Optimizing Advertising Promotions Using Rebates & Incentives

Improving response and ROI for advertising investments while gaining consumer trust and brand equity

New vehicle sales continue to be dependent on a combination of multi-channel advertised specials, rebates and incentives promotions. These offers (i.e., buy this vehicle for $349 a month, 1.9 percent financing and $5,000 off MSRP) play a prominent role in enticing consumers to purchase their next vehicle.

Kelley Blue Book’s recent Leasing and Incentives Study, however, shows that over 70 percent of consumers have only some to no knowledge of incentives. The same research reveals a $2,500 offer motivates shoppers to move from buying within months to purchasing within a week. What’s more, over 90 percent of consumers are shopping for a vehicle online.

Leveraging these OEM offers across all advertising tiers is an effective promotional tactic for motivating consumers to purchase. Making incentive and specials information easily accessible across all marketing and advertising channels can improve shopping traffic and engagement for dealers and dealer service providers (DSPs).

A key foundation for improving response rates is to promote and use the same incentives and messaging across the entire shopping landscape. Consumers who see the same offers through multiple shopping channels (i.e., paid search, display ads, third party listings/dealer websites, price and payment tools online and in-store) are motivated by trust in the offer consistency. This allows dealers (through DSPs) to align with national advertising efforts, creating additional value through all marketing and advertising campaigns which reflect OEM-driven offers.

Research conducted by Cox Automotive Rates & Incentives (CAR&I) analyzed the accuracy of data used for calculating pricing and payment information presented through DSP tools. In the study, CAR&I compared APRs, cash and conditional incentives through these various tools for seven new vehicles in the East Coast and West Coast markets. The analysis looked at data from three competitive incentive providers, including CAR&I.

The study found significant variations across the three providers, ranging from $0 to $6,750 in pricing for the same vehicle, resulting in monthly payment fluctuations of up to $122 per month for 60 months. The analysis also showed that both unnamed vendors incorrectly applied incentives for two vehicles, resulting in $500 to $750 in overstated incentives applied, costing dealers valuable margin.

These disparities have wide-ranging consequences for dealers, including loss of credibility in pricing and loss of profits on transactions. It’s not just that consumers might walk away from one purchase; it can affect repeat purchases and referrals too. Rebate and incentive information must be accurate for advertising and marketing to effectively build trust and transparency while improving the customer experience.

The use of rebates and incentives for advertising across Tiers I – III creates a consistent, credible message that supports a customer experience while driving brand equity and buyer loyalty. With dealers paying from $.50 to $20 + per VDP visit according to Generations Digital (https://www.generationsdigital.com/), choosing the correct data partner for a single source of accurate and complete rebates and incentives leads to improved response rates, increased lead conversion and greater profitability. 

Brad Korner is general manager of Cox Automotive Rates & Incentives.