Trying to nail down the right digital advertising strategy for auto dealers is like trying to find clarity in retail sales performance at dealerships. It’s currently all over the map, and this is certainly reflected in the advertising strategies dealers say they’re employing.
Ongoing manufacturer production and supply chain bottlenecks for many carmakers have kept inventory levels from recovering more quickly. On the consumer side, rising interest rates and still-high prices are creating ongoing concerns about consumers’ ability to afford new and used cars and trucks.
Despite all of this, September’s seasonally adjusted, annualized rate of sales was reported at 13.67 million, above analysts’ projections and noticeably improved from the 12.38 million mark in September of last year.
These muddy waters are making it harder for retailers to also find clarity in their digital advertising strategies. Our recent online survey of approximately 3,000 dealership executives from across the U.S. aimed to address several digital advertising topics and concerns. Given current market conditions, a large portion of dealers say they aren’t pulling the plug entirely on their ad spending. A third of respondents said they have decreased their ad spend by less than 50%, and a quarter of respondents said their ad spend is similar to 2021.
A little more than half said they decreased their ad spend because they are focused on inventory acquisition or they are re-thinking where they should focus their advertising dollars.
In terms of where dealers are spending their advertising budgets today, the majority (81%) said online video (YouTube), social media (73%), and search (66%). This is especially interesting since most dealers (77%) said they believe they get the most ROI from advertising spend through streaming audio (Spotify, Pandora), followed by streaming TV and online video (both at 70%).
Many dealers (70%) said they believe search advertising drives the most traffic to their website, followed by social (64%) and email marketing (43%). However, in terms of driving traffic to a physical showroom most dealers turn to email (74%), followed by search (71%), and traditional media (62%).
Ultimately, when asked which media channels they would like to try most, the majority of dealers said streaming audio (73%), streaming TV (72%), and online video (69%).
How are advertising partners helping dealers make the right choices?
The disconnect between the focus of still-heavy legacy media versus the curiosity of newer media begs the question of how proactively advertising partners are advising dealers, since more than half of dealers (53%) said they are learning about new media channel opportunities from their advertising agency partners. What’s more, proven ROI (82%) and recommendations from the advertising vendor (76%) are the top influencers driving a dealer’s decision to try new media channels.
Still timid about trying something new
It’s particularly interesting that dealers are still relying on traditional media even though they also believe they get the most overall ROI through new media channels, such as streaming audio and streaming TV. Much of the data in the survey showed that dealers continue to require additional education on the right media channels. Industry experts continue to believe that the right digital advertising strategy leverages the most efficient channels while reducing wasteful media spend.
There is plenty of logic that supports why dealers should more closely look at new media and streaming media options – and plenty of analytics that show it’s working.
The purchase power of Millennials and Gen Z will continue to expand greatly over the next 20 years. It’s essential to not get caught up in muscle memory when advertising to these different age groups. This means dealers can’t employ the same advertising tactics they’ve used for the past 10-15 years and expect to reach newer, younger audiences. For some dealers, streaming audio and video offers a bridge between the old and the new.
The automotive industry will continue to trudge through some muddy waters in the coming months. However, relying on the right digital advertising media partner – and truly taking their advice – will help retailers make more educated, proven decisions when it comes to the right advertising strategy in the coming months.
Click here to download a copy of our white paper: 5 Key Takeaways From The Purecars 2022 Digital Advertising Survey.
Since 2007, PureCars has helped thousands of dealers improve their advertising effectiveness, lower ad costs per unit sold and per repair order. Through our unique combination of advanced advertising solutions, digital merchandising and market analytics, we provide dealers and partners with best-in-class solutions that increase efficiency and profitability. We are a certified digital provider for 16 OEMs in the U.S. and 1 in Canada, compliant with 40+ brands and serve 65 of the top 100 dealer groups in North America. To learn more, please visit purecars.com.
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