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Stay Focused On More Effective Auto Advertising

I know that a number of factory folks read my advertising articles in Dealer Magazine as I receive frequent emails, some good, some bad, and have actually developed an E-mail relationship with some of the upper-level management over the past 10 years. Unfortunately, a few have been purged in the past few months, but maybe I’ll make a few new friends…and not-so-friends in the coming months. So to those of you who are reading, a few ideas on the marketing challenges ahead of us.

First, let me share a crazy theory of why many good dealers in the GM and CDJ ranks were dumped. I’m thinking these makers seized the opportunity to dump many dealers who could live without their products. Of course we were over-dealered in some markets and over-zealous competition drove grosses to pitiful levels. And of course there simply were some bad dealers who should have been gone a long time ago and this was the perfect opportunity for the factories to whack the weeds under the protection of the courts. But in some cases the whacking was senseless and suspiciously diabolical. I personally know of at least four exceptional dealers who’s demise is more of a loss to the respective manufacturer, than to the dealer himself. Good dealers who ran a well-balanced operation with a high percentage of absorption, a clean, attractive facility, good personnel and substantial used-vehicle revenue. That, in my opinion, is exactly why they were dumped. They could live without the sales of new vehicles. GM and Chrysler knew one of the keys to their survival was dealers who could only survive if they advertised and sold (and ordered more) NEW GM and Chrysler vehicles. Regardless of profitability. For those of you who have read my columns for sometime now, you’ll remember that I predicted this eventual outcome. I called it the ‘penny a gallon’ ploy. When I was a kid pumping gas in the last 60s, I remember asking the service station owner why on earth he would be willing to sell gas for a penny a gallon profit, let alone keep the ‘islands’ cleaned and painted and pay us gas jockeys minimum wage. He simply pointed to the service bay and said: “kid, we lose money out here but it keeps that big sign up there on the pole which allows us to make money in there so it all works out in the end.”

As more and more dealers acquired multiple franchise makes in the late 80s, they became less threatened by the quota taunts of the manufacturers. They would make money on every vehicle. Or they wouldn’t sell it, or advertise it, or re-order it. Take a look at the list of dealers who lost franchises and see if you don’t agree. Of course there were many smaller market dealers who were destined for factory extinction and the current economic situation just afforded an excuse to shutter them with little or no compensation. But that’s another story altogether.

Okay, so factory guys, if you’re still reading, here are a few ideas to super-charge your marketing efforts.

Stop pretending you are in the branding game. That’s nonsense. For the past twenty years the manufacturers primary efforts have been promotional in nature and have done little to ‘build a brand’ in anyone’s mind save for a few. Until you can find a way to truly differentiate your ‘brand’, focus on spending your advertising money in the best way possible to assist your dealer-partners in selling as many vehicles THIS weekend as they possibly can. Remember, automobile dealers are YOUR retail customers, but without your assistance in creating a resale demand, your sales will flounder and the rail yards will overflow.

Stop looking at your competition to figure out what your promotional game plan will be for the next 30 days. How many times have we seen entire 10 day periods go down the drain because you don’t release plans early enough for dealers to formulate their own game plan to complement your national or regional effort. Get further ahead of the curve even if you fear negative repercussions of a program overlap. Do you really think dealers will ‘hold off’ selling cars when they have an opportunity? And what’s wrong with making a better offer retroactive a few days? Cut your national budget and give more coop to the good dealers who know how to spend it much better than you could ever imagine. Most of the dealers are exceptional businesspeople who can spend advertising dollars far more wisely in THEIR market than your ‘media planners’ on the 85th floor could ever do. Your DEALERS are often buying the same spots you do for pennies on the dollar. Not only that, they are monitoring and constantly advertising results of their efforts in the most important arenas of all. In the showrooms, on the phone and on their websites.

While you’re at it, GET OUT OF THE PROMOTIONAL PRODUCTION BUSINESS. Produce great running footage and some ‘branding spots’ if you must, but stop spending $75,000 to $250,000 on a 30 second spot when your dealer’s local advertising agency can put something more compelling together, faster, for about 10% of what you pay or less. What part of that don’t you understand?

Allow your dealers to use at least some of the coop dollars to promote USED vehicles of your brand. The best used car dealers in the market are the ones who control the NEW market. If more people buy your USED cars, resale value goes up and overall long term cost of your NEW vehicle goes down. Does anyone remember when Ford and others spent all of their advertising dollars on USED cars after World War II? There was a shortage of new cars and FORDS represented a great value, plus Ford understood that if they promoted USED cars, their dealers might take more orders for NEW cars as they were available.

Stop strong-arming your dealers with a billion ‘don’ts’ in their marketing efforts. They know what to say and how to say it and they are tightly regulated in the fraud department by over-zealous state DMV’s already. As long as a dealer does not impugn the quality or integrity of your brand, let them do what is necessary to re-sell as many of your vehicles as possible this weekend.

Remember that your DEALERS are your retail customers. Stop trying to compete with them by constantly floating ideas about selling cars on Ebay, etc. How many times have you tried this in the past? (Since 1940)? How much money do you have to lose and how many of your RETAIL CUSTOMERS (READ: DEALERS) DO YOU HAVE TO AGGRAVATE before you figure this out?

Marketing is conception to consumption. Since you, the factory, have so heavily involved yourself in the ‘consumption-advertising’ efforts of the dealers, how about making the dealer more of a part of the conception? In the 30 years I have involved in advertising, working with some of your BEST retailers, I have witnessed conception ideas that could have been dumped at a very early stage saving the factory billions of dollars if they had just listened better to the folks who are suppose to put them on the street. By the way, some of your best dealers don’t have time to be on the ‘council’ or attend numerous meetings. But they will gladly give you an honest evaluation of ‘saleability’ in their marketplace, based on their experience.

Consider consigning. If you do have a bunch of iron sitting at the rail-yard, maybe it would make more sense to consign it to dealers on an earned basis. They don’t pay floor plan. More retail customers see them. Your storage costs are less. Any dealer can sell out of the consigned stock.

We’ve been through some tough times in the past year. Now more than ever, a genuine partnership with YOUR retail customers, the American Automobile Dealer, will serve you well in your overall marketing efforts. Do it well and it won’t be long before we will be back to 16 million PROFITABLE new vehicle sales in America.

7/26/09 Copyright © Jim Boldebook (for September 2009 Issue of Dealer Magazine)

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