Study: Dealers Overspend on Marketing

MINNEAPOLIS — Marketing automation platform provider Outsell announced the results of a marketing return on investment study completed in partnership with RXA and Vistadash. Conducted in September and October and billed as the first of its kind for the automotive industry, the study spanned 300 dealerships and looked at data on 420,000 customers, 3.5 million customer interactions, and $72 million in media spend.

Analysts sought to measure whether auto dealers were allocating marketing spend across channels for optimal return. They found that half of the dealers surveyed were overspending on at least one marketing channel, meaning they had invested to or past the point of diminishing returns.

Other key findings include:

• Dealership size has an impact on ROMI, with smaller dealers seeing solid returns from paid media and referrals whereas larger dealers have the scale to see better performance from display and email.

• When it comes to conquest marketing, dealers need to go big or go home. If you can’t do it at scale, you shouldn’t do it at all as you’ll never achieve positive ROMI, analysts said.

• About half of dealers are underspending on social media marketing.

• One out of every three dealers is overspending on search-engine marketing.

While dealers have often believed they need to spend more on marketing in a large market, the study found that market size does not impact ROMI. Often, dealers could optimize their investments simply by shifting budget around without necessarily investing more.

“As John Wanamaker famously said, ‘Half the money I spend on advertising is wasted; the trouble is, I don’t know which half,’” said Mike Wethington, Founder and CEO of Outsell. “We set out to try to measure that, to set benchmarks for the industry and eventually to help any dealer calculate their own marketing ROI. The methodology we developed for this study could be applied at the dealer level to help them better understand how they can shift their marketing budget around for better returns.”