Dealership Ad Budgets That Make The Most Money

The automotive advertising budgets that make the most money are the budgets that are created using objective, data driven results. 

They’re not a guess and they constantly throw money in your pocket, not the other way around.

Traditional Budget Management

We talk to a lot of dealerships who potentially need our agency’s help. 

During these conversations, we go through the budget line by line. 

  • “Why are you spending your money on this?”
  • “Why are you spending that amount?”
  • “How do you measure your decision as either a success or failure?”

After talking with dealerships across the country, we’ve found that over 80% of our dealers have roughly 40% of their budget based on “a feeling”. 

Now let’s break this down… with a monthly advertising budget of $40,000 per year, a typical dealership would spend $16,000 per month based on “a feeling”. That’s $192,000 per year. That’s a pretty large amount to leverage on your gut. 

The reason so many dealerships spend money based on “a feeling” isn’t because they can’t do better, it’s because they have done it THIS WAY for so long and are reluctant to change. 

Third party data is available and you also have your own data. If you organize it, it can yield some amazing direction for you.

A tremendous amount of value lies within your data. The dealership below was able to reveal the true cost per car of some lead sources. 

It’s a lot of work to change into a new model, but it’s happening around the country. 

Working with dealerships across the country, many of them try to tell us,

“Our dealership is different. Our market is different. Our customer is different.”

The truth is, the process is the same in every market. The consumer is not significantly different market to market. There are regional differences in the psychology of people, but again not significant. 

When I first come in contact with a dealer and get into their budget, I rarely find the dealer creating their budget based on purchase intent and buying moments

Embrace Your Customer’s “Buying Moments” 

There are five different stages in which people shop, also called “buying moments.” 

  1. Which Car is Best?
  2. Is it Right for Me?
  3. Can I Afford It?
  4. Am I getting a Deal?
  5. Where Should I Buy?

As a tier three franchise or used/pre-owned dealer, you DO NOT need your messaging at all these stages.  

Messaging tip: Show customers why they can afford it and how. Show them what a great deal looks like and people getting those great deals. Give them that reason to BUY FROM YOU. 

Quite frankly, it’s a waste for you to try and do all of these stages well. 

The factories and major corporations will take care of stages 1 and 2 even if you’re a stand-alone used-car lot. Don’t spend any time on 1 and 2. 

  • Digital conversions for Tier 3 Dealerships in stages 1 and 2 average under 5% of all dealership conversions. 

Alright… Now we know the bottom three “buying moments” are most important, and these are people that are truly IN MARKET, especially in stages 4 and 5.

There are a certain number of car buyers in your market.  

They are interested in a certain type of vehicle, and they want to shop a certain way. 

It is your mission to find them and give them a reason to do business with you. 

Being able to effectively target in-market buyers allows a dealership to reduce its dependency on 3rd party lead providers and increase CORE leads that come from a dealers website. 

Would you believe only 15% of dealerships are targeting in-market buyers? Well, it’s true! It’s also absurd. 

This should be the focus and MORE IMPORTANTLY, your messaging.

Recently, we created an advertising budget to launch an aggressive digital marketing strategy for Wischnewsky Dodge in Huntsville, TX. Read more about this dealership launch here.

With a marketing budget and strategy focused on targeting in-market consumers, Wischnewsky Dodge saw an immediate increase in CORE leads originating from their site. 

Budget Management the Right Way 

(This section gets a little complicated. You’ve been warned)

When tactical KPIs (key performance indicators) match up with strategic KPIs – PROFITS!

Instead, I see dealerships creating their advertising budgets based on tactical needs instead of setting up Strategic KPIs (Key Performance Indicators) enforced by Tactical KPIs. 

When you have tactical KPI’s matching up to your strategic KPIs you will have success, and it’s not a maybe, it’s a guarantee. 

If you map these out clearly you either hit your KPI’s or you don’t. 

Did you hit your tactical KPI’s but your strategic KPIs were not achieved? You have the wrong tactical KPI’s. Change the tactical KPI’s and test again. 

You can absolutely do this and it will work! It is more work but it is the best way to validate your advertising spends.  

October 23, 2020 / 4 minutes of reading

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