Hitwise Intelligence - Alan Long - Asia Pacific

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The Pressure Point of Fuel Prices

August 01, 2008

The increasing price of fuel to run our vehicles puts continued pressure on the household budget and while I begrudge paying high prices at the pump, just how far can the price go before we start to look at alternate fuels and hybrid vehicles as a serious option?

According to CommSec equities economist Savanth Sebastian the average family is now paying $223.30 a month for petrol, well that makes me about average – but with only one car. The good news is that he is predicting that the cost of petrol is about to decrease to a national average of $1.40 per litre, and in the past week we have already seen some relief with prices sub $1.50.

So I started thinking of conspiracy theories about petrol retailers pushing the prices up to a pressure point where users are aggrieved and are close to taking action, and then lowering prices to take pressure off, all the while desensitizing the consumer to longer term increased fuel costs. I am not a conspiracy theorist, so I am just interested in what the online behaviour tells about users' reactions to fuel prices based on searches for auto-related hybrid searches.

To make this comparison we took the median average of monthly Metropolitan ULP prices (Source: www.fueltrac.com.au) and compared it against the 4 week rolling average of a custom search portfolio that contains 974 hybrid / alternate fuel auto related terms. (Click on image to enlarge).

The chart highlights a correlation between petrol prices and online searches for auto related hybrid /alternate fuel searches. The trend lines rise and fall in sequence until the price moves through the pressure point of $1.40, then the volume of searches surges as households are put under increasing pressure. If the price drops below $1.40 will the interest in alternate fuel decrease or does the demand now have a momentum of its own?

Toyota, Lexus and Honda have all released hybrid vehicles and are actively using PPC campaigns to raise the awareness of their range / offering. The level of competitive activity against this search term portfolio is quite strong with 189 sponsored links found on Google (AU) and 679 sites receiving traffic (paid and organic). The chart below from our upcoming Search Intelligence product release identifies Wikipedia is the main beneficiary of traffic, with a combination of manufacturers and News & Media sites featuring strongly. (Click on image to enlarge)

Using the prominence of brand / product names in the search portfolio provides an indication about the level of brand awareness within the hybrid / alternate fuel cars interest group. A total of 32 brands featured including international brands such as Tesla and Chevrolet. Branded terms made up a total of 22% of the search term portfolio, the top 10 brands are:

honda	64
toyota	53
hyundai	14
lexus	10
bmw	8
ford	7
mitsubishi	7
mercedes	5
tesla	5
hino	4
Period: 4 weeks ending 26/07/2008
Source: Hitwise Australia

Through the Hitwise tools I have highlighted the ability to identify a correlation between the economic environment and consumer sentiment, the competitive landscape, level of activity and tactics surrounding the specific issue and the relative success of brands – aided and unaided.

How can you apply this ability for the benefit of your business in a tactical and strategic sense?

To find out a little more about the future of Hybrid Cars check out these two articles at Wired.com – Future Transport & Plug-In 2008