Are you as amazed as I am that the year is almost over? The good news is you still have ample time to pump up the volume in 2010 but you may have to re-think your traditional advertising mindset.
In some markets the political ads for this mid-term election will make slim pickings of network TV. You don’t want to be in that fray. First of all the rates will be astronomically out of proportion to true value. Just like the car business, media is supply/demand driven. And just like the hottest new model of any vehicle may not be worth an ADM sticker of $4,000, a premium on your local 6 pm news may not be the best way to spend your money in these times. Additionally, the ‘turn-off’ factor during heated political seasons is enormous. Lots of viewers will be taking at least a mental hiatus from the mud-slinging.
This does not mean you necessarily have to push forward or delay your efforts to drive buyers to the dealership. It just means you have to think it through carefully and not fall into the trap of paying exorbitant rates to be on an overcrowded stage. Of course if you’re involved in any kind of local customer research, you’ll have a much better idea of where to look for viable alternatives with better a better value/ratio perspective.
I use the word ‘value’ a lot when talking about buying ad time and space because it is the single most important concept to consider. For instance, if an advertisement on local channel 6 early news costs $400 and motivates four people to shop your dealership on Saturday, resulting in one sale, your cost per vehicle is $400. If that same $400 will buy 20 avails on several of the most popular cable channels, driving 10 people to the dealership, resulting in two sales, then your cost per vehicle is $200. However, when you evaluate your efforts qualitatively, the true CPV can be very different. Where and what you advertise can dramatically affect not only the trust factor, but the gross, and bottom line profit of a deal.
For example, about 10 years ago I urged a dealer client friend of mine to move some of his network rotators on a CBS affiliate to an independent channel featuring old movies. Rather than rotating through the day, the dealer bought four avails in an early afternoon movie five days a week. Three months later, when we did a post-analysis of our efforts, we made an interesting discovery. First, the ‘old-movie’ reference showed up measurably on our customer surveys, indicating not only ‘recency’ (ads seen at most opportune time of purchase) but also a solid indication of exceptional frequency with an ideal marketing target group of the dealership. Result: In just under 13 weeks, the sales of two specific models (advertised on ‘old movie channel’) increased by approximately 20%.
But even more importantly, average grosses on those models increased by almost $300 per unit. Okay, so let’s do the math. The dealership was spending essentially the same money on the ‘old movie’ channel as network rotator. Selling approximately five more vehicles per month times an additional $300 equals $1,500 more to the bottom line for the same ad expense. That, my friends, is what I’m referring to as value driven. What you pay for a spot, where you place it, how many times people see it, CPMs, gross rating points, etc, all takes a back seat to the number you take to the bank.
That’s why I encourage dealers to move away from the old traditional thinking of cost per vehicle and evaluate marketing efforts by model by percentage of gross spent on the advertising. If $5,-000 sells 15 vehicles with an average gross of $1,400, then the ad expense is roughly 20% of gross. If however that $5,000 sells 25 vehicles with an average gross of $600, then the ad expense is roughly 30%. At the end of the day, the only question is value’ and ‘profitability.
Maybe this is the time to shake up some traditional thinking in your organization and do things a little differently in the next few months. If you’re in a political market, don’t waste your time with the network reps. There are very few if any avails and I guarantee you’ll pay too much. Talk to the cable companies. Cherry pick your channels to include only the most popular ones in your market. History Channel, A&E, National Geographics, Discovery, ESPN, Fox News, etc. (If you’re doing research with your customers this should be fairly easy, if you’re not, email me and I’ll recommend a few research companies who can help you do it.) Don’t fall victim to greed and buy only highly pre-emptable time or you’ll get what you pay for. Nothing.
Consider radio. Again, buy those stations most likely to reach your target audience. If you don’t do research, here is a simple trick that works 90% of the time. Take a walk through your dealership right now and ask every single employee (office, service, sales, porters) what station they listened to this morning and the call letters/frequency of their two favorite stations. Your employees represent an ideal cross segment. First of all, they are working. They probably represent a wide range of socio-demographic segments. They are within reasonable driving distance of your primary market area.
About 20 years ago I recommended a country station to a dealer friend located just outside a major metro. He laughed and said, “No one listens to that cows__t station.” I asked him to take a walk with me. We asked every single employee which station they listened to. The country station came up high on the list. We ended up buying time on the station and it proved to be one of the most successful advertising moves the dealership ever made. Isn’t it amazing what a little common sense and good listening can accomplish?
Are you involved in any search engine marketing programs? If not, you might want to put some of your fourth quarter budget into a program tailored to your model/demographics. If you’d like a whitepaper on SEM and Internet marketing, e-mail me and I’ll send it right out. No charge of course.
Finally, on the creative side, keep in mind that we are still in a ‘gotta have’ market, meaning that there are more ‘gotta haves’ than ‘wanna haves’ buying vehicles right now. A lot of the ‘wanna haves’ are biding their time. The ‘gotta haves’ don’t have any choice. They’ve gotta have and they are just looking for the best deal and a dealer who will work with them.
I’m betting Congress will be a little better balanced come November and a slight spike in consumer confidence could be just the shot in the arm we need to end the year on an upbeat note and get ready for a barn-burning 2011.