Recessions Aren’t Novel Like COVID-19
While COVID-19 is a novel strain of the coronavirus, a compression in market demand isn’t. Any time a recession hits, American businesses and the public at large have to dig in their heels, using resources available to best navigate it all until we come out the other end. Fortunately for automotive retailers, those who pivoted to and championed digital channels and strategies were already better prepared to continue reaching local in-market shoppers with far greater budget efficiencies.
There’s one general takeaway from the most recent recession: people still shopped for cars.
Yes, there were obvious drops in sales with new cars taking a more significant hit with approximately 17 million sold falling to just over 10 million sold. Used cars, meanwhile, did see a dip but remained overall consistent with much fewer dramatic fluctuations. This underscores the value of your used inventory.
As the market sees compression in demand from consumers and marketers see the same in search volume, it’s important to remember that even in the best of times only approximately 0.5% of Americans are in the market for a vehicle — and the more compressed the market, the fewer people that 0.5% represents. That places a greater emphasis on defending and growing your market share.
To compound the issue, dealerships also face compression margins. The most recent reports demonstrate that dealers are spending $620 marketing cost per car sold for mass-market cars and around $700 for luxury vehicles.
Wow — There’s a lot of compression going on, but let’s look at the bright side. When implementing the right strategies in the right channels, you can reasonably expect that your marketing cost per car sold to achieve numbers as low as $200-$300.
Quick Aside: You also want to ensure that you’re not neglecting your fixed operations! It’s included, too, but let’s talk more about dropping cost per car sold first!
How Do I Set and Invest a Marketing Budget for My Dealership?
Despite all of that contextual setup, the formula to create a dealership’s budget is quite simple. You set your sales goal (say 150 units) and want to achieve a marketing cost per car sold goal (say $250). You just multiply them as shown below.
Now, you can start thinking about how you invest that $37,500. We have a plan for that, too.
You begin your investment with the most important, fundamental pieces that begin with your website.
Attack Intent Channels First
That’s right. When consumers are shopping on your website, it’s your inventory that they see. You are the sole influencer, and it’s important that you offer a frictionless journey across the site from homepage to SRP to VDP — or, say, to schedule service (not letting fixed ops be forgotten!).
You understand how to create a more frictionless journey by understanding consumer behavior on your website, taking advantage of tools on the website, and making adjustments as needed by what you see through analysis. Our team has even spent time analyzing website elements, such as homepage banners, which you can watch a KPI Cafe about it here.
You’ll also want to install various tools — trade appraisals, chat, digital retailing, and so on — to help consumers get the answers they need and get further along the path to purchase from home.
Please keep in mind that, as you implement these strategies and tactics to get people to your website, you’re not just competing against other dealerships. There are many searches where third-party sites are dominating the top SERPs spots, so you want to ensure that you’re capturing those shoppers instead of third-party sites who also give your competitors the same advantage.
There’s a lot of synergy in digital marketing. If your website is where shoppers shop, then you need varied means to get them there. If you refer to our funnel earlier in the article, you’ll have noted that SEO and SEM sit just above your website. This is where your next investment goes.
First, your SEO strategies and tactics. You’ll want the following tactics to power your strategy:
- Content Marketing
- Technical SEO
- Local SEO
You’ll want to create content pages based on in-market searches. It’s vital that you align your website’s content to search intent, so when you push your ads out across multiple channels, they have somewhere relevant to land. These pages will vary and be prioritized differently based on the actual search queries in your market that you analyze in your Google products.
It’s necessary to implement best practices for your technical SEO. There is a multitude of components that comprise this tactic — meta titles and descriptions, H1s, alt-tags, link building, URL structure, and so on — that help clean up your website for Google to more easily understand what you’re offering so it can better deliver it to those who have entered relevant searches.
While your Google My Business listings (yes, plural) is a directory, there’s so much more that you can do with it. From reviews to FAQs to images and videos to citations, there is an abundance of information about your dealership. You’ll want to have your main listing, then listings for parts and service. These help consumers reach the numbers for contact and see the hours of operation, among other things, of each department with precision. Plus, Google continually innovates, such as the recent update on the main listing to have links to your other GMB listings.
Your directories are important. These include Facebook, Yahoo!, Bing, Yelp, and over 20 more. Here is where you’ll ensure that citations are accurate and represent information found on your website. It helps build your authority with Google as a reliable source of information for anyone seeking out the products/services that you offer.
Here, your primary goal is to capture “Ready to Buy” customers with conversions and leads in mind with a secondary goal of qualified traffic for people who’ve narrowed their selection or are delving into their search.
There is such a diversity of searches. That means there are varying degrees of needs and intent. Someone who enters a query of “Ford F-150 near me” has a different intent than “Ford F-150 price” and those have a different intent than “Ford F-150 lease.” You can also think about the varying needs for your fixed operations, including oil change and tires (two different needs).
This means that you need to have a granular approach to have the right campaigns with the right ad groups that represent the right keywords. By satisfying that diversity of search intent, you’ll be better equipped to leverage Responsive Search Ads and, subsequently, help increase your Quality Score.
The greater your Quality Score, the less you have to bid in order to be competitive. Your Quality Scores are based on a few factors:
- Clickthrough Rate
- Relevance of Each Keyword to the Search Term
- Landing Page Quality and Relevance
- Ad Text Relevance
- Historical Ads Account Performance
Now that you’re driving people to the website, you’ll want to invest some money in retargeting. And this strategy, while being the most efficient in costs of any channel, is honestly the most simple in its intention. You want to retarget customers with the right vehicle — the one they looked at and similar vehicles — at the right frequency. And only do retargeting.
Let’s face it. Shoppers are on these third-party sites. That means you still want to maintain a presence there and not simply yield your presence to in-market competitors and lose out on potential customers. It’s important to be smart about how you invest your money and even on what platforms based on performance metrics that you’re seeing.
Now, Let’s Stimulate Market Interest
If you recall an earlier statistic, no more than 0.5% of consumers are in the market for a vehicle. There’s no better platform to stimulate interest in your dealership and push more people into the path to purchase than Facebook.
The issue that many dealers have encountered is a poorly organized Facebook campaign. The approach that most have taken — whether through their internal team or with a marketing partner — is more generalized that contains only up to 6 ads with a static image and some ad copy. That doesn’t really resonate with consumers. If you look at other major retailers beyond automotive, you’ll note an abundance of ads that speak to individuals. Though automotive retail is unique in many ways, it shares the common trait of inventory that appeals to many different segments of buyers.
Dealerships have the ability to segment buyers into unique audience personas: sedan buyer, SUV buyer, truck buyer. Within that, there are even difference in trim as a Tacoma buyer has different needs and intents than a Tundra buyer.
The same applies to used car buyers. Some people seek vehicles under a certain price or want a specific class of vehicle.
All-in-all, contingent on what brand(s) that your dealership represents, you can have up to 50 unique audience and ad combinations. This gives you three distinct advantages:
- You will be able to speak to individuals with data-driven precision based on a number of variables, including behaviors and interests.
- You will help reduce ad fatigue by not showing consumers the same exact ad far too many times.
- You will deliver consumers straight from the ad, using carousel images, to the exact VDP of the vehicle that interested the most and compelled the click.
That begs the question: “How do you know that a click isn’t just a click?”
This approach to paid social media ads had a re-engagement rate that is 3-4 times higher than the average seen on this type of platform. Upwards of 13%+ of consumers who clicked on an ad returned one week later; 10% the week after that; almost 8% the week after that; and so on.
You can also leverage Facebook for retargeting. The best part is that they don’t have to come from a Facebook ad. No matter the channel, you can retarget them on Facebook with the exact VIN and other similar vehicles.
If you’d like to learn more about this approach to social media, we call it Intelligent Social. There are several KPI Cafe episodes that dive more into it, starting with this one: How Your Dealership Can Have Social Media Mania, Brother!
Whether you want to send eBlasts or direct mail, your dealership already has plenty of data to mine for delivering content to actual consumers who’ve previously been to your dealership. You have a better understanding of lease terms/expiration, vehicle equity, and consumer criteria to model a targeted approach as seen in the aforementioned digital channels.
Amazon Prime. YouTube. Eros Now. Pandora. The list goes on for the many programmatic platforms that allow for the same impressive reach as traditional media — but with better targeting measures.
Your dealership has a DMA that likely extends far beyond towns, cities, and counties of where your actual buyers live. When you purchase traditional media for that DMA, you’re also paying to deliver content to demographics who are not your buyers.
So, essentially, you’re paying to deliver ads to people outside of your target market and outside of your target audience with traditional media like television and radio.
With programmatic, you can be far more specific with the demographic and geographic targeting, then have the ability to layer on behavioral targeting. This eliminated the wasted spend inherent with traditional media. There’s another advantage to programmatic media.
People see, on average, around 10,000 ads per month. You want to maintain a moderate frequency to help with ad recall. and
With traditional media, you can increase your frequency by spending more money.
With programmatic media, you can increase your frequency by adjusting your targeting.
A Hypothetical Full Budget Allocated Among These Channels
Below is a hypothetical example of a dealership’s budget allocated across the channels covered in this content. You’ll notice some leftover budget for community events or production or other needs that arise throughout the month.
We have some additional resources that you can refer to for your budgeting, as well as a range of other topics for digital marketing and automotive retail.
Reunion Marketing’s budgeting episodes on the KPI Cafe, of which the first shares the same name as this blog.
Reunion Marketing’s webinar that hits a lot of the high notes presented here today, as well as some additional insights from our CEO Dave Spannhake.
As always, if you want further assistance, our team at Reunion would love to help you with a free digital marketing audit or review of your budget. You can contact us using the following link: Let’s Connect.