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From: Jared Hamilton
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Tia Newman

Tia Newman Marketing Associate

Exclusive Blog Posts

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Kicking Automotive Into High Gear

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Netsertive and Borrell Associates latest study: Kick Automotive Co-Op Into High Gear outline’s what automotive advertiser’s and brand managers need to know about their digital marketing efforts. With over $6.5 Billion in OEM funds set aside for marketing, the study examines dealership surveys, automotive advertising trends, and interviews with brand managers. This research report teaches automotive dealers and brand managers how to drive sales and gain quality leads, by spending reserved OEM funds towards emerging video and mobile advertising capabilities.


“There’s a clear opportunity here for OEMs to learn from dealers, and vice versa, to strengthen marketing plans,” said Gordon Borrell, CEO, Borrell Associates. “What surprised me—and I’m sure will surprise OEMs—is that more dealers now view TV commercials as less effective than digital video advertising or TV and digital combined. I think it’s also curious that 90% of Tier II dollars continue to be spent with traditional media, which is wildly out of step with where car buyers are looking.”

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As the market transforms, dealers have had to alter their marketing plans and adapt to it.  According to the study, digital media makes up 90% of the top mentioned sources for consumer research on car or truck information.  As a result, OEM’s have had to increase their digital marketing budgets by 25% over the past 3 years.

 

The research report also cites a few changes the dealership-marketing environment has had to make over the decade.

 

  • A new competitive dynamic. In the past decade, the number of franchised dealers has dropped 18 percent while the number of new vehicles sold per dealership has increased 18 percent.

 

  • A new ownership dynamic. That increase in sales and decrease in competition has reduced the per-vehicle price of advertising a new car by 21 percent, to $522. It’s the type of efficiency that has attracted investors like Warren Buffett and driven stock prices in public companies like AutoNation, CarMax and Penske Automotive Group. Investors don’t manage dealerships the way family owners did. The ad budget gets closer scrutiny and co-op credits thus hold a higher value.

 

  • A new consumer dynamic. More than 90 percent of car purchases start with research via digital media. Empowered consumers are transforming dealerships from “stores” to fulfillment centers.

 

  • A digital-centric marketing mindset. Now that dealers have their own media channel in the form of the Internet, they’re discovering that they need to create “news” programming on a regular basis. Specials and rebates are their versions of breaking news. OEMs and dealers create promotions valued at $2,404 per new vehicle — nearly five times what’s spent on advertising that vehicle — in the form of rebates, loyalty programs, contests and incentives. The amount spent on digitally focused promotions is increasing at twice the rate of promotions spending overall.

 

  • The rising power of millennials. Although millennials comprise one-fourth of the adult population, they account for more than half of all adults planning to buy or lease a new car or light truck during the coming year, according to Scarborough Research

Check out the research report.

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