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Understanding the value of paid search for automotive brands

Automobile manufacturers enjoy strong name recognition among consumers and, like most major global brands, find themselves naturally entrenched in top organic search listings for brand queries. Holding on to and bringing website traffic in from those top rankings often leads some to wonder if they need to invest in paid search for their brand name. Virtually all original equipment manufacturer (OEM) brand names make for very competitive keywords in paid search auctions, meaning whether a particular automotive manufacturer is bidding on their own brand or not, it can be expected that several others most certainly will fill those paid search listings anyway.

To help automotive OEM advertisers understand the value of bidding on their brand name, and what they can expect it may lead to, Microsoft’s Advertising Analytics Group set out to understand just how many clicks may be in jeopardy when relying on organic search listings alone, and how that may impact offline vehicle sales.

The importance of ad exposure

In evaluating paid search auctions for automotive OEM brands, we found that advertisers earn 2.1x more total clicks when they serve a paid ad for their brand versus relying on organic search listings alone.
Bar chart showing difference in click share in advertiser’s brand auctions between advertisers who served a paid add and those who did not.

Source: Microsoft internal data, May – July 2020, U.S. only. Bing owned and operated only. Based off average performance of 5 OEM advertisers, cross-tiers.

When a shopper searches for an OEM brand and that brand’s ad is not present on the search results page, 59% of clicks are not picked up by their organic pages. That means they are capturing just 41% of brand clicks when relying on organic search listings alone, while competitors are capturing 29% of clicks on their brand name (21% of which come from paid ads). However, when they do serve a paid ad on brand searches, OEMs capture 86% of total clicks (78% from paid ads and an additional 8% from organic listings). Furthermore, those brands reduce the amount of clicks that competitors are taking to just 8% of total clicks on their OEM brand terms.

This significant impact of showing an ad when consumers search for a brand is not isolated to just that one search either. Leveraging anonymized user search paths, our proprietary data allows us to evaluate what those users did next as well. When the OEM advertiser did not serve an ad on their brand keywords, 15% of users went on to search for a competitor OEM in their very next query, and 20% of users went on to click on a competitor. Again, this highlights the importance of ad exposure: Consumers may dither from selecting the brand for which they originally searched if they are not being exposed to that brand’s ads.

The connection between online and offline: paid search and vehicle sales

Going a step further, we looked at monthly new vehicle sales figures for 33 months (January 2018 – September 2020) to assess quarterly trends and show why getting as many branded paid search clicks is advantageous for automotive OEMs.
Bar chart showing the correlation between OEM brand clicks and vehicle sales from 2018 to 2020.

Sources:

  • Microsoft internal data, January 2018 – September 2020, U.S. only. Based off aggregated performance of 5 OEM advertisers, cross-tiers.
  • Publicly available market data from various sources including GoodCarBadCar.com.
  • Proprietary third-party data acquired by Microsoft.
 

Evaluating the relationship between clicks and sales, there is a 99% statistically significant positive linear relationship between branded paid search clicks and vehicle sales. While the consumer journey is multifaceted and paid search clicks are an integral factor, the data show that 29% of the increase in vehicles sold can be explained by the increase in branded paid search clicks.

Chart showing data to support the conclusion that 29 percent of the increase in vehicles sold can be explained by an increase in branded paid search clicks.

Sources:

  • Microsoft internal data, January 2018 – September 2020, U.S. only. Based off aggregated performance of 5 OEM advertisers, cross-tiers.
  • Publicly available market data from various sources including GoodCarBadCar.com.
  • Proprietary third-party data acquired by Microsoft.
 

What this equates to is that every six paid brand clicks an automotive OEM advertiser captures on the Microsoft Advertising Network leads to a corresponding increase of one more vehicle sold.* (*This is not a guarantee of sales, but an observation of a positive linear relationship.)

The data support the claim that automotive OEM advertisers can acquire 2.1x more clicks when serving paid search ads on their brand keywords, and offline vehicle sales increase as paid brand clicks increase, proving tremendous value in paid search investment.

Download an infographic of these findings: The importance of paid search in Autos.

For more automotive industry insights, check out our latest reports:

 

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