Reunion’s Guide to Dealership Budgeting

Colored overlay across a massive calculator

What Is the Blog About?

Car shoppers rely on digital touchpoints across their buyer’s journey, so it’s important to properly set up your dealership’s budget.

Why Should You Read It?

You may still be using outdated channels that have a lot of inherent waste, which diminishes the value of every dollar that you spend.

How Are We Going to Help You?

We analyze the data from our national network of dealers to offer a framework for budgeting and to explain the effectiveness and efficiencies of digital channels compared to the process and waste of traditional media buying. Our CEO spent years as a Media Buyer for a 33-store group, managing millions of dollars annually, prior to becoming its Marketing Director.

The average consumer sees up to 10,000 brand messages, including ads, per day. But with an average attention span of just 8 seconds, consumers are likely retaining only a fraction of them. Dealerships who are competing for these eyes by spending tens of thousands of dollars in traditional channels, like television and radio, are barely managing to have their ads reach audiences 3 to 10 times — a very low frequency.

Consider that approximately just 0.4% of consumers are in-market to purchase a car during any given month.

Dealerships spend a significant portion of their budget where messaging is drowned out by thousands of other ads in a market where less than 1% are preparing to purchase a vehicle — on traditional media channels where manufacturers are spending millions to build brand awareness for core models.

There’s a far more effective way to spend your budget, but it requires a shift in thinking. Forget the combative traditional versus digital mode of thinking. It’s time to focus on intent and stimulus marketing.

How to Set and Allocate Your Budget

First, it’s important to set your budget. You have some numbers specific to your dealership or automotive group that you’ll want to use: your current marketing cost per car sold and your sales goals.

Marketing Cost Per Car Sold x Sales Goals = Your Dealership’s Marketing Budget

Let’s talk about how to allocate your newly established budget.

Prioritize Your Dollars With Intent Channels

Your Dealership’s Website

It’s important that you spend money on building and maintaining a website that adheres to SEO best practices and converts well.

Staying up to date on SEO best practices is crucial. People use Google to search for products and services, including makes and models. There’s plenty of technical SEO pieces that you can put together that will help you show up in the results for those searches, such as:

  • Consistent online directory information
  • Quality links from other websites
  • Updated copy, meta, and H1s
  • Fixed links
  • Adequate page speed

You can leverage tools like Search Console, Google Ads, Moz, and others to understand what people in your market want based on their actual search queries. Build content that satisfies the queries, starting with those that are most intent-based, then across the spectrum to deliver content to searchers across their journey.

Commitment to these best practices should create a website experience that is unique, frictionless, and relevant.

Pivoting to conversions, you need to start by setting up the right goals. Goals are the actions you want car shoppers to take, such as:

  • Call your dealership
  • Submit a lead form
  • View inventory
  • Initiate a chat or text
  • Schedule service

Whether you hire an internal team or partner with an agency, make sure you can hold them accountable for understanding the purpose of your website. Without that purpose, all other strategies to drive traffic there will never be effective.

Your SEM Campaigns

SEM (paid search) is the natural partner of SEO. Since you’ve built your website content to match the intent of car shopper searches, this same data applies to your paid search campaigns. This dynamic should naturally lead to ads — generated within hundreds of specific ad groups and keywords — that take shoppers to the relevant landing pages you’ve created.

Paid search is a channel that offers a great return on investment, so you’ll want to allocate much of your budget to this strategy. Focus on cost per shopping engagement, impression share, and Quality Score.

Speaking of Quality Score: It significantly influences the efficiency of your ad spend by helping you keep bids lower without losing your Ad Rank. So keep this top of mind when speaking with your team or agency partner.

Third-Party Site Listings AutoTrader. CarGurus.

Yes, consumers use these sites to shop for vehicles, and yes, you pay for visibility. It’s still important to maintain a healthy presence here for merchandising your vehicles, assuming you’ve made sure they have clear pictures, are properly priced, and highlight all of the right value propositions.

Whereas your site is limited to a single set of inventory, third-party sites push your inventory alongside competitors. This creates a situation where you are ensuring a presence on these sites while also competing against them.

The most insightful performance metrics include cost per vehicles viewed, percentage of inventory viewed, and cost per lead.

Use the Remaining Budget to Stimulate Interest

Traditional media is a stimulus channel — a wasteful one. So when building your budget, channels like television and radio should be the last on your list. There are other stimulus channels that will help you optimize the power of each dollar you spend. These are called programmatic channels, which include social media, video pre-roll, and Pandora.

Programmatic advertising uses automation and software to make and adjust real-time bids. While traditional is set-and-forget, programmatic is a live channel that you can monitor to keep bid prices low. These media can target a specific audience, who are identified as your key buyers based on a number of factors, like:

  • Demographics
  • Geographics
  • Behavioral Signals
  • Contextual Signals

These factors let you choose where your ads are delivered and to whom they are delivered in a very granular manner, which is well beyond the capabilities of traditional media.

This isn’t an attack on television as a concept but television in its current form. By understanding how to effectively build programmatic advertisements, you’re essentially preparing for the inevitable shift of televisions networks coming off of cable providers and into their own apps, such as seen with HBO Now (and likely where AMC Premiere is heading).

Your key metrics to monitor are audience targeting, frequency, engagements, and cost per shopping behavior.

The Specifics of Budgeting

Our approach will help you lower your advertising cost per car sold in the face of decreasing gross profit margins. We’ve offered a framework for your budget here. The details — percentages and dollars — vary too much for us to provide anything more specific without a longer conversation.

If you do want insights about specifics on budgeting or to better understand the potential value of your website and digital marketing strategies, you can contact us today.

In the meantime, here are a few other ways to stay up-to-date with all of the insights we share:

You can watch our interview with CEO Dave Spannhake about dealership budgeting.

You can subscribe to our monthly newsletter.

You can subscribe to our Youtube channel.

You can follow us on LinkedIn, Facebook, or Twitter.

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