THE DIGITALAUTOMOTIVE LANDSCAPE

Q2 2013

2

CONTENTS

Overview

The Prospective Buyer: Research Habits

Top-of-Mind Awareness

Digital Advertising Insights

Timing and Frequency of Ad Exposure

Demographic Profiles

Digital Purchase Intent

The Road Ahead

About the Survey

3

4

6

8

9

10

11

12

13

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A CHANGING MARKETWith automotive advertising spend in digital media predicted to hit $5.07 billion in 2013 and increase to $7.80 billion by 20171, the need for greater efficiency is more important than ever. Consumer reliance on digital media in the auto purchase process—77% of new-car buyers use the Internet in their vehicle shopping process2—has transformed the process from a simple linear path to a cycle of ongoing consideration: Prospective buyers are now likely to make multiple trips to the dealer, returning home to do additional research after seeing a vehicle in person. Prospective car buyers that do their research online consider more brands and dealers, and one in four will visit the dealer they purchase from as a result of online information.

NEW DEVICES CHANGED THE SHOPPER JOURNEYWhile shoppers primarily conduct research at home on desktop PCs, mobile devices such as smart phones and tablets are highly influential during the comparison and final consideration phases: When shopping for a new car, 20% of consumers will access auto content via their smart phone, and 18% will do so via a tablet device2. When researching potential purchases, nearly 1 in 3 consumers will do so either on a smart phone (28%) or tablet device (30%).

When viewing auto content, more than one third of smart phone and tablet users view content from familiar brands and models and will narrow down their consideration to a specific brand before they even start their search. In this way, smart-phone advertising helps to narrow the consideration set and influence near-term decisions.

40% of auto-related smart phone content is accessed in the vehicle3, and the majority of users are looking for services within local driving distance. Once they arrive, three out of five (59%) of buyers use their mobile devices while at the dealership1.

59% of car buyers use their mobile devices while at the dealership

ABOUT THIS REPORTRocket Fuel served more than 2 billion ad impressions for automotive advertisers in the second quarter of 2013. During that time, we’ve had a unique opportunity to take consumer and market data from a number of sources to create a report that will help automotive marketers understand the landscape and get the most out of their digital marketing programs. In this report, you will find a mix of data collected from the following sources:

• Rocket Fuel Auto advertising delivery & performance data from a sample of ad impressions served in 1Q and 2Q 2013

• Rocket Fuel Auto advertising survey data from 1Q and 2Q 2013• Survey data collected from a panel of 606 adults 18+ in 2Q 2013• Curated data from a number of online research sources

1. eMarketer, The US Automotive Industry 2013: Digital Ad Spending Forecast and Key Trends, June 20132. J.D. Power and Associates, Online Auto Shoppers: Who Are They and How Do You Meet Their Needs?, June 20113. Nielsen, Mobile Path to Purchase Study, November 2012

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THE PROSPECTIVE BUYER:

74% of auto intenders say that they “always” do research prior to purchasing a new vehicle, with another 23% claiming to do research “most of the time.” Nearly all intenders (96%) do research on a PC or laptop, and just under one third also conduct research on either a tablet (30%) or smart phone (28%). PC/Laptop is the top choice of research platform among intenders, though tablet research is significantly more common among intenders with a household income of $100K or more per year (45%).

AUTO INTENDERS SPEND 60% OF RESEARCH TIME ONLINENew vehicle buyers spend the greatest amount of their researching time on third-party websites, followed by OEM, dealer sites, and search. Online behavior can be leveraged to deliver highly-customized messaging and promotions—ultimately driving a larger share of auto intenders down the path to purchase.

COMPARISON SHOPPING INTENSIFIES WITH PROXIMITY TO PURCHASEThe majority of auto intenders begin doing research five or more months prior to making a purchase, and on average consider two vehicles five months prior to their purchase, 2.3 vehicles three months out, and 3.5 vehicles in the final month leading up to the purchase4.

6+ Months Prior

5-6 Months Prior

3-4 Months Prior

1-2 Months Prior

Less Than 1 Month Prior

Q. WHEN DO YOU TYPICALLY START RESEARCHING VEHICLE OPTIONS PRIOR TO PURCHASE? (N=606)

30%

21%

21%

22%

6%

RESEARCH PLATFORM USAGE

96%

30%

28%

PC/LAPTOP

TABLET

SMART PHONE

4. J.D. Power and Associates, Online Auto Shoppers: Who Are They and How Do You Meet Their Needs?, June 2011

RESEARCH HABITS

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THE FINAL WEEK OF SHOPPING IS THE MOST CRITICAL TO DRIVE OFFLINE SALES59% of online intenders will narrow selection down to a single model within a week of purchase5. During this time advertisers should focus on stepping up dealer-focused marketing initiatives to tip the scales with creative that focuses on pricing incentives, consumer reviews, and configuration options. For those shoppers who are considering more than one vehicle, it is critical to appeal to their decision criteria (e.g. size, efficiency, safety, and so on) as well as identify potential brand defectors early on.

INTENDERS LOOK TO REVIEWS, COLLEAGUES FOR RESEARCHOnline researchers tend to give greatest weight to reviews from dedicated research sources such as Consumer Reports or Cars.com, though more personal recommendations from colleagues or friends are an equally important factor in the process. Comparatively, recommendations from friends or colleagues hold significantly greater weight than anonymous reviews or recommendations online.

Manufacturer websites are also an important factor in the research process, though these are seen primarily as a source for pricing and dealership information rather than a means to learn more about a particular vehicle.

RESEARCH SOURCE RATINGS

2.42.32.22.2

Review publications (e.g. Consumer Reports)

SOURCE SCORE (1-3)

1.91.9

Recommendations from friends or colleagues

Research Sites (e.g. Cars.com)

Manufacturer websites

Online reviews on social networks/message boards

Online video content about the vehicle

INTENDERS STILL HESITANT TO COMMIT ON MANUFACTURER WEBSITESOver 91% of auto intenders have visited a manufacturer website, primarily to research price (84%) or locate dealer (69%). Despite a willingness to visit manufacturer websites for research, intenders have been hesitant to commit to either test drives (16%) or newsletters (15%), though this may improve in the future: 40% of intenders plan to sign up for a test drive on a manufacturer website in the future.

AUTO INTENDERS: MANUFACTURER WEBSITES AND ACTIONS

Research Price

Sign up for a test drive

Locate a Dealer

Search Dealer Inventory

Build/Configure a Vehicle

Request a Quote

84%93%

78%

77%

67%

62%

40%

69%

55%

49%

35%

16%

Plan to do in the future

Have done in the past

5. J.D. Power and Associates, Online Auto Shoppers: Who Are They and How Do You Meet Their Needs?, June 2011

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TOP-OF-MIND AWARENESSTOYOTA, FORD DOMINATE TOP-OF-MIND AWARENESSWhen asked to identify the first brand that comes to mind when thinking of cars, consumers are most likely to list Toyota, followed by Ford and GM, generating results loosely in-line with manufacturer market share and sales results for 2012.

When asked to do the same for trucks, Ford was the clear victor, with 45% of respondents identifying the brand with trucks. This was followed by GM, for which results were split between GM and GMC, and Chrysler, which was primarily identified by the Dodge brand.

GENDER, INCOME SHOW LITTLE DIFFERENCETop-of-mind awareness results were largely the same when looked at by gender and for consumers with an annual household income of $100k or more.

Q. WHEN THINKING OF CARS, WHAT BRAND COMES TO MIND FIRST?

22%

22%

13%

11%

6%

6%

5%

3%

12%TOYOTA

FORD

GM

HONDA

CHRYSLER

NISSAN

BMW

HYUNDAI

OTHER

Q. WHEN THINKING OF TRUCKS, WHAT BRAND COMES TO MIND FIRST?

45%

19%

13%

12%

11%

FORD

GM

CHRYSLER

TOYOTA

OTHER

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LUXURY AWARENESSHOUSEHOLD INCOME AFFECTS LUXURY AWARENESSWhen asked to identify the first brand that comes to mind when thinking of luxury cars, consumers are most likely to list Toyota’s luxury brand, Lexus, followed by BMW and Cadillac. Top-of-mind awareness shifts significantly, however, when considered solely among those auto intenders with an annual household income of $100K or more. Among these consumers, BMW and Mercedes Benz dominate top-of-mind awareness with nearly half (46%) of the consumers in this income category listing one of the two luxury auto manufacturers.

GENDER DIFFERENCESWhen polled on top-of-mind awareness for luxury cars, women are slightly more likely to list Lexus (30%) compared to men, and slightly more likely to list Cadillac (16%).

Q. WHEN THINKING OF LUXURY CARS, WHAT BRAND COMES TO MIND FIRST? (ALL HHI)

LEXUS

BMW

CADILLAC

MERCEDES

AUDI

OTHER

Q. WHEN THINKING OF LUXURY CARS, WHAT BRAND COMES TO MIND FIRST? (HHI $100K+)

27.3%

17.0%

13.8%

13.0%

4.3%

20.9%

BMW

MERCEDES

LEXUS

PORSCHE

AUDI

ACURA

23%

23%

16%

5%

7%

5%

23%

OTHER

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DIGITAL ADVERTISING INSIGHTS

AUDIENCE IS MORE IMPORTANT THAN PLACEMENTThough ad size and placement matters for generating click activity, it has significantly less impact on conversion rates, where ads below the fold have generated slightly higher conversion rates for auto campaigns. Audience data and timing tended to be more significant factors to generate conversions.

The same was largely true for ad sizes, though wide skyscraper (160x600) ads tend to underperform when compared to conversion rates for leaderboard (728x90) and wide rectangle (300x250) units.

FBX ads consistently deliver the strongest conversion-rate results for auto campaigns, underlining the importance of including FBX as a display tactic for automotive advertising.

CONVERSION RATE INDEX BY AD SIZE

ABOVE THE FOLD - INDEX 91

BELOW THE FOLD - INDEX 106

728x90INDEX 109

160x600INDEX 82

300x250INDEX 108

100x72INDEX 231

FBX AND AUTO CAMPAIGNSThe FBX environment is ideal for DR campaigns, where consumers can be reached at lower points in the purchase funnel.

EXAMINING AUTO ADVERTISING DATALooking at a sample of more than 602 million impressions served for more than a dozen auto advertisers in 2Q 2013, Rocket Fuel’s proprietary technology is able to identify the common data points and factors—such as time of day, placement on the page, or number of ads served—that had a significant impact on ad performance based on conversion rates. Note that conversions as used here are advertiser-defined based on program objectives and will vary by brand and objective, though typical conversions include lower-funnel activities such as locating a dealer, signing up for a test drive, or building a custom car on a manufacturer website.

Note that while the majority of the time intenders spend researching is online, only 20% of eventual buyers will submit online leads through OEM, dealer, or third-party websites6. Thus, true measurement of digital ad performance of automotive advertising will require a second form of measurement, such as such as survey-based metrics (such as Awareness or Purchase Consideration), or offline sales measurement in addition to online leads and site conversions.

6. R.L. Polk & Co, The Role of the Internet in the New and Used Vehicle Purchase Process, February 2011

55

126

193 187208 195 194

164

105

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TIMING AND FREQUENCY OF AD EXPOSURE

4+ AD EXPOSURES REQUIRED FOR RESULTSConsumers don’t convert from automotive ads immediately, tending to convert after exposure to 4+ campaign ads and converting with greatest frequency when exposed to between 6 and 17 ads.

This does not imply that a “rapid-fire” approach to ad exposures should be taken, however: Recency analysis showed that conversion rates were highest when exposures were between 8 hours and 4 days apart, though conversion rates remain high for a period up to 4 weeks after initial exposure.

Results are similar for purchase consideration (as measured by in-flight in-banner surveys), where 4+ ads generate optimal results, spaced multiple days apart.

AUTO CONSUMERS CONVERT MORE ON MONDAYS & TUESDAYSOn average, consumers are most likely to convert from automotive ads on Mondays, Tuesdays, and Saturdays, and likely to do so between 6 a.m. and noon —prospective buyers are out on weekends and then doing additional research early in the week. Note that this only applies to conversion rates and not click-through rates, which peak in the evenings and not on a particular day of the week.

MON TUES WEDS THURS FRI SAT SUN

REACH PEOPLE HERE

CONVERSION RATE INDEX BY DAY OF WEEK

CONVERSION RATE INDEX BY # OF ADS SHOWN

5592 119

151201 214

182

1 2 3 4-5 6-9 10-17 18+

CONVERSION RATE INDEX BY RECENCY

124 123

99

9685

105

98

Never (First ad)

0-8 hours

8-24 hours

1-2 days

2-4 days

4-7 days

1-2 weeks

2-4 weeks

4+ weeks

PURCHASE CONSIDERATION & FREQUENCYData collected from aggregated survey metrics shows that 4+ impressions are required to generate optimal purchase consideration lift for automotive advertisers.

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DEMOGRAPHIC PROFILESTO OPTIMIZE AUTOMOTIVE ADVERTISING, RETHINK DEMOGRAPHICSAutomotive advertising performance is largely age- and gender-invariant. That is, men and women are equally likely to convert, and with the exception of consumers under the age of 25, age is not a significant factor in the conversion process either. Instead, automotive advertisers must go beyond simple age and gender targets to achieve optimal results for digital automotive campaigns.

HOUSEHOLD INCOME, MARTIAL STATUS PLAY A LARGER ROLE IN THE CONVERSION PROCESSHousehold income plays a significant role in automotive advertising conversions, with higher-income consumers having higher conversion rates. A similar effect can be observed for married consumers, who convert on automotive campaigns 1.1x more often than single consumers.

8189 92

102 107 111 110

Less than $20k

$20k - $40k $40k - $50k $50k - $75k $75k - $100k $100k -$150k

$150k+

CONVERSION RATE INDEX BY ANNUAL HHI

Similarly, consumers with a higher annual household income are more likely to report a shift in purchase consideration after exposure to ads, particularly among those with a household income of $125K or more per year, for whom Rocket Fuel has observed an average lift of five points after exposure to auto ads.

GREEN LIVING AND AUTO ADVERTISING1 in 6 (18%) online in-market auto consumers have expressed an online interest in Green Living or Green Lifestyle content, and 1 in 4 (23%) auto intenders considers whether a vehicle is a hybrid or electric to be “very important” with regard to making their purchase decision.

Green consumers currently appear to be under-served by standard automotive ads: When measured via in-banner survey in-flight, consumers who showed online interests in green living showed on average a 6-point drop in purchase consideration after exposure to ads. These same consumers also demonstrate slightly below-average conversion rates when compared to the average for auto advertising programs (index 94). Reaching this segment of consumers effectively likely requires a different creative approach.

Q. HOW IMPORTANT TO YOU IS EACH OF THE FOLLOWING WHEN BUYING OR LEASING A NEW VEHICLE?

87%77%69%26%

Price

% RESPONDENTS ANSWERED “VERY IMPORTANT”

Mileage

Features

Country the vehicle was manufactured in

Whether the vehicle is hybrid/electric 23%

N=605, Rocket Fuel US Automotive Consumer Survey

Most (70%) consumers say that whether a car is hybrid/electric is at least “somewhat important” to their purchase decision.

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DIGITAL PURCHASE INTENTIN-MARKET CONSUMERS DRIVE HIGHER PERFORMANCE, BRAND LIFTAlthough intuitively one could infer that identifying and reaching in-market auto consumers and consumers with automotive interests is going to provide a higher performance on automotive advertising programs, it may be unclear exactly how much doing so will improve performance, and how specific auto-related interests and data points will affect a survey-based measure of performance such as Purchase Consideration.

PURCHASE CONSIDERATION LIFTOverall, in-market auto consumers are 80% more likely to convert from automotive ads across the board, though conversion rates will vary by the type of consumer and the make and type of car they have been identified as being in-market for. They show a similar malleability of opinion with regard to survey metrics, where auto intenders have shown an average lift of 3.5 percentage points in purchase consideration for a given brand after ad exposure. Luxury auto intenders make an even better target, showing an average lift of 6.5 points in purchase consideration after exposure.

Predictably, consideration lift is negative on average for online consumers who have recently purchased a car prior to ad exposure.

CONQUESTINGWhen data is available to identify a particular consumer as being in-market for a specific make or model of vehicle, it presents an optimal opportunity for conquesting. In these cases, conquested consumers are typically 2x more likely to convert than the average consumer when presented with automotive ads for a brand, make, or model other than the one they had been identified as being in-market for (though still less likely to convert than consumers in-market for that specific make or model).

IDENTIFYING IN-MARKET CONSUMERSIn-market auto consumers share certain traits and qualities that can be used to expand the focus of an advertising program to improve results and increase the likelihood of reaching consumers whose shopper journey is nearly complete.

AUTO IN-MARKET CONSUMER TRAITS

SEGMENT/INTEREST INDEX

290Age: 40-49

289In-Market: Business & Office Supplies

286Homeowners

250Healthy Lifestyle

218Financial Services

154Restaurants

LUXURY AUTO INTENDERS

AUTO PARTS & REPAIR

NASCAR FANS

AUTO INTENDERS

CAR SEATS

+6.5

+4.7

+4.2

+3.5

+3.3

N=6,539, Rocket Fuel RTBO Surveys, Average Lift Shown as difference between control & exposed groups

(SAMPLE) Q. Which of the following car models are you most likely to consider when purchasing a new or used car?

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With nearly 80% of new car buyers using the Internet during their vehicle shopping and selection process, the challenges and opportunities available for the savvy auto marketer are greater now than ever before. When thinking about their next digital marketing program, auto marketers should consider the following:

THE MULTI-SCREEN AUTO SHOPPER: With nearly 1 in 3 auto shoppers now using smart phones and/or tablets to help them make a purchase decision, it is incumbent upon auto marketers to adopt a multi-screen approach to deliver effective digital advertising, especially closer to the point-of-purchase. AMPLIFY FREQUENCY CLOSER TO PURCHASE: Nearly 60% of auto buyers state that they will narrow their selection down to a single model within the final week of purchase. Rocket Fuel-measured automotive conversion data corroborates that the highest levels of conversion activity occur within one to two weeks of ad exposure.

DRIVING SALES - THE FACEBOOK EFFECT: Marketers should strongly consider Facebook not just as a destination site for auto make and model information, but a powerful advertising channel through the use of Facebook’s advertising exchange (FBX) to drive conversion activity.

BUILD THE BRAND WEDNESDAY THROUGH SUNDAY, SELL ON MONDAY & TUESDAY: Rocket Fuel conversion data suggests that auto marketers would do well to adapt their advertising messages to the day of week where conversion activity is predictably higher than days where marketers can continue to build the brand.

THE HYBRID BUYER REQUIRES A DIFFERENT CREATIVE APPROACH: One in four auto intenders consider whether a vehicle is a hybrid or electric to be very important to their purchase decision and one in six have expressed an interested in green living or green lifestyle content, yet standard automotive advertising does not typically make this connection. Hybrid manufacturers would do well to tap into this lifestyle mindset when developing advertising assets to drive sales.

THE ROAD AHEAD

ABOUT ROCKET FUELRocket Fuel is proud to serve 10 of the top 10 automotive manufacturers7, and delivers a leading programmatic media-buying platform at big data scale that harnesses the power of artificial intelligence to improve marketing ROI. Rocket Fuel’s powerful Advertising That Learns™ technology drives best-in-plan results for advertisers, and empowers media teams to focus on strategy, not spreadsheets. Its distributed computing engine currently screens over 28 billion ads per day, and selects the best for its customers via real-time bidding (RTB) relationships with major publishers and exchanges. This technique has proven itself across web, mobile, video, and social channels.

Awarded #4 on Forbes’ 2013 Most Promising Companies In America list, Rocket Fuel was founded by online advertising veterans and rocket scientists from NASA, Yahoo!, Salesforce.com, and DoubleClick. Rocket Fuel currently employs 486 people in 19 offices worldwide including New York, London, Paris, and Hamburg; and has a strategic alliance with cci to provide its services in Japan.

To learn more about how Rocket Fuel drives success for auto manufacturers across all stages of a consumer’s path to purchase, contact sales at 888-717-8873 or email sales@rocketfuel.com.

7. Top 10 Auto Manufacturers defined by sales data from Edmunds.com

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ABOUT THE SURVEYSurvey respondents were evenly distributed by gender and weighted according to U.S. Census data for age. The majority of respondents had one or more children under 18 living in their household.

50%50%

18-24

25-44

45-64

65+

12%

49%

32%

7%

GENDER AGE

12%

31%

15%

24%

13%

5%

Less than $30,000

HOUSEHOLD INCOME

$30,000 - $59,999

$60,000 - $74,999

$75,000 - $99,999

$100k - $149,999

$150k or More

MARITAL STATUS

26%19%43%12%

Single

Married, no kids

Married, with kids

Other*

*Includes options: Divorced, Separated, Widowed, and Living w/Partner

CHILDREN (UNDER 18)

46%23%20%10%

None

One

Two

Three or more