Article

Marketing Campaigns

August 2006, Auto Dealer Today - WebXclusive

by John Carroll - Also by this author

Advertising agencies love a challenge, particularly when it calls for their best advice at selling a product. With a host of dealerships around the country groaning under the added weight of the used car inventory that washed in with the summer's gangbusters season of employee-financing incentives, many dealers are looking to them for some new advice on ways to market those trade-ins.

"The used is where it's at right now," said Tom Letizia, whose Las Vegas-based Automotive Marketing Group works with 30 dealers in 11 states. "Most of the dealers have a pretty decent used car inventory. That seems to be the one thing that’s keeping them afloat."

Ultimately, the message Letizia and his colleagues in the field are crafting concern keeping the sales flow moving, and that has to do with the type of vehicle that is on the sales block. With new vehicle sales flagging as manufacturers see consumer interest wane with the unheralded return of value pricing, that calls for a heightened focus on used values.
 
"The domestic sales are soft," Letizia said. "Products in demand (like many of the Japanese cars) are short on inventory. And we're finding more success with used promotions than new car sales promotions.”

Late model used vehicles are a great alternative. Dealers can take late model used vehicles with mileage in their low teens and present those products as if they are a new car campaign. In Minneapolis, dealers are pulling out all the stops to get those used vehicles to move.

Ian Moquist, who founded the Minneapolis-based Integrated Advertising Network and handles the campaigns of about 15 dealerships in the greater Minneapolis area, along with the local auto dealers association and the auto show, agreed with Letizia.

“All of those summer new vehicle programs certainly brought a lot of trade-in inventory," Moquist said.

Some of the new marketing techniques being tapped to market those trade-ins look distinctly familiar, as newspapers are earning a fresh look at driving sales after online marketing campaigns became an overnight wonder in the auto marketing world.

"Whatever anybody wants to say or think, newspapers continue to play a big part in marketing used vehicles," Moquist said. "The newspapers continue to do a better and better job leveraging their own Web sites. The combination of print and online media seems to be working."

And even after a growing legion of dealers switched to Internet-based marketing plans, the newspaper ads are still the place to go to give readers the kind of detail on make, model, year and price that they want before they start shopping. Those details, with a special emphasis on price, are vital to making a sale in this environment.

According to Art Spinella, chief of CNW Marketing Research, employee-pricing incentives have driven dealers' used car inventory from a 45 to 46 day supply up to a whopping 65 days. With floor traffic down, dealers are marketing price.
“The dealers are giving some outrageously good prices on used cars,” Spinella said. “Dealers are shifting back to newspapers. People are picking them up to see what they can find locally.”
 
That's because the newspapers weren't content to let the automotive advertising and real estate advertising – two mainstays of newspaper revenue – be lost forever to the online sites. So the newspapers came back to the market, offering better deals to get dealers back into newsprint. Meanwhile, the Internet groups were filling their sails with success and started to charge more.
 
“Dealers using the Internet found they were trying to tap into the emotional part by putting up more photos,” Spinella said. “The problem is that it costs more to do the Internet now than it did two years ago. Two years ago, you got a free ad and then you had multiple levels up from that: a picture cost such and such, color cost more and it is better. It's becoming significantly more expensive per sale to use the Internet.”

In the hard-charging world of auto marketing, it's not hard to find a contrary point of view. “We're finding that more and more dealers are dropping newspapers. It’s the wrong audience," President of Automarks Steve Vetter said.

Vetter, who specializes in providing saturation mailers for sales events said if a dealership has a target customer of age 23 to 45 and the Star Tribune and others have said the median age for newspaper is 55 or above, it's “kind of like selling hamburgers at a pita convention.”

“You're spending money to market to people who aren't your consumers,” said Vetter. Dealers need something to scream about. We provide the scream.”

Dealers in Moquist's area are finding success tagging their used car deals with mini-incentives of their own to hook new buyers. Those incentives include free or discounted gas with the purchase of a used car. Another successful incentive includes a three-day, 300-mile money back guarantee, with no questions asked on returned vehicles. It may mean a two-year commitment to free oil changes or a chance for consumers to grab some free airline tickets.
 
A group of dealers in northern Minneapolis have banded together to promote their area through local media as a one-stop shopping destination. They urged customers in the metro area to come out and look over their collective 8,000 used cars and trucks of low-priced inventory as a way to increase traffic.
 
Earlier in the year, consumers traveled an average of 25 miles to buy a car. In September and October the average dropped to 19 miles. It makes the notion of one place to look very attractive.
For direct mail groups, the continuing sales season built around used vehicles has been a welcome switch.
 
“It's typically slow at the end of October and early November, but it hasn’t fallen off a bit this year,” said Eric Weissbarger, who runs Allegiant Marketing Group in Edmond, Oklahoma. For Weissbarger, it's a chance to extend the season for his direct mail campaigns: a mountain of pressure-sealed mail that looks quite official and includes customized information on each address, including your name, the age of the car you probably have in the garage and the type of financing deal your credit score will support.
Weissbarger said the trick is to get the consumers to open it up to see what's inside and the returns have kept him channeling new campaigns well into the fall. If you do 10,000 pieces, Weissbarger said, it is estimated you’ll have a 1.5 percent response rate. An average dealership should close 15 percent of the responses, making it a profitable way to move built-up inventory.

“We've used Allegiant for years," said Charles Madison, who runs Hesser Toyota Scion. "Very few people out there have stuck with the same direct-mail people because they tend to fizzle out. These guys are consistent. They know what we want and canvas the same radius every two to three months.”

The employee-financing incentives were rolled out by the big domestic manufacturers, Madison said, but a lot of the Toyota dealers were doing record business all summer long that left them with their own inventory/marketing issues. Doing direct mail consistently, he said, has generated an average of 30 sales a month – a welcome help when you're dealing with sudden inventory bulges.
Later in the year, radio's appeal tends to wear off as it loses the mass appeal that makes it a summer favorite of dealerships.
 
“From now until Christmas, television is likely to look like an expensive alternative to other types of advertising,” National Sales Director at FishMarketingOnline.net Jeff Fishel said. FishMarketingOnline.net does radio, television and print production. Television ads are also going to be harder to spot in the clutter of retail ads that will hit from mid-November through December 25.

“You get to mid-December and it's pretty hard to beat Santa Claus,” Fishel said. “When New Year rolls around, though, it's an especially good time to start advertising on television. You can make really good buys that first quarter. Junk mail will be strong right until 10 days before Christmas. On the 15th, you start fighting Santa."
 
At this time of year, people start thinking about holiday shopping and to compete for their business, dealers should start thinking about deferred payments. "No payments until next spring" is likely to grab the attention of more shoppers right now.
If creative financing doesn't work, appeal directly to their love of a bargain.
For SUVs and the big four-wheel drives, the key attraction will be pricing. Stickers have gone soft on the big, gas-guzzling vehicles, however for people who don't drive 40,000 miles a year, they can look awfully attractive. In places like Minneapolis and the Northeast, Moquist said, those lower prices are likely to start looking particularly appealing to drivers facing another long cold winter. For the economy cars, the key selling point will be obvious: easy on the pocketbook when you pull into the pump.
 
“SUV sales have been reduced to a very slow level with this gas issue. You're seeing more car activity than SUV and truck activity," Letizia said. “I think we're going to need aggressive activity out of Detroit to get this market going again.” Then, of course, a new round of successful rebates will spawn a new glut of second-hand vehicles in need of a new marketing campaign.

Vol 2, Issue 12

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