Advertising In The Real World

August 2007, Auto Dealer Today - WebXclusive

by Rob Anderson - Also by this author

Advertising campaigns take many forms, but how can you figure out what works best for you? To find the answer to this question, I surveyed dealers to see how advertising works in the real world. What I found was the key to having a successful advertising campaign was to have a staff and budget that work with your advertising, not against it.

I started by asking dealers how they work leads generated from different advertising campaigns. Most stated that television generated the largest number of leads. While Internet marketing generated a smaller amount than the TV, direct mail generated even less.  For leads generated through television advertising, there is a much higher response rate. Dealers that were successful with television campaigns had a larger staff, a dedicated Business Development Center (BDC) department and a larger advertising budget. The smaller dealerships I surveyed, said they’d tried television advertising, but most were not overly successful.

With television advertising, there are three main types of advertising campaigns. The first is branded by the manufacturer, these leads however have not decided to purchase from your dealership. Dealers noted that this type of lead was more difficult to work because they have a very specific idea of what they wanted to buy, but no specific place to buy it. The second type of television advertisement is branded for a specific dealership. Those commercials drive traffic to your dealership. The last main type of TV advertisement is a generic offer, not branded to manufacturer or dealership. This usually involves a third party providing leads to your dealership. Regardless of which type of television advertising campaign the dealers used, they all said that they have to spend more time working the leads but had a higher return than other types of advertising.

The dealers that were successful with Internet marketing  had a medium-sized budget and enough staff equipped to spend the time needed with leads to generate sales. The common denominator among all advertising campaigns is the more leads you generate, the more man hours it will take to sort through and contact those leads. If your dealership has a medium-sized staff that has the ability to sift through leads and a limited budget, Internet advertising may be the best choice for your dealership.   

Direct mail advertising works well for dealers with a smaller staff and budget. Dealers that were successful with direct mail campaigns agreed that it takes less time to sort the leads because there are less of them. The upside to direct mail campaigns is that the leads were more motivated than those from Internet or TV. One dealer noted that every direct mail campaign is different, so every response is different. Some direct mail pieces offer a giveaway or prize, some promise lower prices and others guarantee exclusive incentives. I found larger dealerships use direct mail as a companion piece to larger advertising campaigns since the return is lower. 

With any advertising campaign, time is one of the biggest issues dealers face. The older a lead is the lower value it has. This is why staff size and ability is so important. Dealers with a successful BDC department make, on average, five calls to each customer just to get them on the phone. Of the people they get on the phone, they set appointments with 70 percent of them. That means a dealership that has 500 leads to work needs to make 1,500 phone calls to set 350 appointments. Smaller dealerships generally do not have the sales force to dedicate to that task. The successful dealerships I surveyed used advertising campaigns that their staff could handle. Your advertising should be dictated by the staff you have, not vice versa.

When evaluating the current advertising campaigns your dealership uses and what campaigns you would like to try, look at the capabilities of your staff. Dealerships that had trouble finding successful advertising and marketing campaigns did not focus on the relationship dynamics between the customer and dealer. Bottom line, if you have too many leads, and not enough time to work them, you will not have a good return of investment (ROI).

The only way you can unequivocally see what works and what doesn’t is by consistently tracking and analyzing the results. Track what works and track what doesn’t. If your advertising is working, stick with it, but try other avenues. All advertising has the ability to be successful, but it takes a balance between your sales force and budget to make it successful for you.

Vol 5, Issue 7

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