Automakers become social for the long drive

Academic Supervisor:
Professor Wahyd Vannoni
Hult International Business School
46-47 Russell Square - Bloomsbury
London WC 1B 4JP
United Kingdom
+44 (0) 207 636 5667
General Motors and Ford
CARMAKERS' SHIFT TO
SOCIAL MEDIAADVERTISING

The less understood social media and mobile applications …
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CARMAKERS' SHIFT TO SOCIAL MEDIAADVERTISNG
2
This is an independent study conducted
during the period 19th of June 2012 until
23rd of July 2012 for MGT 493, as an
independent course under the supervision
of Professor Wahyd Vannoni of Hult
International Business School.
In this report, I will explore how
the automobile industry have
embraced the social media
marketing. Two distinct automobile
makers will be included in this
process where the nature of their
marketing activities /operations
will be explored, particularly the
difference of their marketing
strategy within online platforms.
General Motors and Ford of the
United States of America will be
studied and compared to their
competitors in the American
market.
Scope:
I will engage companies' financial
reports, social media platforms, outreach
measure such as Klout and Facebook
statistics, financial institutions' report for
automobile industry trends, motor shows
and comments from various newspapers.
Limitations:
Observation will be limited by a five
week period only, from 18th of June, 2012
until 23rd of July, 2012. Time constraint
implicate limited data collection and
comparison with carmakers' published
sales. (Quarterly reports) Another
limitation is the question of brand
awareness through online platforms;
whether the awareness created has an
impact on overall sales.
Objective

“Advertisers are still coming to grips with how to use these more interactive platforms, analysts
say, and are reluctant to commit to Facebook and Twitter while there is no established metric for
measuring success.”(FT, 31.05.12)
The automobile industry is an assembling, technology-, knowledge and capital intensive, with a
relatively high capital-to-labour ratio and is being dominated by General Motors of United States of
America, Volkswagen Group of Germany and Toyota of Japan by total sales. ( Reuters, 2012)
According to OECD report, economic activity in the automobile industry usually moves in line with
the overall business cycle, where they studied the correlation between two variables in the Unites
States, Germany and Japan. A correlation is found between car sales and private consumption,
which might be a huge factor determining the total sales of the industry. This study shows how huge
the industry for vehicles is, considering that it a necessity for our development.
In our current economic environment where consumers are more conscious of their spending,
looking for more value for money, carmakers face greater challenge in convincing customers to buy
their products in addition to the more fierce competition between manufacturers.
Last year 2011, 58.89 million vehicles were sold worldwide compared to 56.82 million in the
previous year 2010. (Scotiabank, 2012) According to some research, one from Borrell Associates,
carmakers will spend 11.6bn USD of their total 30.9bn USD advertising budgets online in 2012,
which is up 39 per cent from 2011. This is a shift of branding from TV advertisements to online
media and smartphone applications.
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Introduction

Social Media is an umbrella term that defines the various activities that integrate technology, social
interaction and the construction of words, pictures, videos and audio.(M.Kagan,2008)
This definition perhaps summarizes the global picture of the social media fever, which has been a
significant element in changing our behavior and the way businesses operate today. Therefore, five
key elements are being captured; participation, openness, conversation, community and
connectedness.
Tools empowering the five elements:
Facts:
# Social networking sites are officially more popular than porn sites. (Time, Oct.2007)
# Wikipedia boasts almost 4,000,000 articles.
# 65,000 new videos being uploaded in Youtube daily.
# 901,000,000 Facebook users globally as of March 2012.
# 140,000,000 Twitter users in May 2012.
# Only 14% trust advertisements while 78% trust recommendations of other consumers. (Nielsen
2007)
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Social Media

This January 2012, General Motors (GM) was the world's top
selling automaker, Volkswagen in second place provided that
Toyota lags behind spotting the third rank. In the year ended
December 31, 2010, General Motors' advertising and sales
promotion expenses amounted $3.4 billion to support media
campaigns for its products and selling, - and marketing expenses
reached $0.6 billion real ted to dealerships. The total amount of
advertising and marketing is ca $4 billion, in generating $149
billion revenue. Total of $12 billion was spent for selling,
administrative and other expenses, where marketing falls under as
a category.
Ford Motor Company (F) is also an American
automaker, founded by Henry Ford,
headquartered in Detroit. Ford is ts the
second-largest U.S-based automaker after
GM, and one of the USA's Big Three
together with GM and Chrysler. In matching
GM's $12 billion, Ford spent $0.5 billion less,
$11.5 billion for selling, administrative and
other expense, in generating $136 billion
revenue.
Indirect costs include research and development, corporate operations, dealer support, and
marketing and are difficult to estimate because many indirect costs are difficult to allocate to
specific production activities or are not affected by levels of production. There are three levels of
complexity: low, medium, and high. Low-complexity activities would have a smaller impact on
manufacturers’ operations than high-complexity activities.
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Traditional Marketing

The key factor that affects marketing is whether consumers notice the difference. In the short run
for low-complexity activities, consumers are not expected to notice any change. For medium- and
high-complexity activities, consumers are expected to need additional information, with a greater
marketing effort for high-complexity activities than for medium. In the long run, consumers are
expected to have adapted to any changes, and no additional incremental increase in marketing is
expected. We are talking about activities such as new technologies carried by the vehicles being
sold by the automakers. For instance, a different kind of leather used in upholstery is of low-
complexity, while a a new feature of “driver capability” is of high-complexity.
Driver capability is a system that evaluates driver
aptitude and shuts down vehicle when incompetence is
detected. This system is not yet fully developed but the
closest technology there is in the market is Mercedes-
Benz E-Class, where the driver's normal behavior is
being recorded and established as driver's baseline
profile.
This is where marketing in the automobile industry arises. How
can social media market assist the industry, which platforms offer
the outmost utilizations and in what will be the impact???
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Expenses allocation

Founded in 2004, Facebook's mission is to give people the power to share
and make the world more open and connected.
Over 4 billion viewers every day which is a 50% increase since 2010 and more than 400 million
views per day on mobile devices, tripling in the past year. SIMPLY POST A VIDEO!
From Youtube Channels where
viewers can watch, enjoy and
engage emotionally with your
brand to Analytics where you as a
company can measure how well
your viewers like your videos and
learn how to improve your results.
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Platforms

For businesses and brands, Twitter conversations provide a
powerful canvas and context in which to connect messages and
their brand to what people are talking about right now. It’s a canvas
for telling engaging stories, for participating in cultural events, for
broadcasting content, for connecting directly with consumers, and
for driving transactions. Businesses can influence and participate in
real-time conversations on Twitter to drive consumer action with
integrated paid, earned and owned campaigns, delivering results
throughout the marketing funnel. Twitter also serve as a data base
where companies can listen and gather market intelligence and
insights.
Having chosen these three platforms: Facebook, Youtube and Twitter are parts of the term “social
media” and are grounds for the new market place where consumers and sellers meet. We are
increasingly moving into a new age where transactions and interactions take place digitally,
together with innovative mobile devices providing humanity extraordinary mobility. How does
General Motors and Ford utilize these three platforms and can it be said a success for their
operations? This we will look deeper into by exploring each company's accounts, responses from
the audience and news articles. Furthermore, we will position social media within the nature of this
industry, producing a SWOT analysis.
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Platforms

The main website of General
Motors, www.gm.com , features
the three platforms marked with a
red square. Positioning the three
icons in the mid bottom page
gives a hint of GM's effort in
social media usage.
http://www.facebook.com/generalmotors
GM has 396,665 likes and 5,920 outreach as of July
2012. The page includes the four main brands of GM;
Chevrolet, GMC, Chevrolet and Buick (from top left to
bottom right) and an icon for GM's Twitter account.
Shown above is the engagement by both enthusiasts and
haters of the brand, creating a community within the site.
Take note of the 851 likes and 70 shares.
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LIKE GM and FORD

Unlike GM where you can
immediately spot the icons for
social media once entering the
main site, Ford has a different
approach. Ford has created “Ford
Social”, http://social.ford.com/, which
is a page of its own after you enter
the main website. The site is purely
dedicated for social media leaving
the audience same choices as GM
(Facebook, Twitter) and Blogs with
the exception of Youtube. In
addition there is a Share This
button which allows the audience
to share the site through; Pinterest,
Google+, Fashiolista, Fark.
Compared to GM, Ford has significantly
more likes and wider outreach. The
difference between their figures must show
that Ford is more popular in social media
than GM. However, their total revenue,
shows a different picture, where GM had
$149B, while $139B for Ford. On the other
hand, Ford spent $0.5B less for or selling,
administrative and other expenses than GM.
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LIKE GM and FORD

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TWEET AND WATCH

As shown, both GM and Ford achieved to engage thousands of audiences in all three platforms.
Obviously, Ford got the lead with higher outreach than GM. The table shows a survey conducted by
Base 22, a software and IT consulting firm with offices in the US, Canada and Mexico. The table
produced also shows the same results, where Ford is taking the lead.
“Leading, engaged and
aware”, depict where car
manufacturers stand in each
platform. The table only
shows the results in North
America.
After collecting screenshots of our chosen
companies, GM and Ford. It is proper to state that
both entities have completed the chart provided by
PCG Digital Marketing for Automotive Advertising
Strategies. PCG Digital Marketing specialize in
automotive marketing concentrations including
digital advertising.
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VERDICT

It is too early to say that GM's and Ford's usage is a success based on the social
platforms they utilize and their interaction with the audience. There has not been
any research produced showing a correlation between social media and car sales.
Yet again..it is too early to judge.
According to a
research conducted by
Capgemini in 2011,
where they conducted a
research with more
than 8,000 in-market
consumers in the
mature markets of
France, Germany,
United Kingdom and
the United States, and
the developing markets
of Brazil, China, India
and Russia – social
media sites falls in the
bottom of the table.
However “family and friends” can be considered under the umbrella of social media, since they
somehow interact on social media platforms such as Facebook and Twitter. Red tabs represent top
information sources, providing evidence that car dealers still dominate information feed to
customers, with the only exception of China. Chinese consumers score 43% on web forums and
blogs and 32% on social media site, making the Chinese market dominate in social media platforms
participation. It is worth noting though, that the Chinese government conduct extensive screening
and has a good grip of control on what is on the internet sites within the boarders of China.
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VERDICT

Provided the table produced by Capgemini, a Triad can be drawn based on different sources that
influence consumers behavior. GM and Ford stand as the umbrella and the primary source of
information related their former, current and future products. For the secondary source are the
dealers under the umbrella of GM and Ford. Although these dealers are independent in their
operations, the information they feed to current and potential clients are in line with the primary
source, dependent on what has been published by the primary source. Information are considered to
be bias as most dealers only concentrate on one brand. A dealer of GM, deals with GM vehicles and
the same applies to a Ford dealer. On the tertiary source are websites and bloggers covering the
automobile industry. Tertiary sources have the freedom of comparing car brands, thus have more
independence from the primary and secondary sources. Also, tertiary sources offer more flexibility
and extensive comparison betwwen car brands in the market.
Information from these sources may flow in different directions, where the processed information
reaches the tertiary source as the last stop before the consumers.
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TRIAD THEORY

As we are only covering GM and Ford, their market would be USA. Thus, referring to the table –
car dealers, manufacturers' - and dealers' websites dominate with significant percentages. Having
covered manufacturer's websites and platforms, below are previews of car dealers online account in
the US, which gained good reputation among its customers and sustained loyalty from current
clients.
First out is GM with James Wood Motors,
being actively on Twitter with thousands of
tweets and followers. Recently, James Wood
Motors was featured on the Faces of GM blog
as a car dealership who knows how to
effectively use social media to engage with
customers. Notice the retweets and responses...
“A Dallas based dealership, James Wood uses
their online presence to talk with current and
potential customers without using sales
pressure. Their goal is to participate in
conversations about vehicles they sell;
not to say “hey, come buy a car here.”
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TRIAD – Secondary source

Unlike GM, Ford is its secondary source as being the primary source. One recent instance is the
Fusion campaign, where the three celebrities Micucci, Seacrest and McHale, must dole out 100
Fusion sedans.
Ford's top marketing executive stated
that, “ the celebrities were chosen on the
strength of their online popularity.”
“All three of them were important
because they already have very large
social grasps.”
“We're not starting from scratch.”
Collectively, the three have more than 10 million followers on Twitter, with Seacrest accounting for
more than 7.3 million. This dwarfs the 141,000 that track Ford's main Twitter account. According
to Klout, a company that uses Twitter and Facebook to measure influence online, Seacrest, McHale
and Micucci are in the 95th percentile of influence. (Reuters 2012)
Ford shows a different approach than GM, a more aggressive marketing than putting the dealers as
secondary source. Perhaps, the fact that Ford being the second-largest in the USA after GM can
soon be challenged with Ford's campaigns online and with the positive responses attained form the
audience. Too early to say that...
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TRIAD – Secondary Source

A tertiary source possess freedom in
conducting reviews of not just one brand but
often of several brands. In the automotive
industry, the most famous, is Autoblog - at
www.autoblog.com.
The company describes itself by, “ Autoblog
obsessively covers the auto industry with
news, reviews, podcasts, high-quality
photography and commentary about
automobiles and the automotive industry.”
Autoblog obtains 61% and +K of 10;
equivalent to influencing 10 000 people,
retweets and mentions. Majority of
Autoblog's audience are at the age bracket
of 30's upwards which correlates with the
website contents and ambience. Amid the
popularity of Autoblog, carmakers might
consider blogs such as this one, a threat
where an issue of “favoritism” can occur.
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TRIAD – Tertiary Source

Another tertiary source platform is Car Throttle which caters the younger audience of the
automotive industry. Car Throttle is a media brand focused on providing car reviews, news &
interviews aimed at the youth market. Started as a hobby for the young car enthusiast Adnan
Ebrahim, but also having the entrepreneur spirit in him, inputs were only published under his
personal account. As his idea was embraced by an audience and car manufacturers, Car Throttle has
been registered as a company, successful and profitable.
Evidence shows that CarThrottle is still a young
company compared to Autoblog. Kloud figure
shows the difference with the score and influences.
Note however, that despite of the influences
differential of 9k (10k - 1k), overall score
difference of 61 and 47 is not that wide.
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TRIAD – Tertiary Source

Based on Capgemini's research
which has been mentioned earlier,
the data sample of 8,000 in-market
consumers shows the significance of
Internet as a research tool. The chart
shows the percentage of consumers
saying that they use the Internet as
an information source during the
vehicle buying process.
“Price and product information
continue to be the primary web
features consumers look for when
they research vehicles. Additional
options high on the list include the
ability to compare vehicles and the
ability to get guidance and advice
over the web.” (Dcosta 2012)
Evidently, secondary- and tertiary
sources ( see blue arrows) gain more
interest than the primary sources.
Mature markets are France, Germany, United
Kingdom and the United States, and the
developing markets of Brazil, China, India and
Russia.
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OVERALL IMPACT

So far, only positive results have been expressed by the featured platforms. But as the saying goes,
“just as a coin has two sides, every story has two perspectives. Breaking news distorted Facebook's
IPO when the world's largest automaker just bailed out on them prior to platform's anticipated IPO.
“General Motors plans to stop paying for ads on
Facebook in a move that raises questions about the
social network’s business model ahead of its highly
anticipated initial public offering. GM said it would
continue to expand its use of Facebook pages for its
brands, which companies can set up for free.”
-FT,May 15, 2012
“Facebook executives have assiduously courted the world's largest carmaker. One source said
Facebook was not pushing for GM's immediate return, but offered to provide data showing the
effectiveness of the website's paid ads.” - IBTimes, July 3,2012
Apparently, there are two stories being told here, sharing the same ground. GM expressed that
Facebook had not done a convincing job of demonstrating what returns the new forms of
advertising for its brands would generate. (FT, 2012) Other carmakers does not spend as much as
$40 million dollar on Facebook as GM did. Subaru, a Japanese car maker, stated that they are
satisfied with the $5 million investment they had on Facebook, providing them pleasant results.
“This is the next phase of marketing and advertising and Id on't think GM, Facebook or any
other company is quite there yet because it's still emerging”. R.Lieb, analyst at Altimeter Group.
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SWOT

Having said that social media is the
new sensation and an emerging
market place, the presence of a
company will defend and bolster it's
position. Being in the same place as
your customers and potential clients
is what social media offers.
Social media platforms contribute in finding the sentiment
tone and emotions of consumers. These factors extracted
from thousands of conversations might contribute to car
makers' customer service approach. These results are also
forms of instant feedback regarding carmakers' status with
their customers and competitors, which they can break
down in different time periods.
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Strengths

Looking back at the web charts, Ford has undoubtedly been the winner among its peers. However, it
can be considered as weakness, when people who speak positively about your product are not
buying your product. What are words when it can not sustain a company's operations? Ford was
caught in this dilemma. Interpretation of platform results can sound positive but can produce
negative output.
“ Most of the companies have scores
slightly above the industry average,
Intention to Buy Scores for General
Motors and Chrysler are strongly below
average. This means that there is
considerably more conversation
regarding “intention not to buy” than
“intention to buy.” -Discovery Research,
2011
Positive Evangelism examines the Positive
speech minus the Negative speech and adjusts
for the industry average. The following are
some of the critical highlights found from the
data.
“Toyota, Honda, and BMW have strong
Evangelism Scores meaning that
conversation has stronger positive speak
than negative speak.”-Discovery Research,
2011
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Weakness

As mentioned in our introduction,
according to OECD report, economic
activity in the automobile industry usually
moves in line with the overall business
cycle, where they studied the correlation
between two variables in the Unites
States, Germany and Japan. A correlation
is found between car sales and private
consumption, which might be a huge
factor determining the total sales of the
industry.
Source : Bundesbank; INSEE; Datastream; OECD Economic Outlook
86 and Main Economic Indicators.
Aside from the the economic environment,
strongly correlated to car sales, another aspect
is the emergence of other social media
platforms. The Internet world is known for
taking the world with storm achieving sky-
high valuations but usually ends up with a
bubble. New social media platforms are going
to emerge aside from the the mergers and
acquisitions of current platforms. For instance,
Facebook's purchase of Instagram, amounting
$1bn last April 2012. (FT)
Users are exposed to the adjustment period due
to changes and amendments when two
platforms merge or one gets acquired. The
adjustment period can cost advertisers such as
the car industry time and money.
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Threats

Obviously, its is not just about getting most “likes” on Facebook. Some companies have taken
Facebook fan interaction to the next level. If you've always wanted to design a car, but hate the fact
that you actually need to go to "school" and have "experience," then Facebook cars is the thing.
Aston Martin decided to let their fans build a custom
model once they reach 1 million "likes."The
company let the fans build the entire car, letting
them choose the model, interior and exterior options
and the name. The resulting (and not very creatively
named) DB9 1M is simply stunning. -Carbuzz 2012.
THIS IS A NEW METHOD OF
SOLICITING BUYERS WHICH
MODELS THEY WANT TO BE IN
THE MARKET.
Nissan interacted with its Facebook fans,
letting them design a 370Z track car. The
company solicited opinions from its fans,
sourcing mods such as a GReddy twin-
turbocharged system and catback exhaust
system from those who voted. -Carbuzz
2012.
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Opportunities

Based on what has been said throughout this report, in can be summarized by “Social Media is a
new market place.” Websites are just for formality while in fact the selling and information are in
social media. Both GM's and Ford's Facebook pages boasts numerous videos and updates related to
their operations. However, secondary operators such as dealers and tertiary operators such as auto-
blogs and auto tweeps show more effectivity than primary operators (the companies themselves GM
and Ford). It can be said that dealers and bloggers are kind of a new segment outside the companies'
umbrella. For the dealers, their scope is limited to a certain area of their distribution, thus provides
them advantage in knowing their customers and how to catch their attention. Auto-bloggers on the
other hand serves as an independent body, possessing the freedom of comparing different car brands
as well as disclosing the features of individual brands.
Therefore, it is my verdict that secondary and tertiary operators benefit more from social media than
the primary ones. Dealers earn higher provision with more customers, white tertiary sources hoover
in numerous advertisement, sponsorships and goodies from carmakers. Matching the results of likes
and outreach with the total revenues and marketing expenses by GM and FORD, still does not
provide grounds for a measurement on social media advertising.
It is still worth claiming that for
the automobile industry, social
media and mobile applications is
yet less understood. However it is
unquestionable the fact that
awareness created through social
media provide popularity among
audiences and there is value
added.
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LOGOUT

2012. FACEBOOK SUBSCRIBER GROWTH BETWEEN 2011 AND 2012 [Online]. Available:
http://www.internetworldstats.com/facebook.htm [Accessed July 15 2012].
22, B. 2011. Social Media Score Card - North American Automotive.
BROIHIER, B. 2012. The Faces of GM: How James Wood Motors uses Social Media to Engage
Loyal Customers [Online]. Available: http://www.socialmediadelivered.com/2012/01/17/the-faces-
of-gm-how-james-wood-motors-uses-social-media-to-engage-loyal-customers/ [Accessed July
2012].
DCOSTA, F. February 20, 2012. Putting the customer in the driver’s seat – Social Media insights
for a rapidly transforming auto industry. Capgemini.
GM. 2012. Amanda Williams: Engagingwith customers online [Online]. Available:
http://www.facesofgm.com/2012/01/03/amanda-williams-engaging-with-customers-online/.
HENRY, J. 2012. How Facebook, Twitter Can Move the Metal [Online]. Advertising Age.
Available: http://adage.com/article/news/social-media-marketing-facebook-twitter-move-autos/145402/.
HINES, C. M. 2012. 5 Facebook-Built Cars [Online]. Available: http://carbuzz.com/news/2012/7/13/5-
Facebook-Built-Cars-7709704/ [Accessed July 2012].
KLOUT. 2012. Available: http://klout.com/#/therealautoblog/score-analysis.
LEADER, D. N. S. S. T. 2011. Social Media White Paper for the Automotive Industry. Discovery
Research Group Report.
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REFERENCES

MARKETING, P. D. February 12, 2011. Automotive Advertising Budgets Rise [Online]. Available:
http://www.automotive-advertising.net/20110212-automotive-advertising-budgets-rise/ [Accessed
July 2012].
NUTTALL, R. W.A. C. 2012. Facebook to buy Instagram for $1bn
. Financial Times.
SEETHARAMAN, D. 2012. Ford bets in star power, social media to launch 2013 Fusion. Reuters.
Reuters.
SHANNON BOND, A. E.-J. A. A. D. 2012. GM to pull back on Facebook advertising
. Financial Times.
SHIH, B. K. A. G. July 3, 2012 GM talking with Facebook about advertising again: sources.
International Business Times.
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REFERENCES

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INDEX

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