Growing sophistication of digital landscape means that car dealers will need to up their online game or risk losing sales

By Paul Smith, Managing Director, Traka Automotive

When it comes to formulating the best marketing mix to support sales strategies, automotive dealerships are spoilt for choice. Deciding which channels dealers should invest in requires meticulous planning, informed by market intelligence and validated by response-based statistics, plus a dash of seasoned gut-feel.

The multiplicity of digital marketing options promise ever-closer purchaser reach and engagement, particularly amongst the next generation of car buyers – the fabled ‘Millennials’ or ‘Connected generation’. However, more traditional media choices for advertising, like print (national/regional newspapers, trade press) and radio (broadcast and online) still have their place in the mix for Generation Xers and older.

Decisions around percentage of budget being devoted to advertising is now complicated by the fact that the old ‘above and below’ dividing line between editorial and ad placements has all but disappeared. However, it is easy to argue that online adverts (banners) are easier to measure. Indeed, most ad salesmen offer you a specific number of monthly impressions and suggest benchmark click through rates which your offer should be attracting. If you don’t get these you might even ask for your money back.  As traceability improves online, so does the online ad spend numbers. According to eMarketer, automotive industry expenditure on digital advertising (display and paid search adverts) will exceed $8.49bn this year and rise to $12.08bn in 2019.

Most of this money is not new, but illustrates the point that the bulk of budgets are on the move from hard copy print advertising to digital media domains. Some US automotive OEMs like Ford, Chrysler Group and Scion, for instance, have been encouraging their dealers to apportion more spend to digital channels. Many magazines bundle online access to their titles with hard copy subscriptions in order to avoid being cut out of digital budgets.

The key question is still: which media works best as the source of initial engagement when dealers want to match media to car buyer categories? For example, offline brand exposure such as print advertising or even billboards may be what's actually steering some car buyers to online engagement.

Yet at sales closure, it's digital that often receives the credit for initiating the sale. In reality, different channels are doing different jobs. The Digital Billboard might reinforce the brand values of a particular marque but it is the advert in the local newspaper which might bring the now engaged customer into the nearest dealership stocking that brand.

The ideal is to know precisely how many people see your adverts and other marketing content and how many are taking action to click through to your website to make further enquiries. Once benchmarks are established, work needs to go in to consistently matching or improving these numbers. This degree of granularity can only be delivered online and it's this fact which is helping drive spend in the direction of digital platforms.

Profiling target car buyers by age and income bracket is still an instructive starting point for broadly fitting advertising and marketing aims to media channels. Younger car buyers – particularly those Millennials (born anywhere between the early 1980s and 2000) - are more likely to be responsive to digital campaigns which flex seamlessly from manufacturer and local dealership websites into social media channels; whereas Gen X (now anywhere between 50 and 36) are more inclined to respond to print as well as digital approaches.

There are some quirks automotive marketers will have to work around. Swathes of often wealthier Baby Boomers for instance, are likely to be influenced by an even wider media mix, taking in out-of-home billboard advertising and regional radio, as well as on- and offline advertising. Often among the most affluent of car buyers, they are less likely to splash out on the latest smartphone or tablet PC to aid their car-buying prep.

For the Connected generation meanwhile, OEMs and dealerships are making an abundance of information and marketing content available online. But there are some unintended consequences of ‘over-marketing’ online emerging. One is that a combination of data overload and search fatigue can cause even the keenest car buyer to delay or abandon their enquiry. The other danger is that all this online information gathering is reducing number of trips to physical dealerships significantly.

This has recently been evidenced by Penske Automotive Group in the US, whose Preferred Purchase online shopping tool, now being trialled for roll-out to 115 of its dealerships' websites, enables customers to conduct most of an automotive transaction online, and just show up at a dealership to finalise the paperwork. Company Chairman, Roger Penske declared that this option has resulted in higher conversion and deal-closure rates. Other US dealerships are also trying the 'online-mainly' closure approach.

It doesn't take a degree in computer science to realise that being able to bring the online information requirement and the sale (even just a couple of clicks) closer together is a development that digitally-inclined car buyers will like. It also helps to explain why all-digital UK arrivistes like Carwow are seeing such significant user uptake. Its ‘disrupter’ model borrows heavily from one that has already been fully tried and tested in the online travel, property and leisure sectors. As such Carwow is sometimes called the Expedia, TripAdvisor and/or Zoopla of new car buying world.

Carwow’s online platform enables buyers to select a preferred model, and then alerts more than 1,000 registered dealerships about the opportunity. The dealers then contact the customer with their best offer on the desired vehicle, and then manage the rest of the transaction themselves.

Carwow also shares TripAdvisor-style customer service star rating and historical customer feedback quotes with would-be purchasers. It makes money by charging the dealer (which sells the resulting car) a modest commission.

And Carwow is not alone in  this new car-shaped digital gold rush. Digital marketing services specialists like Autoweb Design, Bluesky Interactive, Gforces, MB Advertising and Marketing Delivery, promise great online results for all kinds of dealerships. Firms like these are well placed to advise on the marketing mix because they are already working with a number of dealership groups and know what works.

What these changes will mean is that more power will progressively be handed from the sharp-suited salesman in the dealership to the customer. Customers are doing more and more decision-making online before they get to the dealership. With Carwow’s help, for example, they will now know how you rate on customer service versus your (geographically) closest competitors and whether you are offering the cheapest price locally for a customer’s chosen model and spec. It will add Used Cars to its platform within the next 12 months.

These are powerful tools, some of which definitely move the ‘power needle’ in the direction of the customer.  One clear reaction is to come to the table with clear, up-to-date, attractive, shareable content detailing current stock and finance offers, while simultaneously building engagement with interested followers via social marketing channels. Traditional advertising models aren’t going to disappear overnight. But now is definitely the right time to start your digital marketing experimentation. So ‘testing, learning and testing’ again, feels like the right way forward in the brave new consumer-powerful world.