Last October at the Digital Dealer Conference & Exposition in Las Vegas keynote speaker Chip Perry, the CEO of AutoTrader.com, addressed a capacity crowd of dealer principals, GMs, parts managers/directors and e-commerce personnel declaring dealer ad costs (per-vehicle) are projected to go down over the next four years.
Have you ever heard an advertising executive predict ad costs to go down? Neither had anyone else in the audience. The crowd wanted to hear more!
Lowering ad costs, the single largest expenditure at a dealership, would sure be good news at a time of depressed sales, lower margins and fixed-ops revenue declines. Anything to cut expenses would be seen as a positive sign for any business!
And if you consider what is going on today with marketing and media, Chip’s prediction adds-up and makes sense. Ad costs will be going down. The question is… will they be going down for your dealership? By taking a good hard look at how you allocate your ad spend, you could be one of the dealers Chip was talking about.
First, let’s define the major players and how most advertising has been purchased over the last 50 years. We have newspapers. Then broadcast, billboards, and direct mail. The most common term for this type of advertising is “traditional.” I have another term for it. “Old.” That’s what it is. Old media. And if old implies outdated you are catching on quick!
Next, the opposite of old is of course, new. New media is online media. Over the past 10 years we have been eyewitnesses to and participants in the most dynamic shift from old to new media in the history of advertising! Similar to when new guy on the block TV took over the airwaves in the 1950s and kicked radio to the car, online media is now doing the same thing to traditional media. However old media isn’t being kicked to the car, it’s being kicked to the curb!
What is most interesting about this shift from old to new is we have traditional media constantly bombarding us with messages telling us we should be accessing them on the new media! It all started when newspapers, radio and TV began telling audiences to visit their web sites! Did you know that in many markets, newspapers own the largest community websites?
For example, in my home town of Phoenix, our state’s largest newspaper, the Arizona Republic, a Gannett publication, owns azcentral.com, Arizona’s leading news and events site. Do you know a radio or TV station that does not have a website?
More recently media companies now beg their audiences to visit them on Facebook and follow them on Twitter continuing to drive consumers away from their primary outlets. When Larry King starts asking you to follow him on Twitter you know something is happening out there! The shift is on!
Follow the crowd!
So what’s an advertiser to do? Follow the crowd? You bet! If old media is telling consumers they should be online, shouldn’t you take a good hard look at being online also? Oh, you say you are online. After all, you are one of Chip Perry’s customers. And just to be fair, you advertise on Cars.com and have the coolest looking web site in town!
We know auto dealers have been mavericks when it comes to online media and in-fact helped shape the internet as an advertising vehicle. Many were early adapters and learned what a great marketing tool being online could be. The rise of the digital dealer is certainly evidence of that! But too many dealers still think of the internet as that little office in the back of the showroom staffed with all those sales people who hate to take ups!
According to Jonika Hoomes, Senior Manager with Google, another featured speaker at the Digital Dealer Conference & Exposition, over 70% of the U.S. population is now online! Yet, dealers are still spending 77% of their ad budgets with “old” media! Your customers are online. By re-allocating ad dollars away from the old and into the new, dealerships can re-position themselves where the buyers are!
Remember back-in-the-day when they use to say that all a business needed were 3 things to be successful… location, location, location? Today that acumen is being replaced with allocation, allocation, allocation!
Just in case or just in time?
Ok, so we know the major players. Next, let’s define their roles. I call traditional just in-case media. “I’ll advertise just in-case they need a car.” Or, “I’ll advertise just-in-case they need a part.” This ad strategy is a huge waste of ad-dollars in today’s digital-savvy environment performing little ROI. In fact, it’s not really a strategy at all. It’s the lack of one!
Whereas targeted online marketing reaches prospects that need your services now! I call it just in time media. The smart money is online making sure every possible opportunity is exploited at the same time someone online needs the information!
Foundational advertising buys
Your online ad dept. should by now have come-out of that office in the back of the showroom and positioned itself front and center as the very foundation of your advertising strategy! There is a new term for it. I call it “foundational media.”
Before a business spends $1 on traditional advertising it should first lay a foundation to optimize every online opportunity available. That means ad dollars should first be allocated to the internet to promote variable, fixed-operations and the new kid on the block, social media. After that, what is left over can be used for print and broadcast budgets, balloons, ink pens and little-league.
Fixing fixed operations
Another major topic at the Vegas Conference was fixed operations. According to Dealer.com, nationally, 80% of dealer profits come from fixed operations. Yet 80% of dealer web site content is vehicle sales related!
As our weak economy enters its third year more consumers are driving their current vehicles longer and performing more of their own repairs trying to save money. This is creating a growing demand for parts and service! Yet the vast majority of dealers ignore marketing this side of the business as revenues from fixed operations continue to decline.
A recent Google marketing study shows that aftermarket now dominates internet search for parts and accessories. Aftermarket is going after your customers in a big way! This Google research tells us that when today’s consumers look for auto parts…
78% search auto parts web sites as their primary source
66% use search engines as their secondary source
17% go to dealer sites in search of parts online
*2010 Google PTSA Aftermarket Study
While Internet search grows larger than ever, dealer web site traffic is trending downward for parts and accessories.
Key budget strategies
|How can dealers fight-back and capture their share of what will become the single largest growth opportunity for auto dealers over the next few years? 1. Re-allocate 2011 ad-spend to maximize online opportunities for every profit center in the store.|
2. Increase spending with fixed operations marketing solutions to provide new ways to communicate with your current customers and most importantly reach new ones!
The shift is on!
By utilizing these two key strategies your business can afford to maximize every online opportunity available to you. You may also discover budget left over and your CVP (cost-per-vehicle) will go down as predicted.
In summary, the shift is on! Auto dealers can easily afford these new strategies if they simply re-allocate ad-dollars currently wasted on “old” ideas no longer working in today’s “new” digital space! You must ask this question…if consumers are online, who are your ad-dollars reaching?
* To view the complete Google Parts/Tires/Service/Accessories (PTSA) Aftermarket Study click: www.sellpartsonline.com.