Dealer Ops

Let's Talk Advertising

First, let’s define what advertising is. The Merriam-Webster online dictionary defines Advertising: the action of calling something to the attention of the public especially by paid announcements, by a printed notice or a broadcast by emphasizing desirable qualities so as to arouse a desire to buy or patronize.

In simpler terms, advertising is used to attract customers to your establishment and buy your product or services. In our industry, that’s buying cars, aftermarket products and automotive services.

The most common time-tested “old school” methods, heavily relied on by dealerships to promote themselves, are newsprint, television and radio. I know that many dealers still pay a kings ransom every month for this type of advertising, and every time it’s a crap shoot. You are gambling that your advertising will get in front of the right people at just the right time with enough incentives to attract them to your store. Making this gamble even riskier are dozens of other dealerships doing the same thing at the same time hoping for the same results. To top this all off, tracking the performance of these types of advertising is far from an exact science. How do you determine how many people read, listened or watched your specific advertisement and were interested enough to take action and visit your store? Wow, just pondering that question makes me dizzy. I’m sure that there’s a mathematician that can come up with a theoretical formula of the laws of probability, but that’s way past most “Car Dawgs” simplified vision for selling cars.

Another form of advertising used to market a specific demographic for products and services is mailers. This is another time tested method with well documented probable results. You know exactly what was marketed, who you marketed to and where the market base is located. A one to three percent return on this type of advertising is considered acceptable, while three percent is considered very effective. If you are patient, this works well. You send it out and hope that you targeted the right audience at the right time to get the desired results. There is absolutely nothing else you can do until the customers start calling or arriving at your store to get their “free air pot” with a test drive.

Now let’s address Internet advertising. Most dealerships have their own Web sites that may be accessed by potential customers. This type of advertising is effective only if the customer is looking specifically for your store. You can add visitor counters to determine how many people visit the site and collect metrics from store visitors to determine its effectiveness, but again, we’re getting away from simplifying a process. Hopefully you’ve employed a good host service or Internet Technology expert to operate it for you. This service can be as expensive or frugal as you want, as long as it gives you the results you desire.

The most effective form of advertising for reaching Internet customers, hands down, is contracting with a third party lead provider. They do all the advertising and provide results. Third party Internet providers take the majority of the risks, and you get a list of customers throughout the month that are interested and motivated to purchase the products and services you provide. Normally these leads are finance driven or vehicle specific (depending on what type of leads you desire).

This advertising can be tracked and measured for effectiveness from the first day you start. You know exactly how many leads you received, which allows you to measure customer contacts, appointments, shows, units sold and gross profits. Using an Internet lead provider is very cost effective, and compared to other traditional forms, is as big a bargain as the Louisiana Purchase.

In most cases, the provider sends you leads up front and asks for payment later. Are your other advertising sources doing that for you? Theoretically you don’t need to factor the cost into your budget because by the time you receive your first invoice, you’ve already pocketed enough profit to pay for the next six months of service. One thing to keep in mind is this type of advertising is effective only if your dealership is equipped with appropriate financing, a large selection of vehicles and most importantly, the people and process to maximize profits. If your employees are old “Lot Lizards,” that probably won’t change their selling style, and you’ll be setting them up for failure. But, if your people are good on the phone and know how to put a deal together, this will mean increased profits for your store.

There is one more important form of advertising that doesn’t cost you a dime but can be the most effective or damaging of any we’ve discussed, “word of mouth.” Treat your customers right, and “word of mouth” advertising is a treasure trove. Treat them with indifference and it will damage you business beyond repair. After enough unsatisfied customers or prospects spread the word about their bad experience at your store, you might as well take a full page ad out for the whole world to see how little regard you have for customers.

No one form of advertising will be the savior for your dealership, so diversify your advertising just like you diversify your investments. Treat every advertising form as an investment with anticipated profitable results and you won’t go wrong.
Vol 3, Issue 10
About the author
Tim Randall

Tim Randall

Senior Vice President

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