From Dealer Marketing Magazine
Written by Michael Bowen
November 6, 2009
Little by little the economy is starting to improve and consumers and businesses are starting to see the light at the end of the tunnel. While this doesn't mean the effects of the recession will disappear overnight, it does impact the way people spend their money and the way businesses plan their budgets. What it means for your dealership is that there is a greater emphasis on return on investment than ever before and dealers are scouring every line of their budgets to find places where they can trim.
Cutting budgets is never fun, but in the end it may force the industry to make some needed changes that were avoided during the boom time. Advertising and marketing is one of the largest parts of any dealer's budget and many dealers have been searching for ways to trim their marketing budgets. Successful dealerships, however, know that you can't eliminate advertising and expect your business to stay open for very long. So dealers have been forced to be creative and come up with ways to achieve the same results with smaller budgets.
"The downturn has forced dealers to get back to basics and make sure advertising is more accountable. They are now forced to make sure that every dollar they spend is producing results. They have had to become more aware of what they are saying in their ads to make sure that there is indeed a real call to action and a message that the consumers find important enough to act on," explains Tom Letizia, president of Letizia Ad Team-Automotive marketing division.
"We believe about $1B has been taken out of the marketing and advertising spend at the dealer level," says Mike Romano, senior vice president of dealer strategy for Kelley Blue Book and chief operating officer for CDMdata, Inc., "Although that is concerning as a marketing provider, it is not bad if you are an online marketing provider. We have seen traditional media fall at a much faster pace than originally forecasted and we have seen more dollars pushed online than originally expected. So when it has all netted out, dealers have ended up cutting poor performing marketing partners and much of their traditional media to move their dollars online."
These kind of changes in dealership marketing were probably inevitable, but the current recession has been a catalyst for change, because it is no longer just a good idea, it is necessary for your survival. And "necessity is the mother of invention," Al Babbington, CEO of OneCommand reminds us. "The downturn has caused dealers to finally give up 'the things we have always done'--things like the newspaper and anything where the return is not obvious. It has also caused automotive retailers to look for lower cost, higher impact solutions that are flexible and measurable."
So where can you find cost savings in your marketing budget while still growing your business? Well, we spoke to three experts to try and find out and they offered up several areas where dealers can save money and find efficiencies in their marketing budgets.
Save money on airtime
Airtime is often the most expensive part of television advertising, but there are things that you can do to lower your costs without sacrificing your brand image. One of the most effective ways to cut your airtime costs is to negotiate. "Dealers need to become better negotiators of how they buy media," advises Tom Letizia. "Customers of media outlets rates can vary as much as 80 percent [in what they pay for airtime]. The goal is to be at the bottom of those prices, however, the best way to negotiate is to give the stations more money. Therefore, you can't be everyone's friend. You need to cut some of your favorite stations out of the buy in order to be more important to the few, to get your rates down lower. Don't try to do this by yourself. Get a buyer [who] knows how to negotiate and fight hard for you."
Negotiation is an effective way to lower your marketing budget; many TV stations are hurting right now and will be willing to make you deals that they never would have considered a few years ago. But Tom Letizia reminds us, "The stations have the same goals dealers have when they sell a car--make gross." That means, no matter what you do, there is a limit to how low the stations will go for their air time.
Fortunately, as Al Babbington explains, there are other opportunities to stretch your marketing dollars by "piggy-backing" on your OEM and Tier 2 advertising. "Leverage OEM and Tier 2 productions and placements to increase reach and frequency and then personalize that complementary message to your previous customers using solutions that are designed to automate one-to-one, multi-channel communications."
Negotiating with the stations for better rates and coordinating dealership advertising with the OEM and Tier 2 advertising are valuable means of bringing down your marketing costs, but they are not the only ways. Thanks to the advent of the internet and mobile advertising there are more opportunities than ever to get your message out in a cost effective and trackable way. In order to achieve the best results, your internet and mobile marketing must be coordinated with your TV and other traditional advertising.
Integrate traditional and online marketing
"Pairing of traditional and digital is yielding significant levels of response for dealers stepping out of their comfort zone. Solutions like mobile marketing and web analytics are now being integrated to allow for tracking of more definitive ROI," says Al Babbington.
That sounds great, but it is not enough to just have your website address in your television commercials. There needs to be real coordination between all your marketing efforts. That means making sure you're sending the same message to consumers, no matter where they see your ads. This is especially important when it comes to price. "The most important thing a dealer can do today is ensure that pricing is the same anywhere it is advertised. Too many times the online price doesn't match the offline price or cars are represented online that aren't on the lot. This immediately creates distrust in the consumers mind and they will move on to the next dealer," says Mike Romano.
Al Babbington agrees that dealers must, "pay attention to consistency in their messaging." He adds, however, that dealers must also "provide their customers and prospects with choices about their communication and channel preferences...and tailor direct communications that support and personalize for more of a one-to-one instead of a one-to-many approach."
Clearly online marketing is growing in importance, but that does not mean you should put all your marketing eggs in the online basket. Even if you have an amazing internet advertising campaign, "you still need to be on television to build your brand name. Make no mistake about it, the average home still watches television over six hours a day," notes Tom Letizia. And if you're not reaching those people watching TV, they won't know to look for you online.
Make a plan
Achieving the best ROI and properly coordinating your marketing requires time and a plan. As Tom Letizia advises, "Start planning for 2010 now. The biggest problem is dealers are making last minute decisions and not making any long term plans. I guarantee if you sit down with your media now, you can lock up some pretty strong deals." Just in case you are the procrastinating type, he also reminds us that "2010 is a political year and radio and TV stations will get healthy. They will be able to survive without automotive. So dealers must get to them now while they are still hungry."
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