DEALER STUDY

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Auto dealerships have a unique challenge in digital marketing. Customers tend to engage in over 900 digital interactions with a dealership before they make a purchase, and dealers can expect to pay anywhere from $350 to $500 in advertising and lead-acquisition per car sold — a significantly higher up-front cost than most other industries.

 

In order to find an accurate cost per car sold, you have to begin by making some assumptions. Here is a sample chart:

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Percentage of sales from repeat business:  15%

Percentage of sales from drive-by traffic:  15%

Percentage of sales from referrals: 10%

Total percentage of sales not generated from advertising: 40%

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THIS MEANS THAT 60% OF YOUR SALES ARE COMING FROM ADVERTISING!

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The auto dealership’s customer journey is long and complex, which makes investing in the right tools absolutely essential to digital marketing in the auto dealership world.

Digital marketing strategy and attribution is the strongest way to connect with your customers. These days, 92% of car buyers are researching online before they buy, and mobile watch time of test drive videos on YouTube has grown by over 70% in the past two years. Digital marketing strategy has become the primary way to connect with potential customers and build brand awareness.

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While at a convention a few years ago, I was talking to a dealer and he was asking me about our leads. At the time, they were buying TV leads for $50 a piece. The he continued... if a sub-prime dealer like me buys 100 leads from TV, they could expect to sell 10 cars. Someone overheard our conversation and said, “That’s $500 per car sold! That’s way too high.” The offending gentleman makes his living as a sub-prime consultant. I replied to my unprovoked attacker, “What should it be?” He said, “Less than $350 per car sold.” He gave this number because it was, at the time, the national average. So a dealership spends $35,000 on advertising and sells 100 cars a month and that’s good? This is the way everyone does it and has done it for years and it is flawed. It is problematic because people who have not been touched by your advertising message purchase a percentage of those 100 cars. Remember ads are only responsible for 60% of your sales!

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So I added: "What if I can lower your lead cost to $10-15 a lead, meaning $100-150 per sale!" They were both standing there clueless, when I started explaining them our digital marketing strategies.

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The process started optimizing their already existing digital surfaces. We dived deep in CarGurus and other used car websites algorithms and within 2 weeks we made sure our cars were shown top of the page when somebody searched for the make and model the dealership have on stock. This gave us an additional 8-10% of leads without even spending a single penny on ads yet.

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It is really important to optimize, algorithms and search engines are not your friends and work against you unless you know how to be seen there. Money follows attention! 

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Once everything was optimized for our digital ad launch, we set up inventory based ads with the right targeting. Most people think targeting is about geo-location, age, and considering some demographic data, but in 2023 it is about way more than that. We can tell from a prospect online behaviour if they are likely to buy a car in the next 3 days, 2 weeks or month, and we can also tell with high probability what car they are interested in buying.

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Moreover I love digital ads because they are 100% trackable. While you run an ad on TV, you will never be able to tell with a 100% certainty who saw that particular ad. In digital marketing, we can show you the results after every cents spent. We can tell you how many clicks you have received, who saw your ads, what's your target audience, how many people filled up your contact form, how many customers called, and how much does it cost you to acquire a new lead.

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After we took over, rebranded, optimized and launched our digital ads, the results spoke for themselves.

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• 172% lead growth for the automotive group in year 1

• 81% lead growth for the automotive group’s website  

• 42% lead growth on used car sales websites (such as CarGurus)

• 37% phone lead growth 

• 22% walk in lead growth 

• Overall 30% lead growth from organic traffic visitors 

• Seven consecutive months of all-time record high sales volume in 2022

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Take a look at the difference between a general or an optimized dealership ad: