Limited vehicle supply and increased consumer demand does not mean dealers should pull back from advertising. 

Dealers should remain focused on a few key strategies, such as shifting advertising spending to help with inventory acquisition instead of customer acquisition — or identifying which set of cars are sitting on the lot longer than others. It also means they need to be laser focused on eliminating wasteful spending, particularly as digital advertising prices in key areas have started to fall.

It’s easy for dealers to see increased demand and think, “OK, it worked; Now we can shut off our ad spending.” All this will do is give their competition a significant advantage in running the overall business.

Ad dollars are getting more competitive — so think smarter

Dealers had steadily increased spending in digital mediums such as paid search, social, and video over the last decade.  As more advertisers competed for the same “digital real estate,” ad cost steadily increased as well. 

That all changed as the pandemic set in and dealers shuttered their doors; costs, especially in Facebook/social media, dropped significantly. However, during the summer of 2020, when lockdowns began to lift and dealers felt a quick rebound, advertising once again rebounded and as a result, costs began to rise once again.

However, with the chip shortage-led inventory challenges persisting well into 2021 and beyond, advertisers have once again pulled back, opening the door for those eager dealers who can again take advantage of falling ad costs on social platforms.

Successful dealers realize this opportunity and have identified the areas within digital advertising where their money can go farther — such as social. The key difference is that these dealers are changing their message to focus on service and repairs, as well as inventory acquisition (we’ll buy your car) offers.

Many dealers who haven’t realized this opportunity fall into this trap of staying with legacy advertising strategies, and this wasteful spending is a blind spot for hundreds, if not thousands, of dealers all across the country.

Overcoming blind spots: Elimination of media waste 

Reducing advertising waste is a key element to boosting dealership profitability. It is estimated that the automotive industry will spend approximately $13.4 billion on digital advertising, and nearly 40% of that expenditure will be ineffective due to the wrong strategy, bad data or both, as noted in "Blind Spots: A Guide to Eliminating Today’s Automotive Digital Media Waste," by PureCars founder and CEO Jeremy Anspach.

When applied to cost per sale, this often leaves dealerships paying hundreds of dollars more to sell a car than their online competitors and leaves them handicapped in their ability to effectively compete.

Today’s advanced advertising data and marketing technology helps dealers follow and capture demand by identifying which vehicles they should be aggressively marketing, which target markets they should be marketing to, and which media channels will be most effective in reaching those markets — all with the goal of optimizing to the lowest cost per sale and RO, rather than vanity metrics like cost per click and impression volume.

Focus on the right marketing investments 

Leveraging advanced data and marketing technology can help dealers make the right marketing investments in selling and servicing new and used cars, but also in identifying and acquiring the right used vehicles directly from consumers where they can better maximize profits. 

Leveraging data helps dealers easily identify — on a daily basis — which new vehicles in inventory require more or less marketing investments, as well as delivering insight on the right media mix models to deliver the most efficient returns.

Automotive groups that identify and adjust their media mix across search, social, streaming television and traditional media channels can often realize millions of dollars in efficiency gains that go straight to profitability.  

Today’s more progressive dealers are activating creative, a new way of sourcing used cars, and with auctions at a premium, buying directly from consumers who live in their vicinity has become an attractive way to build customer relationships and outpace competitors’ vehicle acquisition in a sustainable way.  This strategy is here to stay.

By first leveraging market days’ supply, market days on lot, and scarcity insights, dealers can determine which vehicles are most likely to sell quickly and at a premium in their market. Dealers then activate multi-channel ads featuring “We’ll Buy Your Car” or “$1,500 Over Kelley Blue Book Value for Your Trade” messaging to attract more consumers. 

Today’s successful dealers are leveraging a more scientific approach with sophisticated marketing technologies to more closely align their strategies with retailers who have perfected the art of digital advertising. This combination means dealers look at their advertising strategies in a unique way, reallocating investments rather than relying on legacy practices.

Jeff Allen has worked in the automotive industry for over 20 years and has been at the forefront of transforming shopper data into information across all three automotive tiers. Before coming to PureCars, Jeff was the Director of Analytics at 22Squared, working directly with Southeast Toyota and large retail brands to improve their bottom line. Today he serves as VP of CX for PureCars, working internally as well as externally with clients to remove blindspots to realize performance. For more information, please visit www.purecars.com.