Updated January 6, 2019
I’ve worked with dozens of small and mid-size dealerships, helping them get started with online advertising, and I’ve heard the same response over and over: “I can’t afford online ads”.
But in reality, what you can’t afford is not to advertise online. Here are some stats from the latest Car Buyer Journey report by Cox Automotive.
- Car buyers spend just a third of their time (34%) dealing with dealerships. That includes visiting the competition as well. They spend 61% of their time researching online.
- Three-quarters of consumers will first visit a 3rd party website or a search engine. OEM and dealership websites are toe-to-toe for third place.
- Customers visit 4.7 websites on average before making a purchase.
The fact is, hardly anyone ever comes to your lot out of the blue. If you’re not advertising, nobody will know you’re even there.
Dealerships need to fight hard and pay a lot of money to remain visible. CarGurus has 1,615 listings for Ford F-150s just in Seattle. Cars.com has another 1,174 in the same city. With so much competition, how are you supposed to stand out and make sales?
Challenges of Online Advertising for Small Dealerships
Online advertising is stacked against small and mid-size dealerships. Ad space is dominated by large dealerships that can afford to spend $20,000, $30,000 and up to $100,000 on ads that blanket the Internet. They can pay any price to dominate the ad space on major car websites, Google, and Facebook.
Smaller dealerships simply do not have the budget to compete on these terms. Many feel like they’re priced out of online ads entirely.
But even if you could afford to advertise online, where would you even begin? Google? Facebook? Autotrader? If you spread your money too far, you dilute your exposure and the whole campaign will struggle to get off the ground.
To make the problem even worse, each time you pay to advertise on third-party used vehicle site, you’re essentially competing against yourself. Cars.com and similar platforms will use your ad revenue to attract bigger and better advertisers, driving up the cost of ads for everyone. The more money you give them, the harder it is to get visibility.
5 Steps for Effective Online Advertising for Dealerships
It’s a “David vs. Goliath” fight and odds are stacked against small and mid-size dealerships. But, no matter how tough the competition, if you’re smart, you can win.
If you use the right strategy and tools, you can successfully advertise online regardless of the size of your dealership. You can generate interest for as little as $100 per vehicle.
In the sections below, I’ll talk about the process I go through when advertising cars online and how that relates to the success of my campaigns.
1. Find Your Niche Audience
Before you spend a fortune on ads, you first need to determine your niche. Who are the customers most likely to come to your dealership? The more specific the better– you should determine your target niche’s interests, location, price range, and financing needs.
Maybe you stock more trucks than imports, or maybe you deal exclusively with high-end German vehicles. Perhaps you offer flexible finance options, selling to all credit scores.
Whatever your “deal” is, you need to find the customers who’re looking for the same deal. That’s your niche audience. These are the people you want to see your advertisement.
2. Choose Your Ad Targeting Strategy
After you have a clear idea of your niche audience, the next step is to set up ad targeting. Ad targeting is the process of defining who will see your ad, when they will see it, and where it will be displayed. Obviously, the goal is to get your ads in front of people who want to buy your vehicles.
There are two ways to do online ad targeting: broad targeting and niche targeting.
Broad targeting means putting your ads in front of a wide, mainstream audience. Your ad could reach millions of people, and a portion of them might be your niche audience. However, most people will not be interested in your vehicles, which means a majority of your ad dollars will be wasted. Moreover, broad targeting will cost more money because mainstream audiences are prime advertising real estate. This isn’t a problem for large dealerships who have the budget, but most small dealerships cannot afford to advertise this way.
Niche targeting means putting your ads in front of the right people at the right time. You do this by aiming your ads at the niche audience you identified in Step 1. Your ad might receive fewer impressions, but your conversion rate will be much higher. Instead of spraying ads to a broad audience, you’re focusing fewer ads on the exact group of customers you know will be interested in your vehicles.
Plus, each impression will be cheaper because niche audiences are smaller. The drawback is having to spend more time upfront identifying who that niche audience is.
The rules above apply to almost every advertising platform, including Google AdWords, Facebook, or third-party sites. Instead of spending money on broad targeting, hit your niche audience with the perfect ad at the right time.
3. Choose the right platform
Third-party websites like Cars.com, Car Gurus, and Autotrader are popular for advertising because they solve targeting for you. They advertise your vehicle on relevant searches on their websites. But advertising on these sites costs a small fortune, especially if you want to appear at the top of search results. Plus, there are thousands of identical vehicles being advertised around you. How are you supposed to make your ad stand out?
This approach works if you have a large budget and can pay for as many clicks as you need to get sales. But if you only have a couple thousand dollars to spend, you need those clicks to really matter.
Other advertising platforms allow you to target your niche audience for a lot cheaper. The most popular platforms are social media, search engines, and display networks.
Social media sites like Facebook allow you to target audiences based on their interests, location, and pages they like. For example, you can run ads to everyone who “likes” your dealership’s Facebook page.
Facebook lets you target broad audiences or niche audiences. The broader the audience (e.g. people on Facebook who like “cars”), the more expensive and less effective your ads will be. By targeting your niche audience (e.g. Dodge Ram fans who “like” your dealership page and recently visited your website), you will see a higher conversion rate on your ads, which could then translate into more sales.
When advertising on Google or other search engines, targeting is based on search terms instead of audiences. For example, you can pay to show your ad to anyone who searches for “used cars”.
This keyword might seem ideal, but there are hundreds of thousands of people around the world searching for “used cars” every month. What are the odds one of them is going to buy a vehicle from you? This is an example of a broad target keyword– you have a lot of search volume, but won’t see a lot of results. Plus, advertising on this keyword is incredibly pricey because it is so popular.
A better keyword is one that perfectly describes your niche. For example, you can advertise on the term “used Dodge Ram Kansas City” and find an audience much more likely to buy from you. It would also be cheaper to advertise here because the search volume is lower.
Display networks are the ads you see on popular websites. It’s called a “network” because your ads will show up anywhere your target customer is surfing the web. Whether it’s DrivingSales.com or the local news website, you can reach your niche audience no matter what.
Display networks are relatively inexpensive and you don’t have to compete with other car ads like you do on used car websites. However, they rely heavily on the quality of your niche audience. The more accurate and focused your niche, the more effective your display ads will be.
4. Ad copy and creatives
Even if you define the perfect niche audience and expertly target them, your ads could still fall flat. The design and copy of your ad are just as important as the previous steps.
Ad content is your first impression with your target audience. If you catch their attention and match their expectations, you’ve got them. If the ad doesn’t resonate with them– or worse, they don’t even notice it– then you have no chance to make the sale.
The best advice I can give you is this: If you’re not already an advertising expert, don’t try to become one overnight. Find a professional and get some help starting out.
However, if you have a well-defined niche audience, you’re halfway there. Make sure you catch their attention by highlighting the details of the vehicle they care about most.
5. Test, Test, Test!
Advertising is equal parts art and science: The “art” is choosing the right audience, target keywords, ad platform, and creative content. The “science” is testing to find the most effective ads.
No matter how hard you prepare, it’s impossible to guarantee a successful ad campaign. However, there is an effective way to test your ads and make sure they generating high-quality leads: A/B testing.
A/B testing compares multiple versions of the same ad so you can identify the top performer. I test each ad with the same audience, using just a little bit of money to start. Those who make the cut are further tweaked and refined. When I select the final version, I let the campaign go and monitor if the performance is what I saw in the tests.
A/B testing allows you to quickly and cheaply validate winning ads and refine ads over time. This way you easily root out ineffective ads and pay only for optimal results.
It’s hard and scary, but you’re not alone
There is a reason digital advertising is its own profession. If you chose to do it yourself, prepare to spend a lot more hours in front of the computer. It’s going to be frustrating.
However, you’re not alone!
We founded DealerCue because we believe our technology can help dealerships maintain their edge in an industry that gets fiercer and fiercer. We believe our tools give everyone a fighting chance, no matter how small or big. That’s why we created AdCue.
AdCue uses real-time market data from VinCue to expertly manage the entire advertising process for you, from defining your niche audience to creating optimized ad content. The best part is that management is entirely free– you only pay for the ads that drive results.
However you decide to tackle online advertising, it’s best to think before you leap. You might not be able to compete with a large dealership’s budget, but you can be smart about your ad placements and get excellent results for cheap.
By spending time upfront– or hiring a team to help you along the way– you can compete with the biggest dealerships around.
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