Car dealerships are an appealing target for hyperlocal media and suppliers of digital marketing technology and services. They’re relatively big spenders compared with many local businesses, and they’re adopting digital marketing faster than most. But after steady growth to a record 2015, U.S. auto sales this year are sluggish, and dealership consolidation continues.
The local media gurus at Borrell Associates are forecasting essentially flat growth in automotive advertising this year, with digital advertising a bright spot. Borrell projects dealerships will spend $14 billion on digital and online advertising in 2016, up a modest 2%. Digital marketing services should be an even larger target, as big marketers typically spend $2 on websites, SEO, listings management and the like for every dollar they spend on ads. The car manufacturers play a role in local marketing, too, funding $4 billion of dealer spending via co-op, and having a heavy hand in marketing technology evaluation.
Shifting to Digital, Mobile
The heavy shift to digital — dealers already spend over 60% of their media budget online — will be a blow to publishers who aren’t participating. Borrell’s survey of auto dealers reveals they’re cutting back on traditional media far faster than other local businesses.
As with most digital marketing, mobile is playing an increasingly dominant role in car sales. The location analytics company Placed did a study showing that eight out of ten car shoppers used smartphones while researching, and over 60% did so while physically at a dealership. In response to this trend, auto site Cars.com introduced in March a Lot Insights Report for advertisers that uses geo-fencing to better understand shopper behavior at and around dealerships. Cars.com readers who opt in are tracked before and after lot visits, contributing data in aggregate to help with media planning and buying.
The Placed report says that mobile shoppers are more likely to visit additional dealers, a pattern that, if it plays out, might reverse a trend. Earlier this year, I spoke with Len Short, the chairman and co-founder of Lotlinx, a marketing tech startup for dealership lead generation. Short told me that a few years ago the average car shopper visited five dealers, but, due to their increased sophistication at online shopping, that average is now barely above one.
Short says most buyers have decided on a make and model by the time they’re visiting dealers. They go through a 35-day research process, and then in the last three days they’re out to test drive and haggle. Lotlinx’s service scans online behavior at auto sites for signals that a buyer is close to purchase, then presents to that buyer a link directly to a dealer’s relevant Vehicle Details Page.
Bridging Dealer and Manufacturer
Most dealers compete with one or maybe two others in their local area, so they’re keen on “conquest” marketing. They’re also incented by manufacturers to sell particular models, for example, to align with the manufacturer’s inventory plans or sell a car that’s been on the lot too long. That means a dealer will spend a little more than the average per vehicle ad spend to get those specific incentives.
Individual dealers are getting a bit more sophisticated at campaign management, although nothing like the manufacturers. Detroit has to sign off on new marketing tech before it will approve it for co-op. And on a Borrell webinar, a medium sized Kia dealer confessed that she spent the vast majority of her digital budget on search due to its measurability, and didn’t have the resources to do analytics on display or brand tracking. She relied on the manufacturer for that, and for customer experience surveys.
David Card is Street Fight’s director of research.