As more consumers go online for their purchases, an increasing number of companies are beefing up their digital spend to reach wider audiences, increase site visits, and maximize revenue potential.
This trend is evident in large markets like the US, China, and India. However, emerging markets like the Philippines are not far behind, especially with an internet-savvy population.
Carbay Philippines, Inc. CEO Cholo Syquia shares his insights on how this trend affects the automotive advertising market in the country, coming from the company’s recent acquisition by leading Indian auto tech group, CarDekho.
How big is the Philippine automotive advertising market? What is the role of digital in this space?
While brick-and-mortar showrooms, and shops for that matter, aren’t going away anytime soon, people are increasingly using online platforms not just to gather information but to make purchases as well. That is something not lost on automotive brands, and it shows in how OEM (original equipment manufacturer) ad spending has long started to shift from traditional media to online.
Less than a decade ago, automotive brands allocated less than 5% of their marketing budgets to the digital domain. Today, that figure is 30%, with some brands even going higher. All signs point to this development maintaining an upward trajectory for the foreseeable future.
Within the digital advertisement space, which verticals contribute, and will contribute, the most revenue? What are the drivers of such growth?
Currently, we realize the most revenue from brand-new cars or OEMs considering that they have bigger marketing budget allocations, easily contributing 60% to 80% of our business. In addition, we are aware of the tremendous opportunity presented by motorcycle sales, a particularly promising revenue stream in light of its growing popularity as a mode of transportation in the Philippines.
Carbay Philippines Inc., which operates both Carmudi Philippines (carmudi.com.ph) and ZigWheels Philippines (zigwheels.ph), is in a good position to capture advertising monies from car and motorcycle manufacturers, as we have the biggest digital audience in this space with over 10.7 million users and 17.6 million sessions as of 2019.
Even as we foresee revenue growth from brand-new car advertising, we are also looking at a significant increase in advertising from used cars and related businesses. Carmudi Philippines has had the largest network of used-car dealers for several years now, and we have noticed increased interest and clamor for this group to be more present digitally.
Ancillary businesses such as financing companies, insurance, and other maintenance products like tires, lubricants, and batteries are also trying to ride the digital wave. We see this trend being sustained for a long time.
Are you noticing any trends in the digital advertisement space given the current Covid-19 situation?
First off, we applaud the many automotive companies which have responded swiftly to provide assistance in the fight against the Covid-19 pandemic. Ford, for example, even committed to aid in the production of much needed ventilators. Here in the Philippines, brands like Toyota, Mitsubishi, Isuzu, Dongfeng and others, have lent their vehicles for use of our brave frontliners.
Our business is among the fortunate to be firmly in the digital domain, which has largely spared us from the immediate, obvious effects of the enhanced community quarantine (ECQ) in Luzon. Having said that, we have also seen innovative means on how the automotive industry around the world has adroitly adjusted to the new normal and are introducing novel digital interventions.
A car brand recently did a purely digital launch of its vehicle with Oto.com, one of our platforms in Indonesia. We have also seen other brands explore virtual showroom visits where all questions and paperwork are addressed digitally, leading up to the non-contact delivery of vehicles to buyers’ locations. Even with automotive servicing, companies have actually been finding ways to do either online assessments preceding a mechanic home visit or a non-contact pick-up and delivery of vehicles for servicing. All these solutions are of course only made possible, and are powered, by online platforms like ours.
Brick-and-mortar dealerships have obviously been hard-hit as people are encouraged to shelter in place. Still, these same dealerships have the option to explore and maximize lead generation and consumer awareness through opportunities presented by the digital space.
What is your projection of the state of the digital automotive advertising space after the Covid-19 situation passes? Will this present any opportunities for automotive brands? If so, what kind of opportunities?
Consistent with our initiatives to showcase the value of the digital space in terms of its efficacy, the first-hand experience of automotive brands globally will prove to be positive case studies supporting this. Both brands and buyers were pushed to go online during these moments, and they would have felt the benefits this brings.
While acknowledging a current slowdown in actual purchases, we are assuming a pickup once the situation normalizes. At the moment, based on our continued traffic, this means that research and interest is constant and would likely convert into sales as priorities get sorted after this situation. In line with this, a recent study conducted by IPSOS in China showed that after the Covid outbreak, 72% of non-vehicle owners are inclined toward purchasing a vehicle, as personal transportation is favored over a public one to avoid infection. Given these, the brands would be on a crunch to get their piece of this market.
While brands may maintain or limit their overall marketing spend, there may be a shift from traditional channels to digital in the next few months. Given the digital experience globally and a potential uptake in buyer appetite soon to come, we expect to see brands leveraging potential and the increased interest in the digital automotive landscape.
How will Carbay/Carmudi Philippines drive its business forward once normal economic activity resumes?
At the moment, the team has been fulfilling its committed services to all its clients at all levels. Our traffic has been consistently remarkable throughout the period, with growth spikes on certain days. After the lockdown, our focus will be on the growth path for all segments as well as product evolution to provide an ever-growing solution list.
While the novel solutions mentioned above are mostly already available on our platforms, we will continue to further localize these, and look at partnering with more brands with the goal of making these available to our consumers.