MSc in Marketing

How can Car Dealerships use Targeted Advertising to Reach

Customers More Efficiently? The Case of the Car Dealership Askja

June 2018

Name of student: Íris Hildur Birgisdóttir

Kennitala: 041190 – 2139

Supervisor: Dr. R.G. Vishnu Menon

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How can Car Dealerships use Targeted Advertising to Reach Customers More Efficiently? The Case of the Car Dealership Askja This 30 ECTS thesis is submitted to Reykjavik University in support of the candidature for a Master of Science degree. © 2018 Íris Hildur Birgisdóttir This thesis cannot be copied unless authorized by the author

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Declaration of Research Work Integrity This work has not previously been accepted in substance for any degree and is not being concurrently submitted in candidature of any degree. This thesis is the result of my own investigations, except where otherwise stated. Other sources are acknowledged by giving explicit references. A bibliography is appended. By signing the present document, I confirm and agree that I have read RU’s ethics code of conduct and fully understand the consequences of violating these rules in regards of my thesis. ................................................................................................................................................ Date and place Kennitala Signature

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Abstract The objective of this research is to find out how car dealerships can improve their

targeted marketing methods to better reach potential customers. This is the case of the

car dealership Askja, which is the official car dealership of Mercedes-Benz and Kia

Motors in Iceland. Two studies were conducted to understand how targeting should be

done within car dealerships. The first study was qualitative and the second was a

quantitative experimental study. In the qualitative part of this research six experienced

individuals from various marketing/advertising companies were interviewed using in-

depth semi-structured interviews to gain insights into how targeting should be done.

The interviews were recorded, transcribed and then analyzed through descriptive

analysis. In the experimental part of this research three advertising campaigns were

created through the Facebook Business page of Kia in Iceland, which Askja owns, to

study the impact of targeted advertisements. All three campaigns were for the Kia

Sorento, a well-equipped and elaborate SUV. The results from the qualitative research

showed that most of the respondents who were interviewed thought that car

dealerships were not doing very well when it came to targeted advertisements and that

there was definitely room for improvements. One of the most important things that

respondents recommended car dealerships could do to improve their targeted

advertisements was to establish systematic retargeting methods. Results from the

quantitative study showed that targeting broad audiences worked well to get a good

reach of people. However, in later steps of the advertising experiment the targeting

was narrowed and it did not lead to the end goal, which was to get people to order a

test drive online.

Keywords: Marketing, targeted marketing, targeted advertisements, retargeting, car dealerships, Iceland.

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Acknowledgements

First and foremost I would like to thank Askja and the marketing department there for

letting me do this thesis in collaboration with them. I was lucky enough to be a

marketing intern there in the fall of 2017 and got to know all the wonderful people

there. If it weren’t for them this study would not have been possible and for that I am

forever thankful. I would especially like to thank the marketing director of Askja and

the marketing representative of Kia in Iceland for all the help and for trusting me

completely to do this study. I would also like to thank the people that participated in

this study and gave their time to be interviewed. I am really thankful for their efforts

and input into this study.

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Table of contents

Abstract………………………………….……………………………..………….….4

1 Introduction………………………………………………………..……………….8

1.1 Research Question……………………………………………..……………….9

1.2 About Askja…………..………………………………………..……………….9

1.3 Thesis Structure…………………………………………….……..…………..10

2 Literature review…………………………………………………..……………11

2.1 Technological Innovations…………………………………………...……….11

2.2 Targeting………………………………………………………...……………11

2.3 Behavioral Targeting……………………………………………….…………13

2.4 Retargeting…………………………………………………………...……….13

2.5 Social Media…………………………….…………………………………….14

2.6 Targeting on Social Media…………………………………………...…….....16

3 Methodology…………………………………………………………………….18

3.1 Study 1 – Advertising Insights………………………………………………..18

3.1.1 Participants………………………………………………………………..18

3.1.2 Interview Procedure………………………………………………………19

3.1.3 Discussion on Interviews…………………………………………………20

3.1.4 Methods of Data Analysis…………………………………………...……20

3.2 Study 2 – Advertising Experiment……………………………………………21

3.2.1 Participants……………………………………………………….……….21

3.2.2 Design………………………………………………………….………….21

3.2.3 Procedure………………………………………………………………….23

3.2.4 Analysis………...…………………………………………………………24

3.2.5 Methods of Data Analysis…………...……………………………………24

4 Results…………………………….……………………………………………..25

4.1 Results from Study 1 – Advertising Insights……..…………………..……….25

4.1.1 Reaching Target Groups……………………………………….………….25

4.1.2 Traditional Media VS Digital Media………...……………………………27

4.1.3 Advertising on Social Media………...……………………………………29

4.1.4 Targeting on Social Media………………………………..………………31

4.1.5 Targeting in Car Dealerships……………………………..……………….34

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4.2 Results from Study 2 – Advertising Experiment…...………………..……….37

5 Findings and Discussion…………………………………………………….……40

5.1 Study 1 – Advertising Insights………………………………………………...40

5.2 Study 2 – Advertising Experiment…………………………………………….41

6 Conclusion…………………………………………………………………………44

References……………………………..…………………………………………….47

Appendix 1 – Interview Questions…………………………………………..……..51

Appendix 2 – Advertising Experiment…………………………………………….52

Appendix 3 – Kia Sorento Buyers…………………………………………….……55

Appendix 4 – Interview Inquiry Email……………………………………………56

List of Tables Table 1 – Participants from Study 1………………………….……………………...19

Table 2 – Results from Study 2…………………………………………………..….39

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1 Introduction

For companies to thrive they need to sell their products or services, if they don’t

manage to achieve sales they are consequently doomed to fail. Car dealerships are no

exception; they need to sell cars and their service in order to thrive. In order for car

dealerships to sell their cars and services they – like other companies, need to use

some form of marketing methods to communicate what they have to offer to the

public. Marketing can come in many forms and on many platforms and needs careful

planning. It is important for car dealerships to have a good marketing plan to follow

and know whom their target customers are and how they are going to reach them.

It’s ever more important for car dealerships to use targeted advertisements to be able

to reach their target customers more efficiently. It’s crucial to try to reach people that

are starting to look for a car, and targeted ads can be a very suitable solution. Car

dealerships in Iceland are highly competitive so it is becoming more and more

important to have advertisements that are targeted to be able to reach potential

customers that are looking for a car. There is a need for different approaches to

targeting and segmentation in online advertising because online customers have

different needs, characteristics and behaviors (Chaffey & Ellis-Chadwick, 2012).

Marketing trends are constantly changing and they are always becoming more and

more digital. That is why marketing practitioners must always be up to date with

technological innovation and know what mediums the consumers are using.

Nowadays when people talk about modern marketing, it usually includes digital

marketing; it has become a vital part of todays marketing methods. Social media

marketing is an important category of digital marketing. Social media platforms such

as Facebook have become a vital part of companies marketing methods and targeting

can be very useful when marketing on social media platforms (Chaffey & Ellis-

Chadwick, 2016). On Facebook marketers can target users for advertisements very

easily (Weintraub, 2011).

There is a lot to gain by using targeted advertisements on social media platforms such

as Facebook. The reason why this study was conducted was because it was noticed

how few car dealerships in Iceland were using systematic measures to target potential

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customers with targeted advertisements. It’s important for car dealerships to have a

customer touch point in early stages of the buying process and using targeted ads to

do so can be very effective. This study is important because is illustrates the

importance of using targeted advertisements for car dealerships in Iceland. This study

is mainly focused on targeting on social media platforms, such as Facebook.

The goal of this thesis is to find out how the car dealership Askja in Iceland can

improve their targeted advertising methods to be able to reach more potential

customers. The research question is based on this objective.

1.1 Research Question

The research question of this study is:

How and to what extent can Askja improve their targeted advertisements to better

reach their target audiences?

This study tries to find what marketing methods Askja can use to be able to better

reach their target audiences; people that are starting to look for a new car to buy. To

do that this study uses both qualitative methods through in-depth interviews and then

quantitative methods through an advertising experiment that was conducted on the

Facebook account of Kia in Iceland.

1.2 About Askja Askja is a car dealership in Iceland and was established in the year 2005. They are the

official car dealers of both Mercedes-Benz and Kia motors in Iceland. They have

around 100 employees. Their main goal is to be at the forefront when it comes to

service to customers and marketing of the products that the company sells and

services. Their goal is also to offer exceptional automobiles and to offer services that

fulfill the customer’s demands in safety, environment and reliability. The product

lines under Mercedes-Benz are split into passenger cars and commercial vehicles. Kia

sells only passenger cars line. Along with these offerings, Askja also sells used cars.

The marketing department is divided as follows; Askja has one marketing

manager that supervises all the marketing operations of the company and then they

have three marketing representatives; one for Mercedes-Benz passenger cars, one for

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Kia and one for Mercedes-Benz commercial vehicles and Askja’s used cars. They

also have a full time web manager and a graphic designer.

Askja is using a lot of marketing methods to market them selves and their

products and services. They advertise in a lot of traditional mediums such as

television, newspapers, magazines, radio and on billboards. They also advertise a lot

in digital media; they are active in advertising on social media platforms such as

Facebook, use display ads on Google and on Icelandic news websites. They are also

systematically using direct marketing methods such as reaching people or companies

by sending them direct mail or emails. The author of this thesis was an intern in the

marketing department of Askja and that is why this particular company was chosen.

1.3 Thesis Structure As stated here above, the goal of this thesis is to find out how the car dealership Askja

in Iceland can improve their targeted advertising methods to be able to reach more

potential customers. This study mainly focuses on targeting through the social media

platform Facebook. This thesis will provide insights into how car dealerships can

improve their targeted advertisements.

The first chapter is an introduction to this study; the chapter presents information

about Askja, the car dealership this thesis was done in cooperation with and also the

research question. The second chapter is a literature review where relevant literature

is reviewed, including technological innovations that lead to changes in advertising,

targeting, behavioral targeting, retargeting and targeting on social media. The third

chapter exceeds the qualitative research method, the semi-structured in depth

interviews and how they were carried out and also the quantitative experimental

research that was done on Facebook, and how it was designed. In the fourth chapter

the findings are summarized, both from the interviews conducted and from the

experiment. The fifth chapter discusses the results of this study, in relation to

literature. In chapter six are conclusions from this study and recommendations and

further research opportunities are discussed.

It was decided that it would be appropriate to use a qualitative approach by

conducting in-depth interviews with experienced marketing/advertising specialists in

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Iceland to gain a better insight into how they use targeted advertisements in their line

of work. A qualitative approach is best suited to gain a deep knowledge about a

subject (Merriam, 2016). In depth interviews allow for both open and freely

conversations and have flexibility for changes in the form of questions. It also allows

the interviewer to ask further questions about a subject of interest (Kvale, 1996). After

conducting the interviews it was decided to conduct an advertising experiment on

Facebook, by using advices given in the interviews.

2 Literature Review  2.1 Technological Innovations Leading to Changes in Advertising

What is known as traditional form of advertising such as using newspapers,

billboards, magazines and radio is increasingly being replaced by online

advertisements (Johnson, 2013). Practitioners and academics in marketing have been

witnessing a major transformation when it comes to marketing. There has been a huge

growth in the digital media, social media and in mobile marketing, but this growth

started when the Internet became mainstream in the early 1990’s. This growth

resulted in technological innovations such as the increased usage of the Internet,

inexpensive high speed broadcast networks and the expansion of social media

platforms such as Facebook and also increased usage and adaption of smartphone

devices. All this innovation has influenced how customers act across all these

platforms. This fast growth in mobile adaption has for example opened new ways of

marketing and has also opened new targeting possibilities. These developments in

social media for example have changed drastically how people communicate with

each other and how they communicate with brands (Lamberton & Stephen, 2016). For

advertisers the Internet is very appealing as a marketing media because it allows,

among other things, the accurate targeting of advertisements (Stríteský et al., 2016).

2.2 Targeting

To be able to reach and communicate with various groups of consumers, companies

have long relied on targeting, which is the dissection of a market into smaller

segments that is based on eloquent variables and a selection of a specific segment as

the target (Aaker, Brumbaugh, & Grier, 2000; Blattberg, Buesing, & Sen, 1980).

Bergemann and Bonatti (2011) described the difference between online and offline

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advertising as the ability to target. Targeted advertising is a method of advertising

where accredited methods can be used by online advertisers to target the most

appropriate target groups that have certain traits that are based on what merchandise

the advertiser is promoting (Plummer, Rappaport, & Hall, 2007). The traits that are

often used can be demographic; that would include factors such as sex, age, economic

status, level of education, race, employment and income level. The traits can also be

psychographic focused which means that they are based on the consumers’

personality, values, opinions, attitudes, lifestyle and interests (Jansen, Moore, &

Carman, 2013). They can also be behavioral variables, which would include purchase

history, browser history and other recent activities. Targeted advertisements are

supposed to be focused on certain features so that the consumers who are likely to

have strong preferences will see the advertisement instead of consumers who don’t

have interest in the product and do not match the product’s attribution. Targeting can

therefor contribute to eliminate wastage of companies marketing budgets (Lyer,

Soberman, & Villas-Boas, 2005). On the same notes the research that Farahat and

Bailey (2012) conducted showed that there can be substantial benefits of using

targeting for advertisers. The findings of their study showed that marginal cost of

brand related search resulting from ads was almost ten times cheaper when the ad was

targeted and the marginal cost of a click was about 4 times cheaper when the

campaign was targeted. However, their study also pointed out that the effectiveness of

targeted ads might be a little biased. Advertisers’ goals are to target their ads to

consumers that are most likely to convert as a result of the advertising. Their study

showed that this strategy might not be cost effective since a lot of consumers convert

in the absence of the advertisements. Their research also pointed out that it is critical

to not only compare how targeted and non-targeted consumer groups respond to

advertising but also how they respond in the absence of the advertisements.

According to Thierer's (2011) study there can be some benefits of targeted ads

for consumers; when the ads are targeted they are relevant to the consumer and are

therefore less frustrating than ads that are not targeted. The effectiveness of online

advertising is fundamentally determined by proper targeting (Stríteský et al., 2016)

and the need for targeted advertising is always increasing through the arrival of new

online channels (Johnson, 2013). Furthermore the study that Schlee (2013) conducted

claimed that in the future targeted advertisements will be even more important then

they are now.

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2.3 Behavioral Targeting

There is one form of targeting that has emerged because of prevalent Internet use and

developments in technology that traces the online behavior of consumers. This type of

targeting is called behavioral targeting and is an online targeting method that uses

some of the consumer’s online behavioral elements such as browsing history and

purchases to make a user profile that governs the ads shown to each specific person

(Yan et al., 2009). This behavioral targeting process is unique and different from

other forms of targeting because consumers are not only displayed ads based on

general psychographic or demographic variables; they are also not presented with ads

for the same products that they have already clicked on or viewed. Instead of doing

that, websites present digital advertisements to consumers that reflect the inferences

of the marketer based on what type of person they are, which is based on prior

individual level behavior of the consumer. As an example, a marketer would be able

to use this behavioral targeting algorithm to classify a consumer who purchased

energy saving light bulbs as the kind of person who is concerned about environmental

sustainability and could therefor be served with ad for other environmentally friendly

products or services (Lambrecht & Tucker, 2013).

The study that Alnahdi, Ali and Alkayid (2014) conducted showed that online

behavioral targeting was more effective than normal ads that were not targeted.

Furthermore the research that Goldfarb and Tucker's (2011) conducted showed that in

cases where regulation had limited behavioral targeting for advertisers, the impact of

advertising on consumers’ intention to buy the advertised product was reduced by

roughly 65%.

2.4 Retargeting

Retargeting is another form of targeting that is widely used among businesses and

marketers in the digital media arena; it is used to show ads to existing or potential

customers who have already visited the company’s website. One of the reasons

marketers use retargeting is to stay in front of the consumers across devices and try to

reach them at the right time - at the moment of purchase intent. One of the main goals

of retargeting is to exploit established awareness to drive conversion. This retargeting

tactic is widespread and popular because it tends to have the recency and frequency

that is needed to maintain the attention of a familiar, captive audience to drive

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conversions. For many marketers retargeting is a effective tool to drive repeat sales

and plays a crucial role in the marketing mix (Cosway, 2018).

Cosway (2018) also says that there are some things that marketers need to be

aware of and avoid, such as irrelevance, fatigue and bad timing of the ads. Even

though the advertisement is served up at the right time and on the right device it isn’t

guaranteed that it will be effective if it is not compelling or personally relevant. It

often happens that retargeting ads are persistent and consistent but not creative, clever

or engaging like they should be.

Lambrecht & Tucker (2013) conducted a study to see if retargeting really does

work. They were examining if dynamic retargeting was more effective than showing

generic brand ads that were not retargeted. They used data from a field experiment

that was conducted by an online travel firm. The results from their study suggested

that retargeted ads were, on average, less effective than the generic brand ads. On the

other hand, when the consumers had exhibited browsing behavior that suggested that

their product preferences had evolved, such as them having visited review websites,

the retargeted ads were outperforming the generic ads. Their findings suggested that

marketing managers need to be aware of the multistage nature of consumers’ decision

when they are evaluating how it is best to reach their target customers through ads.

2.5 Social Media

The main difference between social media and traditional media is that social media

allows people to express themselves freely and have a conversation with the person

who submits the message. Social media platforms allow conversations where people

and companies have a way to communicate with each other on a personal level

(Guðmundsson & Hauksson, 2009). Moreover, social media has made a major shift in

human behavior; it meets some of the human needs through commenting, contacting,

sharing and is subsequently becoming a big part of people’s lives (Li, Lin, & Chiu,

2014). There are a lot of opportunities for businesses on social media platforms and

social media has become a significant part of the marketing mix. Social media

marketing can be used to improve awareness, engagement, persuasion, conversion

and retention (Sterne, 2010).

Facebook is a really big social media platform with around 1,4 billion users on

a daily basis (“Company Info | Facebook Newsroom,” n.d.), making it the largest

online sampling of human beings on the planet. Facebook has become very important

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for advertisers among social media platforms (Weintraub, 2011). On Facebook

advertisers can target users for advertisements very easily and there are numerous

ways to target on the platform. It’s for example possible to target customers based on

their interests using an attribute on Facebook called “Precise Interests”. In that

attribute it is possible to refine the ad’s target audience based on the content that they

have submitted on their profiles, as well as Groups, Pages and other onsite content

that they have decided to connect with. That also involves sections such as Activities,

Interests, Favorite Music, TV shows and Music. All of the information in Facebook’s

social graph, which is the heart of Facebook demographic targeting, is considered to

be perhaps one of the greatest developments in marketing since it gives marketers so

many targeting options to be able to reach their target customers (Weintraub, 2011).

Moreover, Facebook knows their users very well, they know what they look like, how

they think, what they enjoy and what they visit because they are the world’s largest:

Liking site, photo-sharing site, linking site, thought-sharing site and demographic and

psychographic gathering engine (Marshall, Krance, & Meloche, 2017).

When advertising on Facebook there are some main advertising goals, they

include among others: Post engagement, website clicks, page likes, website

conversion and video views. Facebook also offers call-to-action operations such as:

Shop now, learn more, book now, download and sign up (Kolowich, 2015).

According to Bernazzani (2017) there are four components that an ad needs to fulfill

to be successful on Facebook. Firstly, it needs to be visual; the ad needs to be visually

appealing. Visual content is both treated favorably by Facebook’s algorithm and is

likewise more likely to be remembered by people than only written content. Secondly

the ad needs to be relevant, it is crucial for the ad to be relevant when advertising on

Facebook. According to the study showing ads that are not applicable to the target

audience is both a waste of time and money. Thirdly the ad needs to include an

enticing value proposition, which is to tell the viewer why they should click on the ad

to learn more about the product. Last but not least the ad need to have a clear call-to-

action. It is not enough that the ad is both high quality and relevant because without a

clear call-to-action the person might not know what to do next. The call-to-action

should encourage people to click the ad (Bernazzani, 2017).

Advertisers need to be aware of the fact that the majority of Internet use

nowadays is via smartphones and tablets; Facebook reports that mobile advertising is

85 percent of their total advertising revenues. Moreover, using mobile advertising

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through Facebook is even the only way for advertisers to reach some customers

(Marshall et al., 2017).

There is one platform that advertisers often use in combination with their

Facebook ads and that is the social media platform Instagram. Instagram is owned by

Facebook and it is very easy to drive ads from Facebook also to Instagram and many

companies take advantage of that option. Advertisers often use the platform to be able

to reach the younger generation, but it is often easier to reach them there rather than

on Facebook. The platform has around 700 million daily users (Marshall et al., 2017).

2.6 Targeting on Social Media

There is a tremendous amount of content that is produced daily on social media and it

is almost impossible for people to receive all the messages that are generated and

distributed daily. Nevertheless a targeted advertising approach presents

advertisements only to people that are likely to be potential customers according to

the content they have been looking at or the actions they have performed. Targeting

on social media can therefore be very valuable for advertisers to be able reach

potential customers (Li et al., 2014).

To be able to retarget on Facebook there is a analytical tool called “Facebook

Pixel” that lets advertisers measure the effectiveness of their ads by understanding the

actions that people have taken on the company’s website. The company website has

to have a pixel or “cookies” on their website for it to be possible to use the Facebook

Pixel tool. The pixel data can be used to retarget people that have visited the

company’s website to make sure that the ads are being shown to the right target

groups. It can also be used to customize advertising audiences and to unlock

additional Facebook advertising tools. The main purposes of the Facebook Pixel are

to reach the right target customers (audience building), push more sales (optimization)

and to measure the results of the ads (tracking). If the company’s website is not

getting enough traffic organically it is possible to use strategic Facebook ads to get

the target audiences to the website and then they can be later retargeted through the

Facebook Pixel (Marshall et al., 2017).

When someone visits a company’s website and takes an action, such as buying

something, the Facebook Pixel is triggered and reports the action. That allows

companies to know when customers took an action after seeing their ad on Facebook.

It also allows them to reach those customers again by using a custom audience. As

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more and more conversions take place on the company’s website, Facebook’s

algorithm gets better at delivering ads to people that are more likely to take certain

actions. Facebook calls this process conversion optimization (“Facebook Pixel,” n.d.)

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3 Methodology

As it was specified in the introduction chapter, the goal of this study is to find out

how the car dealership Askja can improve their targeting methods to be able to reach

more potential customers. To be able to reach this goal this study uses qualitative

research methods, which are best suited to gain a deep knowledge about a subject

(Merriam, 2016). This study also uses a quantitative experimental research design.

Six marketing specialists or individuals highly experienced in marketing were

interviewed in order to gain a better insight into the marketing methods of car

dealerships in Iceland. These marketing specialists were interviewed using an in depth

semi-structured interview method.

After having interviewed those six marketing specialists the decision was made to do

an experimental research using the Facebook account of the car dealership Askja.

3.1 Study 1 – Advertising Insights To gain better insight into what marketing- or advertising specialists thought about

targeted advertisements and how car dealerships were doing when it comes to

targeted ads a qualitative study was conducted through six in depth semi-structured

interviews.

3.1.1 Participants The six individuals that accepted to take part in this study and were interviewed are

operating in various companies but all have in common to be highly experienced in

marketing and/or advertising. They come from marketing consulting companies,

advertising companies and one interviewee is working as a marketing director in one

of the biggest car dealerships in Iceland.

The individuals were selected after an online search for highly ranked people working

inside the biggest advertising and marketing agencies or inside the marketing

department of car dealerships in Iceland. Table 1 below shows more about the

participants such as which sector they come from and their position, but their names

will not be disclosed.

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Firm Sector Interviewee Time/minutes

A Marketing agency Marketing specialist and

consultant

46

B Marketing agency Owner and marketing consultant

32

C Marketing agency Owner and marketing consultant

30

D Car dealership Marketing director 42

E Advertising agency Chairman of the board

33

F Marketing agency Digital marketing consultant

31

Table 1 – What sector the participants come from, their position, and duration of

interview.

3.1.2 Interview Procedure Study 1 is a qualitative study and includes six in depth semi-structured interviews;

most of the questions were open ended and lead to open and freely discussions. Some

questions lead to continuous questions about the subject, depending on the

interviewee. The in depth semi-structured interviews were structured around asking

participants about marketing and targeted advertisements of car dealerships in

Iceland. To conduct the qualitative study, a list of open questions was created that

served as a guide during the interviews, some of the questions were aligned to fit the

interviewees. The questions that were used as a guide can be seen in Appendix 1,

page 51. All the interviews were recorded, with permission from the interviewees and

then later transcribed for the purpose of this study. All the interviewees were told that

they did not have to provide any private or confidential information.

The interview time and location was agreed upon through email communication with

each interviewee, and in all of the six interviews the location was in a meeting room

or a private area in the interviewee’s workplace. All the interview settings were in a

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quiet and relaxed space with no interruptions and allowed easy communications. All

of the interviews took place between 5-8 March 2018.

All of the respondents knew the interview theme of the thesis beforehand as it was

stated in the email that was sent out to the respondents when they were first contacted

(see the acquisition email in Appendix 4, page 56). They were not given any of the

interview questions prior to the interviews to allow discussions to be more open and

free and so that respondents could not have prepared or practiced answers beforehand.

Before asking interview questions the research was introduced and a brief overview

was given on the subject of the preceding questions. After doing that the interviewee

was asked if he/she was comfortable with starting the interview questions on that

subject. All the interviews were conducted in Icelandic since all of the interviewees

were Icelandic. It was thought to be an easier setting than asking them in English. The

interview durations ranged from 30-46 minutes, with all of the topics covered.

3.1.3 Discussion on Interview Proceedings The semi-structured design of the interviews allowed for the discussion to flow freely

and the interviews often took a different direction. All opportunities were used to ask

more profound questions to gain a deeper understanding of a certain topic. The

questionnaire was used to guide the interviews, but not all questions were necessarily

used in each interview. Each theme of the study was visited in the interviews but with

space for the interviews to take a different course.

3.1.4 Methods of Data Analysis The data collected from the qualitative interviews was studied through a descriptive

analysis. Firstly the qualitative data that was attained through interviews was

transcribed from sound recordings to written text. After that the respondents’ answers

were analyzed interpretively. The answers from the respondents were categorized into

five themes. It is worth noting that although answers were categorized into five

themes the answers might overlap regarding to the themes. The answers from the

respondents can be seen in chapter number four.

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3.2 Study 2 – Advertising Experiment

3.2.1 Participants The participants in study 2 varied regarding to the campaigns but in all of the

campaigns only participants who were 31 years or older were targeted since 97% of

Kia Sorento buyers are 31 years or older (see Appendix 3, page 55). Only people that

lived in the Reykjavík capital area were targeted. In this study both females and males

were targeted.

Campaign 1

In the first campaign everyone in the Reykjavík capital area who were 31 years old or

older were targeted. The target group in the first campaign was intentionally set broad

to be able to reach as many people as possible that were likely to be interested in the

Kia Sorento.

Campaign 2

In the second campaign everyone who were 31 years or older, lived in the Reykjavik

capital area, and had visited the Kia Sorento website in the last 30 days were

retargeted through the use of the Facebook Pixel that is on the Kia Sorento website.

Campaign 3

The ad in the third campaign had weighted split test target audiences. The people

targeted were split into two target groups. The first target group were people 31 years

or older who had visited the Kia Sorento website in the last 30 days through the use of

the Facebook Pixel that is on the Kia website. The other target group were people 31

years or older who had watched 3 seconds or more of the video from the first

campaign.

3.2.2 Design In study 2 there was an advertising experiment conducted using the official Facebook

account for Kia in Iceland that the car dealership Askja owns. The car brand that was

chosen for this experiment was the Kia Sorento, a well-equipped and elaborate SUV.

  22  

The experiment was divided into three advertising campaigns. All of the ads can be

seen in Appendix 2 on page 52.

Campaign 1

The first campaign was a split test advertisement (which means that the ad was split

into two ads). One ad with a video and a text about the Kia Sorento and with a link to

the website for the car and then another ad one with a picture and a text about the Kia

Sorento and also a link to the website for the car. The first campaign was designed to

get people to click the link to get more information about the Kia Sorento to drive

traffic of interested customers onto the Kia Sorento website, so that they could be

retargeted in later stages of the experiment.

Campaign 2

The second campaign was also a split test advertisement. One with a brochure (a

picture came up with the brochure), a little text and attached to it was the brochure for

the Kia Sorento. The other one was a video with a little text and attached to it was the

brochure for the Kia Sorento. The brochure that was attached was a link from the Kia

website. The goal of the second campaign was to get people to click the link to view

the Kia Sorento brochure.

Campaign 3

The third and last campaign was a lead advertisement to get people to test-drive the

Kia Sorento. The ad had weighted split test target audiences (which means that there

were two target audiences created, and Facebook chooses the one that works better).

The goal of the last campaign was to get people to test drive the Kia Sorento. To

measure that a lead ad was created with a call-to-action form where people could

“sign up” for a test drive for the Kia Sorento. The lead ad offered to directly come to

people for a test drive. If they signed up for a test drive, a sales representative would

contact them to find a suitable time and would bring the car to their homes or

workplace.

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3.2.3 Procedure This advertising experiment was conducted in close collaboration with the marketing

manager of Askja and the marketing representative of Kia in Iceland. The author of

this thesis got access to all marketing material for the Kia Sorento to be able to create

this advertising experiment. Kia’s marketing representative approved all texts, photos

and videos before the ads were published. The ads were created in the Ads Manager

that is in Facebook Business Manager. The campaigns took place between 3-10th of

April 2018.

Campaign 1

The first campaign was a split test ad, one ad showing a photo and a text and the other

showing a video and a text of Kia Sorento (See Appendix 2, page 52). Both had the

same text in the description. The text said “Exceed in a new Kia Sorento! The new

generation of Kia Sorento includes a powerful design, clever technological solutions,

a eight-step automatic transmission and a low fuel consumption 200 horsepower

engine”.

The ad had the call-to-action button “Learn more” so that people who clicked that

were directed to the Kia Sorento website. The goal of campaign 1 was to get people

interested in Kia Sorento to click the “Learn more” button to direct them to the Kia

Sorento website so that they could be retargeted in later steps.

Campaign 2

The second campaign was also a split test ad; one showing a video with a brochure

attached and the other ad only had the brochure (that came with a picture) (See

Appendix 2, page 52). Both had the same text in the description. The text said “What

is it that makes Kia Sorento exceed? Learn more about one of the best looking and

well equipped SUV in its class”.

The ad had the call-to-action button “Learn more” so that people who clicked it were

directed to a website showing the Kia Sorento brochure. The goal of campaign 2 was

to get people who were already interested in Kio Sorento to learn more about the car

by looking at the brochure.

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Campaign 3

The third campaign was a lead ad with weighted split test audiences. There was only

one type of ad in this campaign (see Appendix 2, page 52). The lead ad showed a text

and a picture that was linked to a call-to-action lead form, so people who clicked the

picture or “Sign up” were directed to a sign up page where they could leave their

name, phone number and email address and a Kia sales representative would be in

contact with them to find time for a test drive. The text in the ad said “Would you like

to get a test drive to your home or to your work? Now you can order a test drive when

it suits you and we will bring a new Sorento to you! Fill out the application and we

will be in contact with you. Notice: This is only valid for the greater Reykjavík area”.

3.2.4 Analysis In study 2 “reach” or how many people the ad reached was measured. Click through

rate (CTR), or how many people clicked on the ad was measured. Impressions were

also measured. Impressions show the number of times the ad was shown on the screen

for people in total. The cost per result was also measured; it shows the average cost

per result from ads (cost-per-click). The amount of money that was spent on each ad

was measured and also the engagement or actions that were taken on each ad.

The author of this thesis also asked the Kia marketing representative to be

informed if there was any increase of Kia Sorento cars bought, test drive, or

customers asking about the car.

3.2.5 Methods of Data Analysis To be able to conduct the advertising experiments the Facebook Business website of

Kia was used, both to create the ads and also to view results from the ads, that was

done through the Ads Manager. To be able to retarget people in the experiment the

Facebook Pixel was used, which is a “cookie” software on the Kia website that is

connected to Facebook. The Facebook Pixel allows for people that have visited the

Kia website to be retargeted on Facebook.

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4 Results 4.1 Results from Study 1 – Advertising Insights The results from the interviews taken will be presented here below. The results were

categorized into five theme chapters where the responses were coordinated from the

respondents. Included are selected quotes from the respondents.

Here below will the answers from the interviewees be presented that are related to

each theme chapter.

4.1.1 Identifying and Reaching Target Groups for Car Dealerships To try to understand how car dealerships should reach their target groups the

interview respondents were asked questions on that subject. The respondents came

from different companies and not all of them had worked for a car dealership before

but they were asked to put them selves in the position as to how they would do it if

they were working for a car dealership.

All of the respondents talked about the importance for car dealerships to identify and

define target groups, respondent from firm C even went so far to say “It is absolutely

necessary to define target groups, if marketers don’t do that it would indicate that

they are frauds”. On the same notes another respondent stressed the importance of

defining target groups: “On the scale of 0-10 the importance of defining target groups

is 11. If the marketer hasn’t defined the target group he/she does not know whom they

are talking to, with what ways they should talk to them or where they should talk to

them. Without defining target groups the marketer is just throwing away marketing

money, something that we call prey and spray, then you are not getting through to the

right target groups, the people that are likeliest to have interest or to the ability to buy

the product” (Respondent from firm B).

When Respondent C was asked how he would define a target group for a car

dealership he said “I would in fact not do it for the car dealership it self-but for the

various car models that the car dealership sells”. Respondent from firm E was in

coherence with that statement and said: “When it comes to defining target groups for

  26  

cars you need to define target groups for each car type and understand what the

needs are that the car fulfills. There can be different types of people that the car is

suited to and then we have different messages to each target group, the same car can

be a family car and for people with active lifestyles and for people who love to go

skiing, then you have three different target groups that all get different ads”.

Regarding to defining the target group it’s also very important for car dealerships to

find out whom it really is that is making the buying decision as respondent from firm

A pointed out: “When defining target groups it’s important to begin with looking at

whom it really is that is making the buying decision and where they are in their life

cycle, what type of car they are looking for, how much money they’ve got and what

type of payment the person is going to use”.

It’s imperative for car dealerships to gather information about customers to be able to

improve the customer relationship and try to get people to test drive the cars as

respondent from firm D, a car dealership pointed out: “We try to gather as much

information as possible about our customers, among other things to be able to offer

better service. We try to gather information from potential customers, like when we

have events or car premieres we try to get people to sign up to be on our email list.

We also try to get people to try the cars, and when people have tried the car they are

much more likely to buy the car, so that is one of our goals”.

When respondent from firm F was asked how they reach target groups for the car

dealership that they work for he said: “We do a media strategy for the car dealership

as a whole and then for specific car brands and from how the target audiences are

defined. We look at the media data and how they are composed. This depends on what

we are working at each time, what the goals are, what percentage of our target group

we need to reach within a given period and what type of messages we need to

communicate.”

It was different between respondents what sort of traits they went with when they

were deciding whom to target, but most of them said they were using a mix of

psychological and biological traits. When respondent from firm E was asked what

sorts of traits they go by when they are targeting he said: “We are mostly defining

  27  

target groups regarding to people’s interests and lifestyle, so we’re more using

psychological traits rather than biological traits”.

To have a well-defined target group is very important as it has been stated before, but

it can be even more significant when advertising online than in traditional media as

the respondent from firm A stated: “Defining target groups for car dealerships is

even more important when advertising on digital media platforms, it allows the

marketer to approach the target group with more evident certainty and it contributes

to getting more for the marketing budget”.

Results from interviews with respondents show that it is extremely important for car

dealerships to have well defined target groups and have a good strategy as to how to

reach their target customers.

4.1.2 Targeting through Traditional Media VS Digital Media Companies are advertising increasingly more on digital media platforms. The

respondents were all using digital media advertising as a part of their marketing mix

and all of them agreed that digital media marketing is growing. In one of the

respondent’s company they in fact put all of their focus on digital marketing: “The

company that I work for specializes in digital media, the company started all their

focus from digital media point of view and we usually don’t use traditional media

unless the customer feels that it is necessary” (Respondent from firm A).

When asked about the development of digital media in his firm respondent from firm

E said: “We are just like every company, the rate of the Internet is always growing

and the opportunities on the Internet are always growing. We made a lot of changes

about 10 years ago when we put the Internet in the first place and yet we are always

going further and further into the Internet and I feel that there has been a very fast

development for about the past two years”.

Using digital media to advertise gives companies much more targeting possibilities

than on traditional media. Respondent from firm B said: “Digital media allows the

marketer to target much better than on traditional media, because then we have

personal information and profiles that can be targeted”. On the same notes

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respondent from firm C said: “Targeting advertisements online can be pretty precise

because it allows us to aim at a certain topic, behavior or a certain website. It allows

for a much better aim at the target group, better than on any other traditional media,

and if it’s well done it can be very valuable and important”.

It’s not only more targeting possibilities that are gained by advertising in digital

media, it also provides the marketer with more measurable results than on traditional

media.

“Digital media allows for more targeting options than traditional media does and it’s

better to measure performance from digital media than traditional media. We can

target people in digital media based on their interests or based on what they have

been doing on the Internet, so it gives us much more possibilities to optimize

advertisements based on responses that can presumably not be done in traditional

media. The growth of digital media has been growing considerably recently, for the

past three to four years, but the Icelandic advertising market been relatively late to

receive those changes” (Respondent from firm F).

Although digital media is growing not everyone agrees that they are taking over in

advertising and like respondent from firm F noted the Icelandic advertising market is

relatively late to receive the growth changes of the digital media.

“Digital media is growing compared to traditional media, but I think that some

people overestimate this development too much, like they can dissolve traditional

media, but we are still not there, television is for example still the strongest

advertising medium” (Respondent from firm C).

“To achieve overall impact of marketing companies need to be on more than one

platform so it has to be a good marketing mix. Digital media’s role and usage is

always increasing but they will never take over, there a long way ahead until that

happens. Many people have predicted that television as a advertising medium is dead,

but television has never been more strong as a advertising medium as it is now, so

that is only myths that have no grounds” (Respondent from firm B).

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It is well known that car dealerships put a lot of their marketing money into

advertising in newspapers and it’s controversial whether they should keep doing that

or whether they should focus on spending more on advertising in digital media

instead.

“Car dealerships are throwing way too much money into newspapers, newspapers are

always full of ads from car dealerships. It’s possible to reach much more people with

the same amount of money through the Internet” (Respondent from firm E).

Respondent from firm D, which is a car dealership, talks about how they are trying to

cut themselves away from advertising in newspapers, because it’s so expensive and

that it’s just “one-off”. The respondent talked about how much is possible to do with

the same kind of money in digital media versus for example one full-page ad in a

newspaper. “One full page ad in a newspaper is about 230-250 thousand kr. and you

can imagine what is possible to do with that amount in digital media, and for a longer

period, it’s something we often think about. But our main customers are over 40 years

old and that is why we have to keep on using newspaper advertising in our marketing

mix, because those people over 40 are reading the newspapers.”

Results from the answers from respondents’ show that digital media is growing fast

and that advertising in digital media is a very important part of the marketing mix for

car dealerships. However most of the respondents did not think that it had yet come to

it that the digital media is taking over traditional media.

4.1.3 Advertising on Facebook and Social Media All respondents said that they actively use Facebook as an advertising medium; they

also said that almost all of the posts now need to be sponsored on Facebook to get a

good distribution.

“All posts now need to be sponsored on Facebook, companies used to use a lot of

games or competitions on Facebook, tag a friend, share the post and that sort of

things to get increased distribution but Facebook has eliminated that, their

algorithms don’t allow that anymore. I’m willing to spend much money on Facebook

  30  

since I know what I’m getting for the money; it’s money well spent and I get highly

proactive and targeted advertisements for that money” (Respondent from firm B).

When Respondent from firm E was asked how they reach their target groups and how

they use social media to do that he said: “We use all sorts of ways, we of course drive

ads through social media and we make a lot of content that appeals to certain groups

and we also use influencers a lot. But the key is to create good content.”

Facebook’s purpose and goals as a marketing tool varied between respondents, it’s

among other things used to increase the brand awareness, drive traffic to a webpage,

add new knowledge and to trigger curiosity and interest of people.

“We use social media platforms as a tool to improve knowledge for people so that

they know more about a certain brand or how some product works and also as a tool

to remind people about the brand and to increase brand awareness. The messages on

Facebook depend on where people are located in the buying process and what the

marketing goals are. When advertising cars on Facebook there is a lot of information

that can be used to trigger interest and curiosity of people” (Respondent from firm

C).

“When we are advertising on Facebook we are usually thinking about driving traffic

to a specific website, some website that gives more information about the product or

service and gives the opportunity to buy the product for example. It’s typical in our

firm to start with content that is pretty general, often a video and try to test the market

with that content, try to see who is interested in that content. After that we try to break

the target group down after viewing who visited the website link, with the information

that Facebook gives” (Respondent from firm A).

Respondent from firm A talked about how Facebook is suitable for experiments to

find out which ads work best to reach their target groups. Experimenting on Facebook

makes it easy for them to find out which ads work best and as a result they go into

more production of that content.

“Facebook is a very good tool to experiment with what works and what doesn’t work,

  31  

something that it for example not possible to do in television or in print media.

Facebook allows us to tell many small stories and we can for example put together 27

different ads, drive them for 3-4 days and then we would soon see which one works

best and what most people seem to be looking at and then we will go into more

production of that content idea and throw the other ones that don’t work away”

(Respondent from firm A). It can sometimes be necessary to experiment when creating ads on Facebook.

Sometimes unexpected target groups can show up when the target is set broad

intentionally on Facebook.

“Sometimes it’s necessary to experiment when advertising to target groups, like on

Facebook for example, sometimes when advertising on Facebook some unexpected

target groups show up when the target is set broad intentionally. To find out who the

real target group is it is necessary to examine the data well (Respondent from firm

A).

Results from the respondents’ answerers show that advertising on Facebook and

social media is really important for car dealerships. It can also be inferred that almost

all of the posts on Facebook now need to be sponsored to get a good

distribution/reach. It was mentioned by some of the respondents that advertising on

Facebook is actually pretty cheap and marketers get well their money’s worth when

they advertise on the platform.

4.1.4 Targeting on Facebook and Social Media Facebook as a marketing tool gives companies a lot of targeting options to be able to

reach the right customers, at the right time. All respondents except the one from firm

D, the car dealership, were using targeting on Facebook systematically in their

marketing jobs.

Respondent from firm F said they are not necessarily trying to reach as many people

as possible with their ads on Facebook but rather using the platform to reach people

that they know are interested in their products, which is done through targeting.

  32  

“We use Facebook as an advertising media, we focus on ads that are targeted so that

people who see the ads are people that we know are interested rather than using

Facebook as a tool to reach as much people as possible. When we are deciding how

to target on Facebook it can be based on interests, age, location, biological factors

and last but not least based on what people have been looking at online. If people

have been looking at a specific car brand they will be targeted regardless of their age

or other factors. So the retargeting strategy often comes before other factors”

(Respondent from firm F).

Respondent from firm F goes on and talks about how they use social media platforms

such as Facebook to share content that appeals to their target groups and that they are

systematically using retargeting to target people that have been viewing cars on the

car dealership’s website.

“We use social media platforms such as Facebook to share content that appeals to the

target groups or those that follow the brands of the car dealership. We retarget a lot

through social media and also online, so that if people have been viewing some

specific car brands on our website we will republish ads to them so they will see ads

for the specific car they were looking at” (Respondent from firm F).

One method of retargeting on Facebook is to use videos; or rather how long people

watched a video that the company posted. It allows the marketer to send out different

messages to people; people who watch the whole video would presumably be more

interested than someone who barely watched any part of the video and hence they

would get different messages.

“One good reason for using videos when advertising on Facebook is that it allows for

the marketer the retarget the person by how long he or she watched the video. So it

allows the marketer to send out different messages to people regarding to how long

they’ve watched the video for, so a person who watches the whole video for example

might probably be interested and could then later be retargeted with more

appropriate messages that will try to lead him/her to a sale (Respondent from firm

A).

  33  

To be able to retarget people on Facebook who have been to the company’s website it

is necessary to have installed the Facebook Pixel on the company’s website. Facebook

Pixel allows companies to target customers that they know have interest in their

products, people who have been to their website.

“A good way to retarget people on Facebook is by using the Facebook Pixel, by using

that the marketer can target a person they’ve never met before in a strategic manner,

and that is something that car dealerships should be doing, they can target people

with ads for the specific car that they were looking at on their website” (Respondent

from firm A).

When respondent from firm D, a car dealership, was asked if they were using the

Facebook Pixel on their website to target people on Facebook the respondent said that

they have it connected to their website but that he has never looked at the results/data

from it. The respondent also said that they wanted to do better when it came to

retargeting and that it was something that they could improve upon.

“Our marketing department experimented with targeted advertising, we tried for

example targeting to women, specific age groups or to people’s interests and we felt

that we did not get enough reach or engagement on social media by doing that, and

we were not selling enough either. After a few months of experimenting with targeting

to special target groups we decided to stop that, we started setting our ads to broad

audiences again and then we were doing better in sales. We have two goals when it

comes to marketing cars, to reach potential buyers, and then also to plant seeds to

future potential buyers and that was one of the reasons we didn’t want our target

groups to be too narrow” (Respondent from firm D).

Most of the respondents talked about the importance of using targeted ads on social

media and to use retargeted ads to target people who had been to the company’s

website. Most of them recommended using the Facebook Pixel to retarget on

Facebook.

  34  

4.1.5 Marketing and Targeting in Car Dealerships in Iceland Buying a car is a really big investment for people, or at least most people. It’s usually

the second biggest investment that people make, after housing. People put a lot of

thought and take due care when buying a car and the buying process is usually pretty

long. Car dealerships should take due care when it comes to reaching their target

customers. Their marketing plan and material needs careful planning and needs to be

customized to fit each medium as respondent from firm A noted.

“All marketing material needs to be customized to fit each medium and to the target

group, and especially in car purchases, especially for expensive cars, people take due

care when it comes to picking the right car to buy” (Respondent from firm A).

It’s important for car dealerships to have a customer touch point on all stages in the

acquisition process, right from when people start to consider buying a car until they

have bought the car as respondent from firm F mentioned.

“Our goal is to have a customer touch point on all stages of the acquisition process.

We always need to look at the interplay of traditional media and digital media and

look at the acquisition process right from when people start to consider buying a car

until they have bought the car. Factors such as getting people to the showroom and to

test drive are really important” (Respondent from firm F).

It’s important to try to reach people that are starting to look for a car, and also people

that are further along in the buying process. People that go to a showroom to look at a

car, or test drive a car have come pretty far in the buying process. Reaching those

potential customers is really important for car dealerships, and that’s where car

dealerships could certainly do better.

“Car dealerships could be doing much better when it comes to reaching people who

have been to the showroom, that is something that definitely should be improved and

be done better. They should be using tactical measures to show ads to people after

having had a customer touch point with them, for example when they first came to the

showroom or when they visited the website, through retargeting. That is where car

  35  

dealerships could really improve” (Respondent from firm F).

Respondent from firm E said that they are using retargeting and that they have a way

of reaching people that come to the showroom by getting them to sign up for a game

where they can win something, and that allows the car dealership to target them later.

“We are using retargeting and we are also targeting people that come to the

showroom, we have ways to get people to sign up for a game to be able to target those

people” (Respondent from firm E).

Using targeted ads has the potential to maximize the profitability of the marketing

budget and to eliminate wasted marketing money for car dealerships as the respondent

from firm B noted: “By using targeted ads car dealerships can eliminate wasted

marketing money, and they are not only eliminating wasted money by using targeted

ads but also maximizing profitability of their marketing budget”.

Respondent from firm A mentioned that companies need to make sure that not all of

their content is them trying to sell something, they should also try to post content that

is fun and interesting so that people don’t get tired of the company always trying to

sell something to them.

“Companies need to make sure that not all of their content is them trying to sell

something, it’s necessary to also use content marketing and show content that is fun,

like tips and tricks or just something fun, it can’t all be sales messages. It has to be a

good combination, to inform, educate and make people buy, people get tired if you

are always trying to sell them something. Companies should be creating more of fun

content and fun short videos and maybe try to take some of the money from print

media into making fun content for the digital media” (Respondent from firm A).

When respondents were asked how they think car dealerships are doing when it

comes to targeted advertisements most of them thought that they were not doing very

well and that there was definitely room for improvements.

  36  

“It’s surprising how many car dealerships seem to be not strong when it comes to

targeting and retargeting but I noticed that most of them have Facebook Pixels

installed on their website to some degree. It’s a waste of valuable website visits to not

be retargeting people after they’ve visited the company’s website. Especially for car

dealerships, since cars are quite expensive. The acquisition process for buying a car

is rather long, much longer than for most other things, most people take a long time

before they finally buy the car. The car dealerships should be reaching out to all

people that visit the website and put together a process with extension ads and

messages and offer people to test drive the car they were looking at. Overall I think

that few car dealerships are doing very well when it comes to targeted

advertisements” (Respondent from firm A).

This quote from Respondent from firm A was used as an inspiration for the

Facebook experiment that was conducted, retargeted ads were used and extension ads

were created in the experiment and a lead ad where customers were offered to test

drive the car.

Sometimes it can be hard to tell if the advertisements that we see are really targeted or

not. Respondent from firm C felt that it was difficult in Iceland to aim advertisements

to specific target groups because the mediums have too wide of an aim than the target

groups that they are trying to reach.

“Sometimes it’s hard to tell if the ads that you see on the Internet are targeted or not.

But I think that companies are not targeting ads enough and I think that one of the

biggest problems with marketing in Iceland is that it is difficult to aim ads to specific

target groups because most mediums have too wide of a aim than just your target

group” (Respondent from firm C).

Respondent from firm D, a car dealership, tried to explain the reason why car

dealerships might not be doing very well when it comes to targeted advertisements.

Among them were the reasons that there was a lack of money in the marketing budget

and that they always have to have some advertisements out there, to reach more

people. The respondent seemed to think that targeted advertisements were more

expensive than using mass marketing (to reach everyone and with the same

messages).

  37  

“There might be an explanation why car dealerships are not doing enough when it

comes to targeting, there is often not enough money in the budget for it and it’s such a

fast business environment and we always have to be on our toes to have something

out there” (Respondent from firm D).

Although respondent from firm D said that they weren’t using targeted advertising in

their car dealership, the respondent said that car dealerships could be doing better

when it came to targeted advertisements. The respondent also implied that they

wanted to try experimenting with targeting ads again, at least on Facebook. When

asked how car dealerships in Iceland were doing when it came to targeted advertising

respondent from firm D said:

“I don’t think that they are going well when it comes to targeting, I haven’t noticed

that at least, but I think they’re not doing very well, and they could definitely be doing

better. We were disappointed when we tried using targeted advertising on Facebook

in the beginning, but maybe we need to start experimenting with that again”.

Results from the interviews with these six marketing specialists show that they all

thought there was definitely room for improvements in targeted advertising in car

dealerships in Iceland. Most of the respondents talked about how important targeting

was for car dealerships to reach their target audiences, people that are starting to look

for a car. One of the most important things that respondents’ recommended to reach

those customers was using retargeted ads to retarget people who had visited the

company’s website.

4.2 Results from Study 2 – Advertising Experiment The results presented below show results from three separate advertising campaigns

that were created through the official Facebook account of Kia in Iceland for the Kia

Sorento SUV.

Campaign 1

Campaign 1 was a split test advertisement, one ad had a picture and the other one had

a video. Campaign 1 had a budget of 20.000 kr., and it was split into two ads; so

10.000 kr. on each ad.

  38  

Results from the first campaign ad that had a picture showed that 12.212

people were reached. It made 31.351 impressions and people that took actions were

448 (engagement). The CTR was 421 and the cost per result (that is how much was

spent on each click) was 24 kr. In total there was 10.000 kr. spent.

Results from the first campaign that had a video showed that 9992 people

were reached. It made 22.382 impressions and people that took actions were 2115.

The CTR was 379 and the cost per result was 26 kr., in total there was 10.000 kr.

spent.

In total campaign 1 reached 22.712 people, made 53.733 impressions, and

2563 people took actions. Overall CTR was 800 and the average cost per result was

25 kr.

Campaign 2

Campaign 2 was a spit test advertisement, one ad had a video and a brochure and one

ad only had the brochure. Campaign 2 had a budget of 10.000 kr. in total and it was

split in two; so the budget was 5000 kr. on each ad.

Results from the second campaign that had a video and a brochure showed

that 422 people were reached. It made 1446 impressions and people that took actions

were 223. The CTR was 1 and the cost per result was 1100 kr., in total there was 1100

kr. spent.

Results from the second campaign that only had a brochure showed that 462

people were reached. It made 1622 impressions and people that took actions were 52.

The CTR was 1 and the cost per result was 1021 kr., in total there was 1021 kr. spent.

In total campaign 2 reached 860 people, made 3068 impressions, and 272

people took actions. Overall CTR was 2 and the average cost per result was 1061 kr.

Campaign 3

The third campaign was a lead ad with weighted split test audiences; the lead was to

get people to sign up to test drive the Kia Sorento. Audiences were split into two;

those who were 31 years or older and had visited the Kia Sorento website in the last

30 days and those who had watched 3 seconds or more of the video in the first

campaign. Overall budget of campaign 3 was 10.000 kr. and it was split in two; so the

budget was 9000 kr. on one ad and 1000 kr. on the other ad.

  39  

Results from the third campaign with the audience group of people who had

visited the Kia Sorento website in the last 30 days showed that 281 people were

reached. It made 594 impressions and people that took an action or pushed buttons

were none. The CTR/leads were 3 and the cost per result was 187 kr. The budget for

this ad was 9000 kr. but in total there was 560 kr. spent.

Results from the third campaign with the audience group of people who had

watched 3 seconds or more of the video in the first campaign showed that 48 people

were reached. It made 101 impressions and people who took actions or pushed

buttons were none. The CTR/leads were none and therefor the cost per result was 0

kr. The budget for this ad was 1000 kr. but in total there was 76 kr. spent.

In total campaign 3 reached 329 people, made 695 impressions, and 19 people

took actions (engagement). Overall CTR was 3 and the average cost per result was

212.

Below table 2 summarizes the overall results of all of the three advertising campaigns

that were conducted.

Measurement Campaign 1 Campaign 2 Campaign 3

Reach 22.712 860 329

Click through rate 800 2 3

Impressions 53.733 3068 695

Cost per result 25 kr. 1061 kr. 212 kr.

Engagement 2563 272 19

Table 2 – Overall results of the three advertising campaigns.

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5 Findings and Discussion The objective of this study was to examine how car dealerships in Iceland could

improve their targeted advertisements, that was done through 6 interviews with

marketing/advertising specialists and then there was an advertising experiment

conducted for the car brand Kia Sorento. Findings and discussion from Study 1 and

Study 2 will be discussed in separate chapters here below.

5.1 Study 1 – Advertising Insights The results from the interviews with marketing/advertising specialists in Iceland

showed that most of them thought that car dealerships were not doing very well when

it came to targeted advertisements and that there was definitely room for

improvements. Most of the respondents talked about how important it was to have

well defined target groups and mentioned how strong using targeted ads were for

dealerships, including retargeting people who had been to the company’s website,

which is consistent with the results from Cosway (2018). The respondents all said that

digital marketing was a big part in their marketing mix, and they had noticed that the

digital media was growing bigger and bigger, which is in coherence with the study

that Lamberton and Stephen (2016) conducted. But the respondents also said that it

had not yet reached to the point that it was taking over traditional media. The results

from the interviews indicated that targeting advertisements online can be pretty

precise because it allows the marketer to aim at a certain topic, behavior or a certain

website. It allows for a much better aim at the target group, better than on any other

traditional media.

All respondents said that they actively use Facebook as an advertising medium.

Facebook’s purpose and goals as a marketing tool varied between respondents, but it

was used among other things to increase the brand awareness, drive traffic to a

webpage, add new knowledge and to trigger curiosity and interest of people.

Facebook as a marketing tool gives companies a lot of targeting options to be able to

reach the right customers, at the right time. All respondents except the one from firm

D, the car dealership, were using targeting on Facebook systematically in their

marketing efforts. Facebook is a very good tool to experiment with what kind of ads

work and what doesn’t work, something that it for example not possible to do in

  41  

television or in print media.

Results from the qualitative study showed that targeted advertisements are best suited

to reach consumers who are likely to have interest in the car brand instead of

consumers who have no interest in the car brand and do not match the product’s

attribution. Using targeted advertisements could furthermore contribute to an

elimination of wasted marketing budgets for car dealerships, like the study from Lyer

et al. (2005) stated. That was one of the reasons it was decided to use targeted

advertisements in the experimental part of this study.

5.2 Study 2 – Advertising Experiment Bernazzani (2017) stated that for ads to be successful on Facebook they need to be

visually appealing, relevant, include a value proposition to tell the customer why they

should click on the ad to learn more about the product and they need to have a clear

call-to-action. The call-to-action should encourage the consumers to click the ad. This

was all taken into account when the Facebook experiment was designed. All of the

ads were designed to be visually appealing, either with photos or videos, they were

relevant, they had a value propositions and they all had a clear call-to-action.

Campaign 1

In the Facebook experiment in this study it was decided to start with a campaign that

would drive traffic into the Kia Sorento website. In the first advertising campaign of

the Facebook experiment of this study the goal was to drive traffic to the Kia Sorento

website, to be able to retarget the people later with the use of the Facebook Pixel just

like Marshall et al. (2017) and also some of the respondents in Study 1 recommended.

The results from the Facebook experiment showed that the first campaign

reached 22.712 people. The first campaign had a good CTR; there were 800 people in

total who clicked the ad and went to the Kia Sorento website. Campaign 1 had split

test ads; one ad had a video and one ad had a picture. The ad that had better results

was the one with the picture of the car.

The main purpose of campaign 1 was to get people who had interest in the Kia

Sorento to go to the website to view more information about the car but also so that

they could be retargeted in later steps. In total there were 800 people who clicked the

  42  

ad and went to the Kia Sorento website, and those people were then retargeted in

campaign 2 and 3.

Campaign 2

In the second campaign Facebook Pixel was used to be able to retarget the people

who had went to the Kia Sorento website in the last 30 days. Facebook Pixel is a great

tool for marketers to measure the effectiveness of the ads by understanding the actions

that people take on the company website and to make sure that ads are being shown to

the right audiences. Marshall et al. (2017) stated that if the company’s website is not

getting enough traffic organically it is possible to use strategic Facebook ads to get

the target audiences to the website and then they can be later retargeted through the

Facebook Pixel. Which is exactly what was done in this advertising experiment study.

In the second campaign only people were targeted who had been to the Kia

Sorento website, through the use of retargeting with the Facebook Pixel. The goal was

to get people to view the brochure for the Kia Sorento to get them to gain more

interest in the car. Results from the second campaign showed that 860 people were

reached. The overall CTR was rather low; there were only two people who opened the

link to the brochure. Campaign 2 had split test ads; the ads were both doing similarly

well, but the one with the video seemed to have more engagement and people taking

actions than in the one that only had a brochure.

It was thought to be relevant to use a brochure in campaign 2 to get people to

view more information about the Kia Sorento. But it might have been better to use

something else other than the brochure in campaign 2 since not many people were

clicking the ad to open the brochure.

Campaign 3

The Facebook Pixel was also used to target people in the third campaign. The

campaign had weighted split test audiences, which means that Facebook chooses the

audience that has better results. The first target group were people who had visited the

Kia Sorento website in the last 30 days and the second target group were people who

had watched 3 seconds or more of the video from the first campaign. The target group

that had better results on Facebook were people who had visited the website in the last

30 days. In the third campaign 329 people in total were reached. There were three

people in total that clicked the link to be signed up online for the test drive, but no one

  43  

ended up ordering the test drive for the car. There can be many reasons why no one

ended up ordering the test drive online, including technical difficulties, finding it

better to show up in the show room to talk to a salesperson before ordering the test

drive, and the price of the car might also prevent some people from ordering a test

drive, but the Kia Sorento SUV is rather expensive.

The author of this thesis had asked the Kia marketing representative to be informed if

there was any increase of Kia Sorento cars bought, test drive, or customers asking

about the car. A sales person of Kia informed the Kia marketing representative that

after the Kia Sorento advertising experiment there was an increased interest of people

asking about the Kia Sorento.

Like mentioned before the buying process for cars is usually pretty long and people

take due care before buying a car and that is why there might not have been any quick

results that lead to a sale for example, but the results might show in sales later.

  44  

6 Conclusion

This study explored what marketing methods Askja could use to be able to better

reach their target audiences; people who are starting to look for a new car to buy. That

was done through both in-depth interviews and an advertisement experiment. The

study focuses on how car dealerships can use targeted advertisements to reach

potential customers. Main findings from the interviews regarding to how car

dealerships can reach more potential customers were that they should be establishing

systematic targeting and retargeting methods. They should be driving traffic to their

website and then retarget people who visit the website with ads for the specific car

that they were looking at. The design of the advertising experiment was based on

those findings from the interviews.

Buying a car is a really big investment for people; it’s usually the second biggest

investment that people make, after housing. People put a lot of thought and take due

care when buying a car and the buying process is usually pretty long. Car dealerships

should take due care when it comes to reaching their target customers. Their

marketing plan and material needs careful planning and needs to be customized to fit

each medium. It’s important for car dealerships to reach customers at the right time,

when they are starting to look for a new car. One of the ways that car dealerships can

use to reach those customers who are starting their search for a new car is to retarget

those who have visited their website and retarget them with advertisements for the

type of car that they have been looking at on their website. It truly is a waste of

valuable website visits not to be retargeting people after they’ve visited the company

website.

The main difference between offline and online advertising is the ability to target

(Bergemann & Bonatti, 2011). The need for targeted advertising is always increasing

through the advent of new online channels just as Johnson (2013) stated in his

research, and according to Schlee (2013) in the future targeted advertisements will be

even more important.

There are also some things that marketers need to be aware of and that is that targeted

ads might be a little biased like Farahat and Bailey (2012) mentioned in their study.

  45  

Their study showed that a lot of consumers convert in the absence of the

advertisements so it is imperative to also be aware of and measure how consumers

respond to targeting and non-targeting in the absence of the ads.

Although this study focuses primarily on how important using online targeting is for

car dealerships, we still haven’t gotten to the point that they could shift all their

advertisements on to the digital media. It’s still important for car dealerships to use

both traditional marketing methods and online targeted marketing methods. Using

traditional media is still important for car dealerships to reach their customers,

especially when the average age of customers that buy a new car is over 40 years old.

It would therefor not be recommended for Askja or any car dealership in Iceland to

shift their marketing methods to using only targeted advertisements but it would

definitely be recommended to add more targeted ads into their marketing mix. They

should definitely be using strategic targeting methods to reach potential customers.

The marketing representative for Kia in Iceland said that campaign 1 went really well

but campaign 2 and 3 could have gone better. In campaign 2 there might have been

something else used other than to get people to view the brochure for example. But

overall the marketing representative for Kia was happy with the design of the

Facebook experiment that was conducted and said that they wanted to continue using

the campaign that was designed, but maybe with some minor adjustments, such as

using something other than the brochure in campaign 2.

The information that Askja and other car dealerships can gain from this study is the

importance that targeted ads can have. There is a lot to gain by using targeted ads to

reach potential customers. Results from this study showed that retargeting can be very

effective to reach customers that are likely to have interest in the product and like

mentioned before companies can possibly even save money by using targeted

advertisements.

It would be interesting to repeat the advertising experiment with some adjustments

such as having content, both videos and pictures that are taken in Iceland, all of the

content that was used in the advertising experiment came from Kia Motors abroad.

Having interesting content that is taken in Iceland might gain more attention from the

  46  

Icelandic market. It might also be interesting to do a similar advertising experiment

through retargeting on Google, so people who have visited the company website

would be retargeted with ads on Google instead of Facebook.

There are some limitations of the current study. The campaigns were run for one

week, but as mentioned before the buying process of cars is usually long, and it might

have influenced the results of the advertising experiment. In future research it would

be interesting to let the campaigns run for a longer period to be able to measure long-

term results.

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Appendix 1

Interview questions

1. Where do you work and what is your job title?

2. How important do you think it is to define target groups?

3. How do you specify your target group/s of a car dealership? Do you know the

needs of your target group/s? What information do you gather about your

target group/s?

4. How does targeting differ from online media and an offline media? What is

your experience in this company in the development of online and offline

targeting?

5. How do you communicate with your target group/s? How do you use social

media to get to your target group/s? Specific to Facebook, how do you utilize

Facebook to reach your audience? Do you use different advertisements on

social media depending on who the target group is?

6. Do you think that it is important for car dealerships to customize

advertisements for different target groups?

7. How do you think car dealerships in Iceland are doing when it comes to

targeting?

  52  

Appendix 2

Advertising Experiment Campaign 1 – Photo

Campaign 1 - Video

  53  

Campaign 2 - Brochure

Campaign 2 – Video and a Brochure

  54  

Campaign 3 – Lead Ad

  55  

Appendix 3 Kia Sorento buyers

Age and gender of new Kia Sorento buyers from years 2016, 2017 and 2018. This

table only shows car bought for general use and not for car rentals or company cars.

Age  of  Kia  Sorento  buyer   Number  of  cars   Gender  of  buyer   Percentage  21-­‐30   2   Man   2%  21-­‐30   1   Woman   1%  31-­‐40   10   Man   9%  31-­‐40   7   Woman   6%  41-­‐50   11   Man   9%  41-­‐50   8   Woman   7%  51-­‐60   15   Man   13%  51-­‐60   5   Woman   4%  61-­‐70   33   Man   28%  61-­‐70   9   Woman   8%  71-­‐>   16   Man/Woman   14%  31  years  or  older   114   Man/Woman   97%  Total   117     100%  

  56  

Appendix 4

Interview inquiry email Dear recipient,

My name is Íris Hildur and I am finishing my MSc degree in marketing in Reykjavík

University. I am writing my thesis about how car dealerships can improve when it

comes to targeting advertisements. I am interviewing a few people that work in

marketing (not necessary to be in the automotive industry) to get an insight on how

companies are targeting their advertisements.

I am very interested in taking a short interview with you for my thesis, and I would

care deeply if you would give yourself time to participate. The interview should not

take much time, or at least not over 30-40 minutes. The interview has open questions

and should not need any confidential information.

Please let me know as soon as possible if you are interested in participating.

Looking forward to hear from you.

Best regards,

Íris Hildur Birgisdóttir