It has been almost two decades since the majority of purchase behavior moved to the digital space - but many in our industry are still running their strategies as if digital marketing advancements are an elective aspect of modern times. To those dealers that haven’t quite embraced updating their methods with new technologies, I’ll be blunt: your margins are suffering and you are running out of time. 

I recently read a report predicting that by the year 2020, each person on Earth will create around 1.7 MB of data per second. Folks, that data is information that machine learning and artificial intelligence are analyzing to identify purchase preferences for use in advertising. This technology is important for dealers to know about today because it puts them in the position to take control over their advertising spend, make better-informed marketing decisions, and ultimately drive more consumers to their brand. 

I’ve spent over 25+ years in Dealerships and Dealer Groups, so I know first-hand how much pressure there is on dealers to enhance their brand with strategic marketing efforts while also fueling vehicle sales. It’s a delicate balance to do both effectively. But I’ve got to tell you, if your dealership is still dedicating a majority of its marketing budget to third party audience sources, you need to realize that is no longer an efficient model for dealership inventory to reach consumers. (Note: Before this turns into a vendor debate, I won’t deny that third party sites do have validity in other, more comprehensive, marketing plans. Right now I’m talking strictly about inventory marketing efficiency at the Tier III level.)

And I’ll say further that back in the early 2000s, third-party sites were critical to our industry being able to successfully transition into the “.com” era. Back then, a dealer didn’t have the necessary tools for optimizing the online experience directly. So dealers fed their advertising dollars into third parties, but as that happened, consumers grew to see third party destinations as the “go-to” source for finding dealer inventory. And year after year, those sites essentially built their brand as a product of the dealer’s inventory and marketing budget. 

But now, both time and an influx of consumer data have allowed for drastic improvements in the targeting capabilities of dealership advertising technology and first-party online merchandising. It has become the norm for dealers to invest heavily in the design and maintenance of their website. As a result, dealer websites have become a true authority for the shopper by providing engagement tools relevant to a sale, such as digital retail tools for negotiation, finance options, and trade appraisal. 

The newfound strength of a dealer site paired alongside /AI/’s ability to drive shoppers exclusively to the exact vehicle page they are looking to purchase can significantly reduce the media spend needed to increase engagement and eliminate the need for dealer inventory to be listed on a third-party destination.

That’s why a marketing strategy that uses shopping tools and technology geared toward connecting purchase ready customers directly to the inventory on a dealer’s site is essential to maintaining profitability, building your brand, and owning the consumer journey.

The probing question to leave you with is as follows:

When it comes to your dealership’s marketing strategy, where are your advertising dollars best spent? Building a third party’s brand by listing inventory on their site or building the dealership’s brand by driving directly to a first-party website VDP?