Weather the Potential Auto Industry Downturn with Smart Advertising

By | August 6, 2017 | Marketing Insights

As most people involved in the automotive industry are well aware, 2016 was a blockbuster year in terms of sales and profits for auto manufacturers and dealers alike. Sales easily surpassed analysts expectations of 17.7 million new cars sold, closing out the year at 18.4 million new vehicles sold.

2017, however, is a slightly different story. While sales are only down 2.1% versus the same period last year, manufacturers and dealers are working to combat the slight ebb in demand for their vehicles.

As a dealer, what power do you have to keep your business profitable and sales strong?

While you may not be able to affect the larger market trends, there are a number of tools at your disposal to ensure you’re running an efficient marketing budget that captures as many sales as possible, ultimately outpacing the competitors in your backyard.

Building an Efficient Budget for a Killer Strategy

Our CEO, Dave Spannhake, has been touting the benefits of building your marketing strategy around consumers who are in the market right now, and in a market downturn — that’s paramount. So, how does a Dealer Principal or Marketing Manager go about doing this?

Don’t stop advertising!

Even if there are fewer customers in the market, this is a crucial time for your business to stay visible to anyone shopping for a vehicle. For example, the screenshots below show a dealer who has boosted sales efficiency in a peaking market through a refined marketing budget, improved internal processes, and streamlined inventory and merchandising over the last year.

Here’s their manufacturer’s declining brand efficiency in their market:

Graph that shows the decline in brand efficiency for vehicles

 Compared to the sales efficiency at this particular dealer:

Graph that shows the increase in dealer sales efficiency

Define your marketing cost per car sold goal.

How much money on each vehicle can you afford to spend on advertising for every vehicle your dealership sells? This will vary depending on your brand and market, but we often see under $400 as a reasonable cost per car sold, despite a recent industry average being almost $650.

We have seen time and time again that dealers who run an efficient budget, actually trimming costs, are able to increase their sales over time.

Take your sales targets for each month, then work backward into a marketing budget cap for each month.

Don’t forget to factor in any co-op reimbursement you’re expecting for the month. The formula to calculate the marketing budget cap is (Marketing Cost Per Car Sold) * (Total Sales Objective) = Budget Cap. Here’s an example:

Chart that shows sales objectives for January through March and the subsequent savings

Build your budget from the bottom of the funnel upward.

Make sure you’re advertising to the shoppers who are 2 weeks away from buying before stimulating interest for shoppers who could be 6 months away from a purchase. At Reunion Marketing, we recommend building a budget from the bottom of the purchase funnel up, like this:

Reunion sales funnel from stimulus through intent

Start with a solid website. We will discuss this more in step 5. Before you start sending thousands of visitors to your site, make sure it’s either responsive or adaptive for mobile devices as more than 50% of traffic comes from mobile devices for the majority of sites we manage. Additionally, remember the purpose of your website: driving leads and shopping behavior like VDP views. Ensure your site is built to encourage that behavior.

SEO & SEM come next. Sending low-funnel, high-converting traffic to your website is critical, and these two services provide exactly that. At Reunion Marketing, we don’t buy and optimize for highly competitive, lower converting, and much more expensive generic terms like “Ford.” Instead, we hone in on searches demonstrating buying intent and proven to convert, like “Ford F-150 deals near me.”

Be found on 3rd party websites, like CarGurus and Cars.com. The average car shopper interacts with 19 different touch points on digital during their buying process, so being found everywhere your customer is looking will help you win the sale.

Be social. Consumers are on their phones, and often social media, dozens of times a day — always checking for the latest updates. Again, the theme here is to be present where your customers spend their time online and influence them with targeted, relevant messaging. Facebook offers partnerships with Polk, allowing advertisers to show for owners and shoppers for particular vehicles based on a number of data points. Additionally, Facebook allows zip code or radius targeting and demographic targeting.

Reunion Marketing offers a partnership with Oracle to further refine clients’ targeting based on shopping behavior.

Traditional media.

Avenues like email, radio, and television have their place in a marketing budget, but only once you’ve built your budget up the funnel from intent to stimulus. The role of these types of media is often to stimulate interest by appealing to large masses of people, often both inside and outside your Area of Responsibility, meaning these types of spends are inherently less efficient than targeted digital spends. This is often very costly but for stores with larger budgets and a strong brand to promote, traditional outlets can make sense.

Optimize your website.

Since your website is where we recommend sending the majority of your traffic, make sure you’re capitalizing on those thousands of visitors each month. Remember the goals of your site: drive leads, show off your inventory, and make sure your accurate business information is easy to find.

Here are a few recommendations to optimize your site:

Make sure your inventory has prices, photos, and descriptions. Which of the following vehicle listings would draw you in:

Two vehicle listings: one has more information for consumers

Focus on mobile! Mobile users want answers. Now. One way you can give them what they’re looking for is to ensure your site has a clickable phone number in the header:

Arrow pointing to phone number in a contact form to show another consumer touchpoint

Do you use website chat? Providers like ActivEngage allow users on your site to chat instead of fill out a form. In today’s mobile-first world of consumers wanting immediate information, managed chat can provide those answers while asking customers for their information so your BDCs can follow up with them:

Image of a box that enable web browsers to send a text or chat with a dealership representative

In summary, while new vehicle sales are slightly down nationwide versus last year, you have the power to capture a higher percentage of your market’s vehicle sales by building a lean, effective marketing strategy and budget, centered around clear budget goals and low funnel shoppers.

Focus your efforts on those customers who are closest to purchase by having a high-performing website, strong SEO presence, and comprehensive SEM campaigns first, then build out to other strategies as your budget allows. Following this simple strategy and focusing on creating success using best practices among each of the marketing channels will save you money, sell you more cars, and grow your share of the market.

Out of all the services we offer at Reunion Marketing, consulting is among the most valuable for dealers looking to overhaul their digital strategy. We work directly with you, developing a strong partnership to fully understand your business needs and goals, then make recommendations based off of years of auto industry experience and success.

I hope you’ll reach out to us for a Free Digital Analysis.