Advertising v. Marketing

Not Necessarily One and the Same

Merriam-Webster defines advertising as “the action of calling something to the attention of the public especially by paid announcements.” It defines marketing as “the process or technique of promoting, selling, and distributing a product or service.” Similar, but different.

Just like the lifelong struggle between good and evil, whether to put resources into advertising or marketing is a constant battle for today’s buy here pay here (BHPH) dealer. Both have their place and to some extent are necessary.

To decide which basket you should put the most eggs in depends on a few factors. If the goal is to increase overall market share, then advertising gets most of the eggs. If building business through repeat customers and referrals is the goal, then marketing gets the eggs. And for those wanting the best of both worlds, the eggs should be split equally between the two baskets.

How the eggs are distributed within each basket plays an integral part in the overall effectiveness. There are four main types of advertising media that seem to be the most effective for the BHPH industry. They are television, radio, Internet and print.

Television seems to be the most popular among BHPH dealers. The key to effective television advertising is not only being on the right stations, but also airing your commercials during the right programs and at the right times. This is especially true when running commercials on local stations. If you have a large number of cheap spots appearing between midnight and 6 a.m., they will likely only be seen by a select few who may not be your target audience.

In markets where satellite service is prominent, local stations are the best bet. Again, pick the station(s) that offer programming your customers are watching. A spot airing during “Judge Judy” will produce more than the same spot airing during “60 Minutes.”

In markets where cable service is more prominent, you can usually get more bang for your buck. Most cable providers offer packages where any combination of channels can be chosen. As with local stations, timing and program selection are key. A spot airing on “UFC Fight Night” will produce more than the same spot airing on “SportsCenter.” As with all television advertising, choose programming and times that fit your customers’ viewing habits, not yours.

Radio is next in terms of popularity with BHPH dealers. As is true with television, pick times and stations that fit your customers’ listening habits. A simple way to gauge this is by making note of what stations are programmed into the radio when a vehicle is traded in or noting what station the customer sets the radio to on a test drive. Doing this costs nothing and tends to be more reliable than the expensive radio surveys available.

Gone are the days when only the big BHPH dealers had Web sites. Now, Web sites have become the rule and not the exception. The Internet is proving to be the best way to reach the new credit-challenged customer.

Due to the tightening credit market, the customer who previously enjoyed bank financing now has to seek alternate financing. This customer has a tendency to be more of a Web shopper, so not simply having a Web site but having an effective one (which is an entire article in itself) is paramount to capturing this customer. Just to put Internet usage in perspective, Hispanic Internet users rose from 7 percent of all Internet users in 2007 to 11 percent of all Internet users in 2008. That may not sound like much, but it was the largest increase in usage among all groups. Internet experts are predicting a similar increase in 2009.

Last on the advertising list is print. While this medium has been a staple for the new car industry, it hasn’t produced the same success for BHPH dealers. Besides the cost factor, overall circulations are substantially down, as witnessed by some very prominent newspaper closings in the past year. For BHPH, what are known as “throw-aways” seem to be the most effective. The Thrifty Nickels and Star Shoppers of the world are the free publications found in the wire racks at the local grocery store. As with most things in business, location is the key.

When it comes to the marketing basket, there are a few methods that have proven effective for BHPH dealers. These would include repeat and referral programs, promotions, giveaways and the Internet. All BHPH dealers should have some eggs in this basket.

The most popular form of marketing is repeat and referral programs. Some examples of repeat programs would include lower interest rates, lower down payments, or a free vehicle after a certain number of vehicles have been purchased. Some examples of referral programs would be a spiff for each customer referred, scratch-off cards with varying rewards for each customer referred, or a free vehicle after a certain number of customer referrals. With the current state of the auto industry, BHPH dealers are extending their referral programs to the new car dealers to capitalize on the lack of funding available. These tend to be a little more costly, but are worth it as the customers turned down are definitely in the market to buy.

Promotions and giveaways are becoming more and more prevalent and are proving to be pretty effective. These take many forms, including drawings for cash or gift certificates, incentives for on-time payments, and promotions with a grand prize of paying off a vehicle. Five years ago, only a handful of BHPH dealers were involved in doing any of these, and now, very few dealers aren’t.

Advertising and marketing play valuable roles in building and maintaining a successful BHPH operation. They are similar, but different. Both baskets need some eggs. The main thing to remember about both is that they should be geared to your customer, not you.

Vol. 6, Issue 10