Article

Where and How Independent Dealers are Spending Their Marketing Dollars

September 2011, Auto Dealer Monthly - WebXclusive

by Jennifer Murphy Bloodworth - Also by this author


According to NADA data released in March 2011, new car dealers are spending $604 per new vehicle retailed. Many independents are spending less than half of that to retail used vehicles. How do they do that? Six successful dealers of varying sizes across the county shared their combination of old- and new-school tactics that keep their ad budgets low and cars moving off the lot.

InstaCredit Automart
In Collinsville, Ill., the advertising has gone to the dogs at InstaCredit Automart, a four-location BHPH group. The stars of the group’s advertising are Dealer Donald Birger’s three Shelties (AKA Shetland Sheepdogs). Television is the dealer group’s main advertising, and Birger’s wife, Jeannie, and brother, Bernard, are in the group’s TV spots with the dogs.

The couple’s Shelties, which appear to be talking in the ads, have been in the dealerships’ TV commercials for the past 15 years. Their first Sheltie star was Buckley. After Buckley passed away about five years ago, they adopted his nephew, Buckey J., and they now have two other Shelties, Baxter K. and Punkey Ray (Buckey J’s son). In addition to the talking dogs, the ads contain messages of easy credit, large vehicle selection and getting “a new start at InstaCredit Automart.”

When customers come into one of the InstaCredit Automart stores, many of them ask about the dogs. “We bring them to work every day, take them down to the showroom and people play with them,” said Birger. Most of the time the dogs are at the Collinsville, Ill., location, but he sometimes takes them to the other locations to visit.

The majority – roughly 70 percent – of the group’s advertising and marketing budget goes to television (about 53 percent on broadcast and 17 percent on cable). Radio accounts for about 18 percent of the budget, while production requires about 1 percent. The dogs’ “voices” are also included in the radio spots, and their pictures are on the dealerships’ billboards. Slightly more than 3 percent of the budget is spent on billboards.

The only form of print advertising the dealerships utilize is a local classified magazine called Auto Source, which requires slightly less than 4 percent of the advertising budget. Last but not least, the dealerships’ website and CRM, which are billed together, consume about 4 percent of the budget. Of course, the dogs are featured on the Auto Source ads and on the website as well.

Birger said, “Each media source has a unique 800 number to track the incoming calls. If we run on six different TV stations, each station has a different number … so we can get a feel for which stations and ads are working the best.” However, he said it’s more difficult these days to truly determine which ads are generating the most traffic because many customers who see/hear the ads go to the website first instead of calling the number on the ad, so the website gets credit for those calls. About 20 percent of the calls track back to TV, while radio generates 10 percent of the calls. The unique phone number on the website receives about 55 percent of calls.

Across all four dealerships, InstaCredit Automart receives about 1,000 calls a month to the unique 800 numbers linked to the different advertisements, and the website generates between 200 and 250 credit applications. So far in 2011, the stores are averaging around 425 sales a month and about $140 ad spend per sale.

Carbiz
It’s all about the Internet at Carbiz in Baltimore, Md. Evan Berney, general manager and co-owner, said, “Our style of Internet [advertising] is different than most. We focus on a branding campaign … We try to mimic a franchise operation. In the independent world, we have to pretty much convince the consumers’ of our credibility.” He added, “It’s very important that when [customers] see those ads, they think to themselves, ‘That’s a big dealer, that’s a reputable dealer and they’re going to sell a good car to me.’”

About 50 percent of the dealership’s ad budget goes to digital marketing, which includes the dealership’s website, third-party listing sites, the CRM tool, the inventory management tool, DealerRater and PureCars. The remaining 50 percent is spilt between two traditional media, with about 35 percent being spent on television and the remaining 15 percent spent on billboards.

The biggest chunk of Carbiz’s digital spend goes to third-party listing sites. Berney said, “It all starts with getting all the good programs through AutoTrader.com, Cars.com [and] Autobytel and spending the dollars there for the upgraded platforms.” He said opting for the upgraded, more expensive platforms available is a must in order to compete with the franchise dealers in his market.

“You have to be just as competitive. If your ads aren’t being seen by the consumers, then they’re not doing you any justice,” he said. “You’ve got to be up there with all the other Ford dealers, Chevy dealers and Chrysler dealers.” The dealership’s ad dollars on these sites are paying off, as Berney estimated they generate about 75 percent of the dealership’s leads.

On Carbiz television ads, the goal is to brand the dealership and portray a clean, uncluttered message. “We stay away from the cheesy used-car dealership commercials,” he said. Some of the dealership’s TV spots also include a celebrity spokesperson, Ray Rice of the Baltimore Ravens.

In the first half of 2011, the dealership ran a total of 39 billboards throughout Baltimore, with three different boards running at a time. The billboard campaign mirrored the branding on the dealership website, using many of the same images that are on the homepage of the site for the billboard ads. For example, one of the boards raises awareness about the dealership’s mobile site, while another brands the dealership’s Facebook page.

Carbiz spends about $35,000 a month on advertising and sold an average of 127 cars per month in 2010, which translates to an ad spend of about $275 per retailed vehicle.

City Auto
Another dealership that relies heavily on television advertising is City Auto in Memphis, Tenn. Marketing Manager Lynsey Freeman said more than half of the dealer’s budget goes to television, and the main goal of the dealership’s TV advertising is to drive traffic to the website. “I find more often than not if somebody has gone directly to CityAuto.com, it’s because they’ve seen a TV commercial,” she said. 

The store has found success on both broadcast and cable stations. “The mainstream networks are vital because local news and weather bring in so many eyeballs. With cable … so many people will actually use their remote to get more information.” At the end of some of the cable commercials, viewers are given instructions on how to use their remotes to get more information on the dealership, which is available on-demand.

Beyond TV, about 25 percent of CityAuto’s ad budget is for digital media. “We lump together third-party sites such as AutoTrader.com or Cars.com along with the things we’re doing on Google to drive traffic to our website as well. We’re working … to drive paid search and organic as well,” she said. Also in the works for the dealership is a mobile app. “Our website is optimized for smart phones, but we don’t have a mobile app per se.” The dealership’s blog is also in the development stage and should be a fully-functional piece of the dealership’s digital marketing by the fourth quarter of 2011.

The dealership also has a second website, CityAutoSelect.com. “We’ve rebranded our highlines as a product called City Auto Select inventory. We’ve actually used cable to drive traffic to City Auto Select.” To target prospective buyers of this inventory, she purchased a niche buy for these spots to run in the suburbs of the Memphis metro area that average a higher income per household.

The remaining budget includes very little radio. “We do much less radio … than we did five years ago.” City Auto only runs radio spots in the “warmer summer months when you anticipate people are outside with the radio.” Freeman said when the dealership does spend money on radio, the percent of the budget that goes into it “is in the single digits.” And while she’s a fan of billboards, the Memphis billboard market is too competitive.

The last big piece of City Auto’s ad budget goes to local events. “This year we’re doing more events than ever,” she said. The dealership participates in business expos, is the title sponsor of the Rajun Cajun Crawfish Festival, and sponsors events like Memphis in May (a barbeque festival), Memphis Italiano (the city’s Italian festival) and Lifeblood Donor Fest (for the local blood center). Freeman said it’s important to be involved in the community and meet people in an environment where they’re comfortable.

The last bit of City Auto’s ad budget goes to social media. “We spend a little money on social media … to drive folks to our website so that we can give things away, but it is far and away the least expensive thing.” For example, in May and June the dealership used social media to direct people to the dealership website to register for a 42-inch flat-screen TV giveaway.

While it sounds like the dealership may have a hefty advertising and marketing budget, Freeman said City Auto’s ad spend is less than $200 per retailed unit.

Dream Cars Credit
The saying goes, “Everything’s bigger in Texas,” but at Dream Cars Credit in Austin, Texas, the advertising and marketing budget isn’t. In the first four months of 2011, Scott Elder, owner, spent less than $250 per unit sold, or approximately $18,000 a month, on advertising

A large portion of the budget (approximately $15,500) goes to the dealership’s various digital marketing efforts, with the largest share (about $6,000) going to pay-per-click (PPC) advertising. Most of the store’s PPC is on Google, with “a little on Yahoo and Bing.” Elder said, “We’re targeting the standard car-purchasing and car-financing [search] terms, and … driving them to our website.”

In the past, he’s “experimented with driving [PPC traffic] to squeeze pages and different microsites,” but said the clicks weren’t converting as well. “Our website is pretty interactive and informational, so we’re finding we’re having better success just directing people to our website.”

About $5,000 of the digital marketing budget at Dream Cars Credit goes to third-party listing sites like AutoTrader.com, Cars.com and CarsDirect, and the dealership spends around $2,500 a month on its websites and microsites. The remaining $2,000 of the digital budget is split equally between a craigslist posting service and Internet leads.

Of all those digital ad sources, Elder said Google and craigslist generate the most leads, and craigslist generates the most sales. A couple of other digital areas the dealership focuses on that don’t dip into the budget are Facebook and online reputation management. The store “experimented with banner ads on Facebook,” but didn’t get a good response, so it currently just maintains a fan page.

Of the dealership’s $18,000-a-month budget, the remaining $2,500 that doesn’t go to digital pays for a new campaign—print ads in Spanish-language magazines. “It’s a little bit of an experiment for us; we just started it 30 to 60 days ago. We’re not really sure about it, but you’ve got to try new things,” explained Elder.

An even newer addition to the Dream Cars Credit ad budget is another Internet lead provider, which will cost about $3,000 a month. He’s yet to measure the effectiveness of that source, but for now has added that $3,000 to his monthly budget, bringing it up to $21,000 a month. If it proves successful, he will curtail “a few other underperforming items to keep the budget around $20,000.”

Bart’s Car Store
The focus at Bart’s Car Store in Columbia City, Ind., is driving traffic to the dealership website, which serves as a portal to all five of the group’s stores. Dealer Bart Churchward said, “Such a large majority of buyers are starting their searches on the Web, it just makes sense to help them find BartsCarStore.com and lead them to our inventory selections, directions to stores, and even our customer testimonials.”

He added, “With that goal in mind, we utilize three main advertising avenues.” Those avenues include third-party listing sites, the dealership website and television. “Our longest-term approach has been to use AutoTrader.com and Cars.com for outside leads and website flow,” he said. “We have seen a consistent return on our dollars spent, and while not an astounding ROI, it is a profitable investment.”

The dealership website “is by far our largest source of new customers.” The dealership group employs a full-time online media coordinator who ensures the website is up to date, adds new content, manages the group’s online reputation, and stays active on social media. 

The dealer group’s TV campaign features a half-hour television show called “The Bart's Car Store Show,” which is produced every two weeks. Churchward said they buy spots to run it each week, and it currently runs 12 times per week. The program showcases individual cars, car-buying tips and customer testimonials.

Churchward said, “It is professionally produced and edited, filmed with two camera people, and overlaid with great music, so it looks much more like a real television show and not an infomercial.” The TV show is generating “buzz” for the dealer group and has “brought us great name recognition and ‘top-of-mind’ market awareness.” 

While TV is an expensive advertising medium, Bart’s Car Store is still able to keep the ad spend per retailed unit extremely low, between $100 and $160. “We have the ability to spread the cost between multiple stores and feel it is creating not only short-term gains in sales, but long-term brand awareness.”

Fairly Reliable Bob’s
In Boise, Idaho, at Fairly Reliable Bob’s, the main advertising is a newsletter campaign sent to past customers. The dealership, which sold 589 units in 2010, has discovered its best source of customers is its past customers. “Our repeat and referral business is bordering on 70 percent,” said Johnny Russell, the dealership’s sales manager.

For more than five years, the store has been mailing out a traditional newsletter to its customer base once every 45 to 90 days. The newsletters feature things like car tips and articles, but they don’t include hard sales pitches. The goal of the newsletter campaign is simply “to stay in contact with customers.”

Recently, the dealership has started producing an e-newsletter that is a “mirror copy” of the newsletter mailer. Russell said, “We’ve started to move towards [the e-newsletters] within the last year. We’re not 100 percent on that, but we’re working on it.” The hard copy of the newsletter lets customers know they can opt to receive it via email.

The dealership’s digital efforts include two websites. Most of the dealership’s Web traffic comes through the main website, Fairlys.com, and while the second website doesn’t produce as well, they maintain it because it’s low-cost and provides another place for customers to find the dealership online. 

Fairly Reliable Bob’s also lists all vehicles on Cars.com and craigslist. Russell said the store’s inventory, which includes everything from Chevrolet Corvettes to Ford Focuses, was once listed on additional third-party sites, but management limited the listings to Cars.com and craigslist in order to cut costs.

The dealership uses craigslist to drive traffic to the lot. “Mainly, we utilize craigslist to make people aware of the inventory that we do have. [We] take good photos of the cars, so that people want to come in and see the car,” he said. Listing cars on craigslist is aided by the DMS, so there is no direct impact on the ad budget. The dealership’s ad spend is less than $200 per retailed vehicle.

Vol. 8, Issue 7 

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