Dealers turn to Snapchat to attract younger buyers

Consumers, particularly those younger than 30, are spending more time on social media during the pandemic. But many dealerships have yet to venture beyond Facebook to apps such as Snapchat that have become a haven for millennials and Generation Z.

Data shows that the age groups drawn to Snapchat aren't shying away from the car market. Millennials and Generation Z were the only two segments for which vehicle registrations rose from the first quarter of 2020 to the second quarter, according to an Experian study. Snapchat says it reaches 75 percent of Americans born from 1981 through 2010 who make up those two generations.

Jeff Gonzales, CEO of marketing company AET Automotive, said dealerships that invest in Snapchat tend to have little competition at the moment. Most are active on Facebook, where there are plenty of baby boomers and Generation X consumers, but Snapchat is still largely uncharted territory, he said.

Gonzales said his company's dealership clients use Snapchat to promote deals they're offering. "Our platform and our technology really focuses on the retail offers, so what we're taking a look at is the segmented buyer based off of specific models within a brand and who the natural buyer is," he told Automotive News.

Snapchat's rising popularity gives stores more opportunities to target users with tools such as Snap Ads, which appear as people peruse the site and last only a few seconds. Snap Ads allow stores to push pictures, animated images and videos to users, then capture those leads by encouraging users to express interest by swiping up on the screen. The final destination could be a sign-up page for users who want more information about a vehicle, for example, or a place to explore vehicle features.

A Boston Consulting Group study released in June and commissioned by Snapchat found that 62 percent of millennials and the younger Generation Z have increased their time on social media since the pandemic began. That compares with 42 percent for older generations, according to the study, which included 9,500 consumers 16 and older in the U.S., the United Kingdom, Canada and France.

On average, Snapchatters opened the app more than 30 times a day in the second quarter. The average number of posts — known as Snaps — created each day by users grew 25 percent year over year in the third quarter.

The health crisis has forced dealerships to rethink how they engage consumers on multiple fronts, such as tweaking the buying process to make it more accessible for online shoppers. The pandemic could lead to permanent changes in consumers' habits, making them more accustomed to handling more of their vehicle purchases and service needs in the coming years without visiting a dealership.

"The most important thing that we're really trying to wrap our arms around is, how is the automotive business going to continue to evolve?" said Shane Dwyer, Snap Inc.'s U.S. head of automotive. "Dealers are going to need to stick with this new way of selling cars that they've built during the pandemic. More and more people want the ability to purchase a car via their computer or via their phone. So, as the business continues to evolve, I'm really interested in following along with how are younger shoppers going to behave versus older shoppers."

A Snapchat study from late July to early August found that 54 percent of users in the market for a vehicle are "very or somewhat comfortable" with a dealership picking up their vehicles for repair and dropping them off afterward, or having a newly purchased vehicle delivered to their homes. That was a 10 percentage-point increase from three months earlier.

Nyle Maxwell Chrysler-Dodge-Jeep-Ram of Castroville in Texas ran its first Snapchat campaign in May and June. The store partnered with its agency, Big Time Media, and AET Automotive to pitch nameplates such as the Jeep Gladiator and Ram 1500. AET built a digital ad studio that helps dealerships create unique creative material for their audiences and select the buying segments they want to reach.

After the campaign, data showed a 150 percent month-over-month increase in sales to customers younger than 30. The only change to the store's marketing was the addition of Snap Ads.

AET also helped Fremont Volkswagen in Casper, Wyo., and Len Lyall Chevrolet in Aurora, Colo., use Snapchat to get significant boosts this year. The VW store reported an eightfold surge month over month in sales to consumers age 30 and younger after its campaign in the spring. The Chevy store posted a 48 percent year-over-year gain among the same demographic in the first half of the year, despite having to close its showroom in April because of the coronavirus.

"Millennials and Gen Z are continuing to age up and continuing to have more total spending power," Dwyer said. "Together, the millennials and Gen Z have over a trillion dollars in direct spending power."