How to Stretch Your Ad Dollars update from February 2009

Can you handle the hard truth?

Many car dealers have not been “marketing” over the last five years. Many have been simply buying ads and taking car orders.

Some nameplates were so hot that dealers told me they were hardly able to keep them in stock. Their biggest worry was getting enough allocation.

For the record, I am not an “ad guy.” Instead, I'm a car-sales veteran and ex- grocery retailer.

I worked the retail business on the inside so, believe me, I have a healthy dose of respect for dealers and what you have to do to sell a car.

But the truth is, in a go-go economy, any ad works in any media. Even bad ads. Money was easy and so were sales.

I am critical of the apathy in most auto dealer advertising. Some dealers still use marketing models and media mixes from the 1970s and complain about poor results. It's an irony.

Car dealers often are the best and smartest businessmen and businesswomen in a city. Dealers spend more in advertising than any other industry. But often they are the weakest at true “marketing”.

The difference between advertising and marketing goes like this: Advertising is firing your cannon, marketing knowing where to aim and when to fire.

You probably should have been anticipating this eventual sales decline and should already have the plan in place that I am about to share with you. I congratulate you if you have, but if you haven't, get ready for some dramatic changes.

It's time to evolve your marketing as a “retailer”, and stop advertising like a “dealer.”

OK, so market unit sales are way down 20%, 30%, even 40%. Look away from the limitation for a moment, and instead look at the opportunity. Odds are that you sell less than 20% of the total annual brand unit sales in your market.

That means you are now in fierce and direct competition with the other like-brand dealers in your market. (I know that this is not a revelation to you, but it seems to be to the manufacturers who keep telling you to achieve “conquest” sales from other brands.)

It's the factories job to sell the brand; it's your job to sell the unit versus the other dealers.

Most car buyers seem to know the specific nameplate and model they want to buy when they first contact your dealership. What they really want to know is why they should buy from your store instead of all the others selling the same thing in your city.

So how can you grow sales in a local market that is down 30% in volume?

In 2009, your single ad dollar has to work like three ad dollars.

Here is a step-by-step process to stretch that dollar:

Step 1:

Run a cost-per-thousand Analysis. That refers to what are you spending to reach 1,000 buyers through your current advertising plan. Your stretch goal should be a $10 cost per thousand for maximum buying power. You are probably at about a $50-$100 cost per thousand right now.

Here is a quick guide to save you time, complete with estimates for what you are currently paying for each media:

You can quickly see how fast you can double or even triple your ad dollar buying power through reallocation of your advertising funds to more efficient media choices. Don't fear change. All media work the same way. Some are just more expensive than others. This is no time to lightly experiment or make slight changes. Make a bold shift and stick with it for 12 months.

Step 2:

In your advertising, tell a story about your dealership that has all the right elements for successful consumer differentiation.

Here they are in order of importance:

Step 3:

Have your store look like you are open for business! I still see stark dealerships that look like they are closed or awfully quiet.

Dealers with no visual displays, color or excitement are the ones who wonder why no one is shopping at their store.

Walk through the nations' best retailers like Wal-Mart and Target. Notice the energy in the store, exciting signage and merchandising. It's these “little” details that make them No.1 in their categories.

Your entrance to your dealership lot is your stage. Showcase two or three of the most popular lines at great prices and payments. Door decal prices and payments are the best. Consider brightly colored units to catch the eye of passing traffic.

In your showroom, have two or three more units done the same way. Don't wait for a consumer to ask. Tell them.

On your website feature the same two or three units with price and payment on the main page.

On the phone and on the floor be sure all salespeople know the promotional units, prices and payments. Quiz them randomly to be sure.

Again, don't look at the limitation in your market, look at the opportunity.

If you implement these changes, and assuming the other competing dealers in your market do not, you will increase your market share, sales and profits. This approach has served us well over the last 30 years. It will work for you too.

Fact: Your ad dollar needs to triple in buying power. So are you ready to make a bold change to your advertising plan?

Adam Armbruster is a partner in the consulting firm Eckstein, Summers, Armbruster & Co. in Red Bank, NJ. He can be reached at [email protected] and 941-928-7192.