing effective online campaigns. It can help you better target your best prospects and more efficiently reach them with the right messages. Compete and JD Power’s Online Media Behavior Study takes that a step further by identifying the online behavior of new vehicle purchasers. Understanding the behavior of purchasers can help auto marketers make the most out of the web by more efficiently using it to accurately target and reach new vehicle prospects.

As auto sales continue to track near historic lows the days of 16 million unit selling rates are but distant memories. Estimates of annual sales of 10 to 11 million units are the new thinking in a market (and economy) where flat is the new up.

Sales are a function of generating demand and converting that demand into purchases. Compete measures auto shopping behavior across the internet and uses a subset of that (visits to third-party automotive sites) to develop its proprietary measure of in-market vehicle demand. Using this data we have seen what may be the very first signs of a recovery.

The chart above shows market-wide new vehicle demand and reveals an uptick from November’s all-time low. January 2009 demand of 2.56 million in-market shoppers was the highest in 11 months and down only 5% from January 2008 when new mid-size car launches drove industry demand higher. The y-o-y decline in January 2009 was the lowest in 11 months. But if this is the first sign of a demand recovery it is in its very early stages given that this was the lowest January demand level on record. In any case, a slowing of y-o-y declines may at least suggest we’re near the bottom.

So if demand has bottomed or even started to creep back up, why are sales still soft? Sales are a function of demand and conversion. Demand, while showing some signs of life, is still off-pace and conversion is still very weak. Conversion of demand to sales in January 2009 was its worst in years. Conversion is calculated using consumer demand and total sales (retail plus fleet). That means conversion will worsen if OEMs cut back on fleet sales since that results in lower total sales. However, even if OEMs have cut back on fleet there is no denying the correlation between worse conversion and the weak economy, both of which collapsed beginning in September.

What does all mean for 2009? Just as the 2008 demand decline preceded the sales implosion does the modest resurgence in demand we’re seeing now mean relief is on the way? It may be. We’re confident in saying that because we correlated our demand measure with monthly industry sales (lagged two months) over the past four years with a resulting correlation of 0.66. That means that—if the demand trend continues AND automakers find the right tools to drive conversion—it is quite possible that vehicle sales will begin to recover in Q2.

But even with a recovery, don’t expect sales to return to the days of 16 million units anytime soon. Demand, currently running over 1 million shoppers below historic highs, needs to fully recover before sales can really take off. If demand holds stable at January 2009’s 2.5 million shoppers, the industry would have to convert nearly 45% of those shoppers into buyers each month to reach 13 million unit sales for the year, the same as 2008. That’s an ambitious target, one that would likely require a continued reliance on incentives to entice prospects. Industry conversion averaged closer to 39% in the 4th quarter of 2008. That translates into a 2009 market of fewer than 12 million units for the year using the current demand trend. In any scenario, even with a recovery, 2009 will remain a difficult year for automakers.

Accurately measuring in-market demand and retail conversion are the two crucial elements to cost-effectively driving sales anytime, but even more so in a highly volatile automotive environment. Demand reveals advertising cost-effectiveness when correlated with ad spend and conversion reveals incentive cost-effectiveness when correlated incentives. With all eyes on efficiency these days, these are the must-have metrics.

And knowing when to expect the light at the end of the tunnel means the best opportunity to plan for success as the market comes back, not chasing after it once it has.

For the US auto industry, 2008 proved to be about as dismal a year as possible. Total industry sales fell to a 16-year low 13.2M units as most OEMs faced declining sales in a struggling economy. And December, the month of those familiar year-end clearance sales and deals, proved to be the final humbug in an already Scrooge-worthy year. US auto sales in December fell 36% from the same period in 2007, the fourth consecutive month industry sales were below one million units.

To identify the driver of December’s off pace sales, Compete assessed the two key variables that drive sales – in-market consumer demand (or shoppers) and conversion of those shoppers into buyers. In a normal December, weakness for one is offset by strength for the other—but not in 2008.

The first punch was fewer prospects shopping for new cars and trucks, continuing the trend that was seen for most of 2008. In-market demand has hovered at all-time low levels since August as the worst economy in decades and its ancillary effects like low consumer confidence kept shoppers on the sidelines. Demand is normally soft in December compared to other months and in 2008 demand actually ticked up slightly. But even then, demand at historically low levels does not set the stage for strong sales.

The second punch was weak conversion of shoppers into buyers, which was very unusual. Conversion was flat in December month-over-month and the lowest in at least four years. Normally conversion spikes up in December on rich year-end deals, aggressive dealers, etc. Conversion may have been held back in 2008 by the inability of deals to overcome consumer fears, or simply from less money available by many automakers to fund deals. The combination of flat conversion and low shopper counts eliminated the possibility of strong December sales.

In most years, the conversion spike means some would-be January buyers get pulled into December. This sales pull-ahead creates a conversion hangover in January. But is there a possible upside to this story? No buyer pull-ahead in December could set the stage for better than normal conversion in January. That, coupled with the typical January demand rebound, sets the stage for stronger January sales. Of course, “stronger” is a relative term and in this case most likely means sales down less year-over-year than in December.

Even with the potential for improvements in January, 2009 looks to be just as challenging for automakers as 2008 and even flat sales in 2009 would be desirable. But recession or not, understanding consumer demand (and its drivers) as well as conversion (and its drivers) is key to understanding sales and sales potential.