Social Leaderboard_Indian luxury car brands_14 September 2012

SOCIAL LEADERBOARD
LUXURY CAR BRANDS: 15th Sep – 28th Sep 2012

1:
INDEX:

 SOCIAL LEADERBOARD:
week-on-week performance of top 3 luxury car brands…

 SUMMARY
Missing the digital gravy train…

 RECONNECT GRADE:
o BMW

o AUDI

o MERCEDES-BENZ

 WHY COMMUNITIES?

 METHODOLOGY:
the research process…

 ABOUT SHACK

©Shack Companis. All Rights Reserved. Social Leaderboard: Luxury Car Brands

2:
SOCIAL LEADERBOARD

14th September – 28th September 2012

80% 79%

51%

Historical Ranking
93%
86% 84%
80% 82%
79% 79%

65%

51%
46%
40%
31%

4th-17th Aug 18th-31st Aug 1st-14th Sep 15th-28th Sep

BMW Audi Mercedes


3:
SUMMARY
12.0%

10.0%

8.0%
Engaged Users (%)

BMW
6.0%
Audi
Merc
4.0%

2.0%

0.0%
Week-5 Week-6 Week-7 Week-8 Week-9 Week-10 Week-11 Week-12

BUBBLE CHART SUMMARY

1. Though BMW had the highest active user base over the 2 weeks, the average engagement frequency
for the period (1.0x) was lower than Audi (3.0x) and Mercedes (2.1x)
2. The spike in Audi's performance in Week-12 was on account of participation in contests related to the
Quattro Golf Cup and A8 Sportscar experience
3. Mercedes-Benz launched the B-class Sports Tourer responsible for the increase in engagement during
Week 11

4.5x

4.0x 2.7%

3.5x
Engagement Frequncy (x)

3.0x
BMW (W11)
2.5x BMW (W12)
1.9%
1.4% Audi (W11)
2.0x
1.1%
Audi (W12)
1.5x Merc (W11)
Merc (W12)
1.0x 3.2%
3.1%
0.5x

0.0x
- 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5%
Active Users (%)

Notes:

1. Size of the bubble indicates unique active users
2. Engagement frequency: Average interactions per active user


4:
TAKING STOCK OF THE WINDFALL

The festive season will see car companies increasing inventory at

showrooms to meet the spike in demand. Luxury car brands are

anticipating a 20% increase in sales starting with Navratri.

"Usually, we deliver only one car a day on an average, but on Dasara we

have around 12 deliveries scheduled this year and the sales have gone up

by 15% compared to Dasara last year," said an official from the Mercedes

Benz showroom at Madhapur. Companies are spending on tactical

promotion to convert consumer interest and into sales so that they can clear

out inventory and also remain on course to achieve their sales targets.

PITTING MARKETING STRATEGIES

 A month remains for the Indian GP and Mercedes-Benz is the only

brand of the three heavily invested (INR 8-10 crore) in the event. The

company plans to use the F1 buzz to increase sales. It has launched

a promotional campaign which allows new buyers a chance to

meet Michael Schumacher in person and test-drivers to win F1

tickets.

 Mercedes is cross promoting it on its social channels. So far, the

Reconnect Grade shows an engaged user base of 2 in every

1000 and zero sales enquiries.

 Mercedes also unveiled the B-class Sports Tourer in direct competition

to the entry level cars of BMW (X1) and Audi (Q3). The strategy to


5:
time the launch during the festive season is aimed at boosting sales

volumes.

 Sales volume of the Q-series (especially the Q3) is pivotal for Audi to

achieve its goal of market leadership in 2013. Accordingly, the

company has invested significantly in BTL activities such as the

Quattro Drive Event to demonstrate the superiority of its 4X4 drive

experience.

 On the digital front, Audi live streams the events and conducts contest

mainly on Twitter to boost engagement levels. Audi India's

Marketing Head Michael Perschke plays an important role in

connecting with influencers such as Gul Panag on Twitter in

order to increase the aspirational value of the brand. However,

contests are note very effective for lead generation because the

participation is mainly from aspirants. Therefore, it doesn't double up

as an effective strategy during the festive season.

 BMW is releasing a new variant of the X1 in November 2012. In

order to clear out the old inventory, it has offered the existing

version at a discounted price for a limited period during the

festive season.

 The company is adopting a strategy of pushing out the promotional

message through its social channels as well as paid advertising.

Surprisingly, the promotion does not appear on the platform that

matters most for sales - the brand website. The company is making

the common error of mistaking digital as a medium that creates

demand. While the fact is that the web only influences people


6:
already inclined to make a purchase. A report released by

Google India in 2011 stated that 65% of car buyers do their

research on the net before making a purchase.

 As a result, we observe a big gap between the actual outcome and

the desired one.

MISSING THE DIGITAL GRAVY TRAIN

We believe that the target group for luxury car brands can be broadly

segregated into 2

 Advertisers do not understand the basic thing about the web. When it

comes to driving product sales traditional advertising works well in

stimulating demand. But history so far has shown us that the web is

only good as a medium in fulfilling demand i.e. helping a customer

when he has already decided to purchase. A cursory look at the ad

revenues of Google and Facebook supports this assertion. Facebook’s

2011 ad revenues are only 12% of that generated by Google from

search ads. Google directly links search queries to relevant ads i.e.

fulfil demand while Facebook ads tries to stimulate it through brand

engagement.

 This implies an unsatisfactory ROI for BMW, Audi and Mercedes for

two reasons

a. Because the web is weak at creating demand, offers promoted

through banner and social ads during the festive season defeats


7:
their intended purpose. Brands will be better served to spend

this money on direct channel like mailers to qualified leads.

b. For a luxury car brand that sells ~10,000 units in a year, the

active audience on its social channels is largely comprised of

aspirants. The aspirants play an important role in maintaining

the engagement levels. But the main brand objective during the

festive season is to generate leads and convert into sales

through offers and discounts. Therefore, aspirants are not the

main target group and spending on contest and promotions to

keep them engaged is a bad marketing decision. To illustrate

this point, we look at the potential ROI for the Quattro drive

contest done by Audi India.

We assume that the social media team of Audi has at least 2 people

(Copy writer, Community management) responsible for the daily

management of the brand’s social platforms. We estimate a monthly

salary of INR 40,000 – 50,000 and approximately 40% (c.4 hours) of

time spent on managing the channel. Suppose it takes the team about

a week’s time to conceptualise the contest, organise it, despatch

prizes and handle complaints. That gives us a total employee cost

of INR 10,000-13,000.

Based on a total of 10 winners and an average of INR 10,000 worth

merchandise per person, we arrive at a total cost of prizes of INR

1,00,000.


8:
We also try to estimate the opportunity cost of this activity. The

media spend, instead, could have been used on campaigns such as

direct e-mailers providing a better targeting to the brand. Suppose a

targeted e-mail is sent to 2000 potential consumers, out of which at

least 20 make an enquiry and 2 get converted. Assuming an average

pay-out of INR 40,00,000 per car sold and net cost of 1,11,500 it

provides us with a net opportunity cost of INR 78,88,500.

Therefore,

Total Cost = Average employee cost + Prize Money + Opportunity Cost

Total Cost = INR (11,500+1,00,000+78,88,500)

Total Cost = INR 80,00,000

Compared to this, the brand engaged even less than 100 users

through the contest. That provides us with an approximate cost of

INR 80,000 per user.

Therefore, it is evident that short term tactical contests aimed at

boosting engagement levels haven’t been effective in yielding results

during the festive season when the primary objective is to generate

leads and increase conversion.

RECONNECT GRADE


9:
 BMW tied up with Delhi Half Marathon to reinforce the brand message

of efficient dynamics. The event connected with 21 in 1000 members

out of which merely 8 in 1000 showed improved awareness.

 Promotion for the X1 discount offer appealed to 3 in 1000.

15th – 21st September 2012

6.0%
Reconnect Grade

4.0%

2.0% 1.2% 1.1% 1.0% 0.9%
0.3% 0.2%
-

22nd – 28th September 2012
6.0%
Reconnect Grade

4.0%

2.1%
2.0%
0.8% 0.8% 0.6% 0.3% 0.1%
-


10:
RECONNECT GRADE
 As we have asserted in a previous report, one-off contests are not

effective in translating into relevant buzz around an event. It was no

different during the Quattro golf cup. Only 15 in 1000 members

amplified the event buzz as against 51 in 1000 participating.

6.0%
Reconnect Grade

4.0%
2.9%

2.0% 1.6%
0.6%
0.1% 0.1% 0.1%
-

6.0% 5.1%
Reconnect Grade

4.0%

2.0%
2.0% 1.5%
1.2%
0.4%
0.1%
-


11:
RECONNECT GRADE
 The new B-class launch was met with mostly positive reactions. ~20

in 1000 members are impressed with the value proposition and feel

that the launch will improve Mercedes’ market share in India.

6.0%
Reconnect Grade

4.0%
2.7%

2.0%
0.9% 0.7%
0.4%
0.2% 0.2%
-

6.0%
Reconnect Grade

4.0%

2.0%

0.3% 0.2% 0.2% 0.2% 0.1% 0.1%
-


12:
About the Social Leaderboard
The Leaderboard updates the results derived from our internal tools and
methodologies on a bi-monthly basis, based on which we will bring out our
conclusions. Shack uses a proprietary grading mechanism
ShackMatrix™ to derive the Authority, Activity and Reconnect Grades,
which are key determinants of a brand’s social presence. Read more
about the Matrix and Grades.

Why Communities?
Create, Connect, Curate — The Shack Manifesto for Building

Communities

With the social online world becoming an important cog in a customer’s

relationship with a brand, there is a need for a common language that can

give meaning to the seemingly unstructured social data scattered across

platforms that represents a brand’s interaction with its core community.

As has happened with the introduction of any new communication medium,

practitioners are making the mistake of using the measuring stick (such as

views and reach) of traditional advertising media to gauge success in the

social web. For over a half a century, we have been thinking about


13:
marketing in terms of campaigns with a very clear beginning, middle and an

end. But the online digital world is currently in the process of being rebuilt

around people and what we know as the social web, in a few years, would

simply be the web.

Therefore, long term success for brands depends on leveraging these

human relationships to create a strong sense of community around

products, concepts and values that are dearest to the brands.

How we measure effectiveness in Online Communities?

The ShackMatrix™ is a proprietary framework that enables assessment of a

brand’s digital footprint in a holistic way. It is a common language designed to

understand the value of a brand’s online efforts expressed through 5 grades that

combine the understanding of traditional branding with the dynamics of a social

online world.

 Presence Grade: Measures how well is the brand represented on digital

platforms.

 Authority Grade: Measures how authoritative is a brand’s owned-

channels for information on the brand and its products.

 TG Grade: Measures the percentage of the desired target group mix

active on the brand’s owned platforms.

 Activity Grade: Measures the level of activity on existing channels.

 Re-Connect Grade: Measures the extent to which community members

connect and identify the brand with the attributes desired by it.


14:
Data Methodology
We take online performance as a holistic concept. While size of the brand’s

community and level of activity are important factors, the profile of the TG,

the authority of the brand’s platforms and its recall are also equally

important ingredients.

In calculating the ShackMatrix™, we assign weights to the different metrics

on individual platforms in order to combine them into a single comparable

grade that is relevant to the digital objectives of the brand.

The weights are decided based on the relative effectiveness of the platform

to a brand’s community as well as the brand’s own digital goals.

Data Validity and Integrity

We source the data from the brand’s official digital properties. Our scope is

restricted by the data made available through the APIs of the social

platforms we cover.

The coverage of data in this report is restricted to Facebook and Twitter.

More detailed and granular metric studies are done for clients on a project

basis.

Disclaimer

While reasonable effort has been made to ensure accuracy of data, Shack is

not responsible for any damage caused by individual decisions based on it.


15:
About Shack
Shack is a digital marketing company which brings together brands and their

customers in carefully crafted, wholesome communities, providing exceptional

experiences for all.

We leverage communities for brands:

In order to create and maintain buzz around your brand you need your target

audience to form lasting relationships with your brand.

We build platforms for the communities:

Being a one-stop solution for all your community building and web-based marketing

needs, we craft comprehensive campaigns, based on careful strategy, encompassing

an entire digital eco-system.

We develop content for the platforms:

Along with creating engagement tools both online and off-line we also encourage and

facilitate generation of remarkably effective and compelling content, in a methodical

manner by our own team, and in a random manner, by your community members.

We measure the impact on the brand:

You need to monitor the impact that the campaign has on your brand. This impact is

not something hypothetical, it is hard, tangible, three-dimensional data that not only

tells you where you presently stand, but also tells you where you need to go and

what path you need to follow with the help of Shack’s proprietary Digital Ecosystem

Management tool. Website || Blog || Twitter


Social Leaderboard_Indian luxury car brands_14 September 2012

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