Moving Offline Ad Spend Online
By: Phil DuPree
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If you have any doubts about where to spend your advertising dollars this year, consider this: According a new eMarketer report, in 2009 the U.S. Internet population will grow to nearly 200 million users, or 65 percent of the total population. Also, that daily Internet usage among all demographic groups is climbing, with the average time spent online by U.S. adults increasing from 11 hours in 2007 to 14 hours in 2008. Nearly two-thirds of adults are claiming they go online every day, the majority for more than one hour.
What are Internet users doing online these days? Well, if you ask e-commerce giant Amazon.com, they're shopping, despite the current economic downtrend. The company recently reported a 2008 4Q revenue jump of 18 percent to $6.7 billion, more than a half a billion dollars higher than Wall Street predictions.
There may be fewer in-market auto buyers these days, but the vehicle shoppers that are out there are still using the Internet to make their purchasing decisions. As a result, many dealerships with aggressive e-commerce strategies are not only surviving the recession, they're setting new sales records.
Extreme Jeep is one example of an Internet-focused dealership whose online investments have paid off. In 2008, the Illinois-based auto retailer began revamping their entire marketing program, redlining most of their traditional advertising, and putting the money they saved into online promotion. The switch in ad spends increased lead volume, and decreased cost per lead. As of last month, the company's vehicle sell-through had doubled. It was also the best January in the company's history.
Harold Cochran, the dealership's director of business development, estimates that 60 percent of his ad budget is now Internet related, with the remaining 40 percent split between direct response mail pieces and radio. According to Cochran, a year ago 60 percent of his marketing budget was newspaper and TV, and only 20 percent Internet advertising.
Cochran also attributes the sales growth to the implementation of a BDC and better in-store lead management processes. "We don't try and sell a customer over the phone anymore," says Cochran. "We qualify them and then get them into the store."
AutoNation, the largest dealership group in the country, is reporting uptrends in total Internet lead share as well. From September through December 2008, the auto retailer's total online lead share, including both new and used vehicle leads, increased over 13 percent.
Even dealerships with declining sales may find it beneficial to invest heavily in the Internet because a major percentage of sales still come from online sources.
Dealers that are still top heavy with expensive TV and newspaper ads need to scrutinize their ad budgets and measure results based on ROI. There's no sense in spending tens of thousands of dollars a month promoting your brand if it doesn't result in more trackable sales.
One method of determining how much to spend on traditional versus online advertising is to initially invest money equally on both sides. Then, at the end of each month move 10 percent more ad money to whichever marketing efforts resulted in the best cost per sale.
It may take some work to find the right balance between your traditional and online ad spend, but it is well worth the time. Don't be surprised if you discover that you've been wasting a lot of money on TV and newspapers. Your customers are online. If you want to get their business, that's where you need to put your advertising dollars.
Phil DuPree is the president of AutoUSA, an independent third-party provider of leads to more than 4,000 dealerships; and vice president of AutoNation, Inc., where he previously directed e-commerce for the nation's largest network of dealers.
This article originally appeared in the May issue of Digital Dealer Magazine.
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