Know If Your Ads Work

Dealership advertising shouldn't be a game of blind man's bluff. You're doing serious business with serious money at stake and you should see exactly what you're getting for your investment.

Even so, most dealers are spending incredible amounts of money on advertising without tracking their return on investment. It's costly and unnecessary. With existing media-tracking e-business technology it's easier to measure the return on your advertising spend, eliminate what doesn't work and focus the high beams on what does. More on that soon. First, let's look at the big picture.

No question advertising works. If it didn't, businesspeople — especially businesspeople in the automotive industry — wouldn't spend so much money on it.

New-car dealers alone shelled out a record-breaking $6.6 billion in advertising in 2001 — an average dealership spend of $303,600, or $387 total advertising per new vehicle sold, according to the NADA.

Let's break down the average dealership's advertising expenditures by medium (and then I promise to lay off the statistics). Newspaper advertising still captures the lion's share of the average dealership's advertising budget: 53.1%. Television is a distant second at 14.5%, just ahead of radio advertising at 13.6%. Direct mail's slice is 6.1%. And the “Other” category (which includes everything from Internet advertising to in-store, promotional giveaways) gets 12.7%.

These percentages haven't shifted very much in the last 10 years. Most dealers are still flying blind because they aren't tracking their ad results any more than they were in 1991, although they're spending more.

Rule one: Advertising works, but not all advertising works. So knowing which efforts pay off and which don't is valuable budgeting information. It's easier to know than you might think, thanks to recent automotive e-business technology.

A media-tracking system lets you assign unique, nationwide toll-free numbers to ads in every marketing channel you use — newspaper, radio, television, websites, billboards, direct mail, etc.

This allows you to monitor all of the inbound calls your advertisements generate, track the source of each call, record the conversation and report the call data, including every caller's telephone number. You can then track which ads produce the most leads per dollar spent, and know which leads generate the highest closing ratios.

Say your dealership spends 50% of its advertising budget on newspaper ads, 40% on radio and television, 5% on direct mail and 5% on Internet ads. What's most effective?

With a good media-tracking tool, you could assign different 800 numbers to each ad channel then track all your target market responses. Maybe you discover your budget distribution is right on the money. Or maybe you discover that you're spending 50% on newspaper ads that generate only 20% of your leads while your 5% allocation for direct mail is generating 53%.

There's no single, surefire formula for success. What's perfect for one market may not work in another. The point is to know for certain what works for you in your market.

Okay, but how can you tell a good tool from a bad one? Here's a checklist.

A good media-tracking tool should provide you with:

Bottom line: If you're not tracking and analyzing your advertising results, important marketing decisions are guesswork. Keeping your eye on the ball is easier with the blindfold off.

John Holt is president and CEO of The Cobalt Group, an e-business provider to automotive retailing.