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10 Auto Advertising Rules – Begin with a Budget, Stick with it

As I sat down to write this article, an e-mail popped up in my inbox from a dealer friend who was a long time client of the advertising agency I founded. It was confidential so I cannot share his name or marketplace, but this is the essence of the message: “Jim, it´s been a long time since we talked. I miss our conversations about advertising and the car business. I´m wondering if you could share some ideas on budgeting in light of what is going on in the market?”

If you read my article last month, I addressed this issue. But I realize more needs to be said about this subject, given the times we are going through.

In 1984, I paid a visit to an advertising client in a rural area of Indiana. Before I could get comfortable in my seat, this client proceeded to tell me about the fantastic idea he had just gotten from his ‘20´ group meeting regarding advertising. “So I want to get this idea up and running for this weekend,” he emoted with some enthusiasm. I reminded him that at about this time last month we had ‘jumped´ onto an idea from a dealer friend of his in a nearby market. Then I reminded him that a month before that, we had ‘jumped´ on an idea his sales manager had at the previous morning´s sales meeting. “And your point is?” said he. “My point is you have absolutely no consistency in your advertising message and not only is it confusing your customers and your sales team but it is costing you a lot more money in production and collateral support,” said I. Then I made another suggestion. I offered that we go over his advertising and promotional expenses line by line for the entire previous year. And the following day we did just that. When we were finished, I highlighted a number of items and took out my calculator. “Bob,” I said, “it is my opinion that these items did absolutely nothing of meaningful value for your business but cost you over $57,000. How many more vehicles could we have sold if we had spent that money wisely, or not spent that money at all and let it fall to the bottom line?” My client sat back in his chair and acknowledged that he was amazed at the amount of money he had spent foolishly. It was at this meeting that we made changes that helped this dealership finally gain control over advertising expenditures by establishing a firm budget for the coming 12 months, with an agreement that we would discuss, together, any variation from the budget. We got back to the basics that this dealer knew very well as a Dealer Development candidate with Ford.

Rule #1: Establish a budget and stick with it. If traffic wanes a little, don´t pull the plug trying to save your way to failure. Conversely, if things are going great, resist the temptation to add ‘a few more bucks´ onto the last 10 days.

Rule #2: Leave a little ‘flex room´ in the budget. For instance, if your monthly budget is $30,000, leave at least 10%, or $3000 unplanned, until 15 days before the month begins. You´ll be amazed at what you can buy in a fire sale when plenty of inventory and space is still available at ‘press time´. Get the word out to reps that you may have a few extra bucks to spend if the value is compelling enough. I´ve seen $9000 fixed-position sports spots sold for $300 just prior to game time. If you play the game right, the deal can always get better at last call. Also, if you leave a little breathing room in the budget, you can justify the baseball program ad for the son or daughter of good customer without going over your budget. And finally, if you don´t spend the entire budget, there is nothing wrong with a little positive surplus surprise on the statement.

Rule #3: Be realistic about your budget projections. Plan on spending at least 16% to 21% of your total gross sales (including any pack) new and used. If you are looking to grow your market and capture market share, that number should be closer to 25%. Include used vehicle gross as well as new.

Rule #4: Make sure your budget includes both ‘sell and tell´ media. Broadcast, cable television and radio are ‘sell´ media. They reach out to both active and passive shoppers and create reasons to shop your dealership now. Print and the Internet are ‘tell´ media. They are information providers for those searching for it. Use your ‘sell´ media (broadcast) to drive potential buyers to your ‘tell´ media. Always reference your website, your phone number or other sources of information.

Rule #5: Leave some room in your budget for creative ideas from the team. Last month I shared an idea from my friend Tony, a domestic-make dealer who has fared pretty well in the challenging times of the past year. Tony´s sales team goes door to door, to homes and businesses handing out business cards, flyers and even free gifts. Some time ago I talked about another very successful dealer who has a contest each month for new, innovative ways to reach customers. The winning salesperson gets a small budget to implement their idea. The salespeople like it and it gives them a stake in the dealership marketing. If there are no winning ideas, the money rolls over to the next month.

Rule #6: Leave a little room in the budget for ‘community requests´. Whether it´s putting your name on water bottles for a ‘cancer event´, yearbook ads or t-shirts for a park improvement walk-a-thon, it´s a good idea to budget for those requests up front, either by the month or annually. Some dealers create a separate promotion category for these items and some allocate to donations, but if there is some advertising value, it probably should go into the advertising budget.

Rule #7: Everything goes into the ad budget that is related to advertising. That includes business cards, production, fees, meeting costs, magnetic signs, flyers, banners, yard flags, etc. It is important that you know what your true advertising costs are.

Rule #8: Plan your work. Work your plan. By the 15th of this month you should have a roughed-out advertising budget by category for all of 2009. By the 20th of this month you should have a firm plan for January and a somewhat detailed plan for the first quarter. You can always fine-tune and adjust when necessary, but it is important to get an advertising budget in place far enough in advance that creative strategies can be implemented within those cost structures.

Rule #9: Be consistent throughout the month. If you can´t afford to advertise 4 weeks a month, come up with a plan that complements the full month. Most good dealers I know like to be on the first week of the month to get it going. The weekend beginning the last 10 days is the most critical time to be in the marketplace. Avoid being out of the market for 2 weeks in a row. It hurts both ‘Share of Market´ and ‘Share of Mind.´

Rule #10: Share your budget plans with all departments. You might consider creating a free ‘Google Calendar´ which you can share electronically with anyone you choose. This lets everyone on the team know exactly what you are doing and when. If you make changes, you can alert team members to check the calendar.

Next month I will share some “Back to Basics” ideas on creative strategy and how to build your brand & traffic in the most efficient, effective way possible. Until then, thank you for reading Dealer Magazine, my advertising articles, and thanks for all of the great feedback and comments throughout the year. May God Bless your family with a very Merry Christmas and a much better 2009!

10/12/08 Copyright © Jim Boldebook (for December 2008 Issue of Dealer Magazine)

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