If You Can't Track It...

November 2008, Auto Dealer Today - WebXclusive

by Harlene Doane - Also by this author

The current trend in advertising isn’t about where you spend your ad dollars as much as it is about how you spend your money. According to NCM Twenty Group data, as of June 2008, advertising expenditures are not rising.

 Advertising per Unit Retailed Benchmarks

Domestic  Highline  Import 
New**  $182  $280  $197 
Used  $278  $254  $240 

** New vehicle advertising Benchmarks® are net of co-op and other manufacturing advertising assistance. 

To keep cost from rising, dealers have been shifting some of their dollars from one media type to another but it’s not all going to the same place for each dealer. Some dealers are reporting a shift to more online marketing, investing in more third-party leads or in their own Web site development. Other dealers have taken advantage of aggressive deals available in print, where their competitors have pulled out, and are busy branding their Web site message there.

Regardless of the media that dealers are choosing to use, one thing is consistent among the best dealers: if they can’t track it, they aren’t interested in it. Dealers know that the only way they can compete today is to spend all of their dollars wisely and that includes all advertising. Good dealers track every form of advertising to calculate the cost per sale. However, the best dealers take it a few steps further.

They dig even deeper to the various providers within a media type. It’s not enough to know the cost per sale of third-party lead providers, but instead you must know the cost per sale of each third-party lead provider individually. The wisest dealers don’t stop there either. They continue their evaluation by comparing the average gross profit per sale for each media source.

Why is this important? To sell 30 units with provider #1, you have to spend $12,000, and to sell the same number with provider #2, you have to spend $15,000.  Do you eliminate provider #2?  Would your decision change if you had all the facts? 

 Ad Spend to Gross Comparison

  #1  #2 
Ad Dollars Spent  $12,000     $15,000     
Units Sold  30  30 
Avg. Cost per Unit Retailed  $400  $500 
Avg. Gross Profit per Unit Retailed      $1,400  $1,800 
Total Gross per Provider $42,000 $54,000

Most dealers would be willing to retain provider #2 even at $100 more cost per retailed unit to earn an additional $400 per unit while focusing on how to improve their processes.
Cutting advertising isn’t always a prudent decision, nor is it the trend in today’s economy, but spending your ad dollars wisely is.

*All benchmarks are compliments of NCM Associates and have been provided by Kevin Cunningham, director of business development.  Questions, concerns or comments regarding benchmarks or Twenty Group programs can be e-mailed to [email protected].

Vol 5, Issue 10

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