Resource Center - Industry Articles
To Advertise Or Not To Advertise…That Is The Question
by Henry Kwartler, March 16 2010
In a down economy everyone needs to save money. We cut payroll, we cut amenities, and we become frugal. But what about your advertising?
Advertising usually represents one of the largest expenses that dealerships have...and you can cut it, unlike say your rent. It's a VARIABLE EXPENSE...right?
What if you viewed your advertising as a VARIABLE INVESTMENT instead of expense? If you were a DR (Direct Response...ads that feature a direct call to action...like the products that Billy Mays pitched or the weight loss products that you hear on AM radio all the time) advertiser that's exactly what you would do. In the DR world, the industry uses the terminology ROI to literally decide what and how much of a particular media to buy...it's just math and it's not that complicated. If I spend 100k on advertising and I sell 200k worth of product, I got a 2:1 ROI.
But cars aren't diet pills. Here's what you do. Start with the number of vehicles you are CURRENTLY selling and compare that to what you PREVIOUSLY sold. Let's say it's 70 versus 100...a 30% decrease ( seem familiar)...then and MOST IMPORTANTLY compare that to what your region is doing...if your percentage is a larger DECREASE than the region, you need to INCREASE your ad budget immediately or dollars to donuts, your sales will get worse. If your percentage is less of decrease than the region, you're in good shape. You could take a chance and further increase your ad budget, particularly if your competition is weak or just stay status quo. And by the way...small percentages make a big difference.
A couple of more thoughts regarding particular media types:
Newspapers: They're not dead yet. Particularly if you are in a market where the majority of the newspaper's circulation is "single copy" or bought in stores as opposed to 'home delivery", try and be in there at least 2x/month.
Magazines: Tricky but they have great shelf life and pass along value. Early deadlines make it difficult to do price advertising and I personally prefer electronic media for branding and awareness. Trade magazines can provide great targeting and great results. Used car magazines seem to be struggling but many of them now have an online component which they give you for free when you run with them.
Radio: Pick one or two stations and own them. Try 10-15 spots on a Saturday if your budget is tight.
Television/Cable: A very good cost per thousand reach and frequency medium. You must have the ability to keep your spots fresh and they need to look good. Don't spend a lot of money on buying the time to put out a message that makes your business look bad. Spend money on good production or don't do it.
Direct Mail: If you're not mailing to your customers, somebody else is. Find the money to use this medium for sales and service...no matter what.
Internet: Google paid search...third party leads...Craig's List for Used Cars...you need them all. If you're not in this media, make it your first priority.
Outdoor: Many uses...great for directional advertising or launching a new brand...can even be used for call to action if you have a vanity phone number...website addresses are good...LESS is MORE.
How do you balance out all of the choices...one way, hire an ad agency who is NEUTRAL. If they are good listeners and provide good creative you'll start SAVING money right away. Best of luck, in this economy, we all need some.
Henry Kwartler, President, KEA Advertising Inc., Sales Overnight. Branding Over Time! 217 Route 303, Valley Cottage, NY, 10989, (845) 268-8686. For more information call 845-268-8686.
