RED BANK, N.J. -

As digital marketing avenues expand and the potential for dealers to have a further reach when it comes to consumers in other states and even other countries continues to grow, the following question arises: is it more profitable to advertise to the local community and  county or try and pull in customers from other markets?

In talking to advertising expert Adam Armbruster, of Eckstein, Summers, ArmBruster and Co., Auto Remarketing found that there may be advantages to both — but dealers must find a balance.

“Well, since the car business has evolved from a pure play retail sales model to one of a ‘car buying service’ provider, the industry needs to accept the fact that they need to market like a service company,” Armbruster explained, noting that the role of a dealership is changing.

“While TrueCar, AutoTrader, Cars.com and others already know this, many dealers do not. When you begin to take a page from the service economy marketing playbook, you’ll see that consumers will shop online and then contact a provider that meets the right criteria. They do not care where this provider is located, just that they can solve the task. No more will car buyers need to ‘stop in’ and ‘look around’,” he continued.

He also stressed that service companies “come to you (the customer),” and though dealerships are not quite at that point yet, they might be well on their way.

“We are not at that point in the car business (yet) but we can use the service model and market regionally against many like brand providers and grow our footprint and sales potential,” he added.

Why is this shift important? Armbruster explained that with retail, consumers often buy locally; but with services, buyers tend to buy regionally.

“That’s why the nation’s highest volume car dealerships market to the largest possible footprint … Since the consumer is moving away from the dealership in both space and buying habits, dealers need to close the gap. And effective large regional marketing is the way to accomplish this,” he further stressed.

Armbruster refers to this shift in dealership marketing as establishing a “larger footprint.”

Explaining this point, he noted, “Think about your immediate largest population center; it’s usually the center of your sales region. All of these buyers can buy from you. Why not invite them all? Why assume they won’t consider you based on distance?

“Especially in subprime or pre-owned stores … If you can get them bought, do they care where your lot is located? I think not,” he further stressed.

The Balance

Though it can be beneficial to market regionally, officials noted that it may not be necessary to market across state lines.

That said, Armbruster stressed the importance of knowing just how far consumers will go to score a bargain.

“Well, while you may not a need to market across state lines, certainly a consumer will drive 100 miles to save a thousand dollars on a car (I have). Why ignore the buyers across town, when they are clearly not ignoring dealers across town?

“If the consumer has a longer reach, why should your reach be limited to your own county or two?” he continued, noting that with the rise of the Internet and digital marketing, consumers have more ways to view a dealership’s inventory.

He also stressed that instead of thinking small, dealerships can benefit locally from advertising regionally.

“It makes no sense to think small. Often the best way to control your own local trading area is buying the entire region; with this approach you reach your local buyers, and you invite your competitors’ customers as well. Don’t think in terms of percentages; think in terms of scale,” Armbruster stressed. 

Which Approach is More Cost Effective?

In explaining which marketing approach would be easier on dealers’ pockets, the answer might prove surprising.

“When you buy high scale media (such as broadcast TV), your cost per customer drops down significantly,” Armbruster said.

“TV has an unearned reputation of being expensive ($3 million dollars for a Super Bowl TV ad); but the fact is it remains the only way to reach massive consumer counts at the lowest possible cost, often less than a penny a person reached,” he continued.

“Conversely, hyper local media such as direct mail, cable TV ads or Google AdWords are the most expensive per person options. Many dealers just don’t have the facts,” Armbruster added.

In fact, to reach a larger audience, Armbruster encourages a “triple threat” option: TV, computer and mobile.

“All three of these screens of TV, computer and mobile allow you the luxury of reaching car buyers at the right time, on the right days, and be able to say the right things to them for as little as a penny per person reached,” he explained.  “The three screen approach works very well because consumers use them together. An example of this is surfing the Web while watching TV. Nielsen Research (2010) says that 40 percent of TV viewers do this every day.”

Moreover, Armbruster further stressed the importance of keeping up a mobile website.

“Mobile marketing is like ‘Internet 2.0’ It’s an entirely different Internet. And they (shoppers) use these mobile tools in very different ways than with traditional desktop computers,” he said.

“If you don’t yet have a mobile version of your website live, you are already missing out on free traffic to your dealership.  If car buyers can’t easily see your mobile website, they will just moves on to another dealer.”

Regional Customers’ ‘High Expectations’

So with a larger customer base, should dealers be prepared for higher expectations from shoppers, as well as a more competitive atmosphere?

Armbruster thinks so.

“For some reason car buyers often only feel satisfied if they cross shop your offer. So if that’s a reality, then make your dealership the easiest dealership to cross shop. A ‘Price Comparison Hotline’ is one idea; a ‘Guaranteed Approved Hotline’ offer is another,” Armbruster suggested.

He also stressed that dealerships could take advantage of their location, especially if they are located outside of a metro area.

“Americans have this innate sense that if a business is far away, then the deals must be better. To this point several of our largest volume dealerships are up to one hour outside of the metro. Distance implies value.

“‘Cars are cheaper in the country’ is a concept that many Americans buy into. Why fight their perceptions, instead use it to market your remote store as an advantage. For a dealership group in distant southern Miami I wrote the slogan ‘Be Smart, Drive South".  It worked, and they still use it today,” he said, offering an example to illustrate his point.

And wrapping up the interview with Auto Remarketing, Armbruster offered some advice for dealers as they move forward with their marketing plans.

“Be willing to rethink everything you know about automotive marketing in 2012. Be willing to consider broadcast TV advertising, and get an expert opinion before you move forward,” he shared.

“Ask for references and check out who is giving you advice. Riches await those who market to today’s buyer in the ways that match their current shopping patterns. Let’s make that you,” Armbruster concluded.
 
Editors Note: To read more about how dealer marketing trends are evolving, see the special "Marketing Evolution" section in the July 1 issue of Auto Remarketing. Also in this issue, read the “Used-Car Market Intelligence Report," for insight into six key arenas impacting the used-car business:

—Used-Vehicle Retail Sales
—Used-Vehicle Values
—Retail Used Supply
—Wholesale Used Supply
—Leasing
—Residual Values