As an industry we are living in unprecedented times, as dealerships are seeing record profits and demand is exceeding supply by a wide margin. With that comes a level of comfort as many dealerships don’t feel the burden of having to know exactly where every advertising dollar is being spent or whether their inventory turn is going to slow down. But, like any wave of disruption (recessions, pandemics, etc.) that sweeps through the automotive industry, it’s important to consider the long-term ramifications of what your marketing strategy and advertising spend look like now. Are you aligned only for current success, or for future success as well?
One item to consider is the number of vendor and service options that have come to market in the last two years. When “remote” became less of a buzzword and more of a reality, everyone jumped at the opportunity to align their services with our new way of life. This was an important step in terms of dealership service offerings and customer convenience, but what it ultimately did was give advertisers new avenues to spend your money in the market. While that’s a positive on the surface, is it possible that many of you opted to engage, enroll, or commit without doing your due diligence? Did you vet out the vendor as an expert in the space and discuss the value of your budget as it pertains to your strategy? Does the service, widget, or tool provide a service that’s equally as valuable in two years as it is now?
As we begin asking these questions, it’s even more important to take the last two years and scrutinize the data as it aligns to a return on your investment. If you opted to increase the budget and add new advertising sources to your marketing mix because of current business conditions and you don’t track the performance, how do you know it worked? If you shopped the market for something that was truly appealing during a remote sales-driven time and it wasn’t a value-add then, what makes you think it’s going to be more valuable when remote sales are no longer a necessity?
To structure your advertising for future success, we recommend three things:
- Review the vendor mix: Look for duplication, determine who communicates the best, and understand what areas of the market are covered with the current vendor mix.
- Understand the advertising spend: Know which portion of your spend is budget and which portion is fees. Do you align with a market dictated by heavy demand and limited supply or are you focused on a particular kind of customer? Are you too heavy on new inventory or do you need to shift the budget to service and used?
- Measure the return: What are your internet or BDC managers saying? Do they notice traffic or lead volume from certain advertising sources? Did they see an uptick in customers who wanted to use one tool versus another? What do the analytics look like, and do you compare leads (or sales) to budget?
In time the market will normalize again, and dealerships will likely be forced to reallocate funds or change their strategy. Instead of focusing more on being first to market or simply checking a box to appeal to the market today, consider a more sustainable approach that creates opportunities for success in the future.
For more information, please contact our Dealerships Practice using the Contact Us form below.