One of the greatest areas of confusion in the automobile advertising business today is the breakout of media budgets. Few dealers believe they can prosper…or even survive without advertising, and they are committed to spending a percentage of sales or gross profit on advertising and promotion. But many dealers constantly question whether their dollars are being spent on the best possible media combination. Now the powerful influence of emerging digital technologies, especially on younger buyers, has created even more uncertainty for the automobile advertiser. A few months back a study on entry level car buyers by a well-known research firm created quite a stir with automobile dealers. The main thrust of the research suggested that the youngest potential buyers for automobiles were doing most of their research and obtaining most of their buying information almost exclusively from the Internet. Interestingly, however, many interpreted this analysis to mean the only way to advertise to the younger entry level buyer was over the Internet. Within a week of the published research I received a flurry of emails from dealer friends, clients and advertising colleagues on the ramifications of this study. Based on this information many suggested that, with the advent of IPODS, satellite radio, blogs, etc., it was no longer possible to reach younger buyers with any form of traditional media. Nothing could be further from the truth.
For starters, let’s separate and clarify the issues. Information and research versus advertising and promotion. For many years I have explained the basic difference between print and broadcast advertising in this way: Print tells. Broadcast sells.
Print provides a forum for information. Numbers, pictures, statistics, and lots of (often unreadable) fine print. Broadcast on the other hand is salesmanship. Hopefully constructed with passion and enthusiasm to persuade even those consumers not actively in the market to consider shopping for a vehicle.
Although traditional broadcast mediums are ever increasingly challenged for a share of the young buyer’s eyes and ears, the traditional print medium has all but been replaced by a new forum for information: the Internet. While it’s true the youngest entry level buyers, and buyers-to-be, are doing the majority of their research on the web, the traditional broadcast channels are still formidable tools for advertising awareness. In fact, our own agency’s research shows broadcast is a powerful motivator for web site awareness in most demographic segments. In one instance recent research showed visits by 18-24 year olds to a dealership web site increased by 500% after just two weeks of a radio promotion involving the dealer’s web site. In another report, late night television ads tripled the number of entry level credit applications received on a dealership’s website.
The increasing influence of IPODS, PODcasting, and streaming music on the Internet will undoubtedly dilute commercial broadcasting’s impact on entry level buyers, but recent focus groups have suggested broadcast radio and television will continue to play an important part in lives, habits and attitudes of future buyers for at least the foreseeable future. The real challenge for automobile advertisers is more, and better research to determine the best ways to use these mediums.
Last week a report by AutoPacific suggested marketers might be be paying too much attention to the youngest population in the first place! AutoPacific’s research suggested 41-60 year baby boomers are the most affluent Americans with three-quarters of the nation’s financial assets and TWO TRILLION dollars in annual disposable income. Their study found 50% of ‘Boomers’ already own three or more vehicles and that ‘Boomers’ will maintain their car-buying pace, with over half of this segment trading in 48 months or less. (For further information on the AutoPacific study contact Jim Hossack or George Peterson at AutoPacific in Tustin, California at 714-838-4234.)
During the recent N.A.D.A. convention, I polled eight highly profitable independent dealers on their media plans for the coming year. All of these eight dealers enjoyed increases in profit in 2005 vs 2004. Included was one smaller market, four medium markets and three larger markets. I averaged the expenditures and here is the planned budget breakout:
Television 35% (almost evenly split between network and cable)
Radio 25%
Print 20%
Internet 9%
Direct Mail 6%
Misc. 5% (includes outdoor)
The television budget percentage includes production.
The largest increase this year over last was planned Internet related expenses. Not only are successful dealers experimenting with new ways to advertise on the Internet (search engine placement, etc.) but many of these dealers are spending higher percentages of traditional media advertising specifically to bring customers to the dealership website. Interestingly, of the dealers I spoke with who increased Internet ad budgets this year, these dealers actually decreased planned expenditures with third party brokerage sites. The dealers most pleased with their Internet budget R.O.I. have developed regular e-direct mail programs either in-house or with various vendors. A substantial part of the Internet budget increases for these dealers is earmarked for continued developed of email promotions for both sales and service.
While overall planned television expenditures did not increase with this group of dealers the percentage of network television (vs cable) increased slightly this year after several years of decline in the overall television budget.
Print advertising budgets continued to decline with this group of dealers (from an average of 24% last year with these same dealers.) Two of the dealers in this group plan no newspaper expenditures for 2006. Most of the dealers in this group plan to spend direct mail budgets on specific and strategic campaigns to their existing customer base and visiting prospects only. One of the dealers targets only prospects who have bought same make vehicles from competitive dealerships. All of those I spoke with seem to feel they have the right formula for effective direct mail use.
Every market is similar. Every market is different. Your media mix may be dramatically influenced by specific factors such as media availability and costs, demographics and the vehicles you sell. The Internet will continue to grow in importance as an ‘information’ technology and interactive communication tool. The need to do research has never been greater. Measuring the return of specific mediums, both in quantity and quality, and the spiral integration of your overall media mix is the only possible way to achieve the highest possible return for your advertising dollar.
Do you have questions or comments about this or past AdTalk articles? Feel free to email them to CBC.
This issue of AdTalk is brought to you by Research Partners. Serving dealers for nearly 20 years to help reduce advertising cost: Research Partners
