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One of the tough decisions in automotive marketing is whether or not to go premium with AutoTrader.com. However, knowing whether or not it pays off is not a matter of guesswork. By going from featured listings to premium, your inventory will be included on more Search Results Pages (SRPs). Under the reporting tab of Dealers.AutoTrader.com, this is found in the Executive Summary as "Times your vehicles were seen in a search."
More SRPs leads to more shoppers selecting your inventory, measured as Vehicle Details Pages (VDPs). This can be found in the same report as "Detail pages viewed for your inventory."
The value of going to premium status can best be measured as the margin cost per VDP. Calculate the additional amount you are paying AutoTrader.com to go from featured to premium status, then divide this dollar amount by the change in the number of VDPs. Generally speaking, we are looking for a marginal cost per VDP of less than $1.
The $1 per VDP benchmark assumes market pricing, good merchandising, and good lead handling. It also assumes a marginal cost per vehicle sold of $400 is tolerable. Adjustments must be made when these assumptions are not valid. For thousands of dealerships, store operations are so poor that even a marginal cost per VDP of less than $1 is still not cost effective. Generally speaking, these stores should get their house in order before expanding their advertising.
It is important to evaluate the change to premium status using marginal cost per VDP, rather than average cost per VDP. Chances are your average cost for featured listings is lower than $1. The fact is AutoTrader.com and Cars.com make sense for most dealers. However, the marginal cost for going to premium status is almost always more expensive on a cost per VDP basis.
In later posts, I'll explain why aggressive market pricing, outstanding merchandising, and the best possible lead handling can make it possible for dealers to gain substantial profits at a marginal cost of more than $1 per VDP. I'll write about other ways to measure the value of listing services. And yes, I'll also write about Cars.com.