John Sternal

Director | Merit Mile

John Sternal is Director of Market Insights for Merit Mile Research, a division of integrated communications company, Merit Mile. He is a veteran public relations professional with more than 25 years of experience serving clients in a variety of industries on both the agency and corporate sides and has been writing about the automotive industry since 2005. His creative approach to PR is a leading reason why John has been able to get press coverage in newspapers around the country and leading magazines like The Wall Street Journal, USA Today, Forbes, Cigar Aficionado and Good Housekeeping, among many others. He is also the author of a brand new e-book, called the PR Toolkit, which helps small businesses learn the ins and outs of PR so that they can be successful at getting their own press coverage.
OTT Advertising: Auto Retailers & Agency Partners Find New Car Shopper Connections

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Today's online ecosystem offers an ideal medium for the delivery and consumption of many advertising formats. Unlike traditional television, the internet is universal in how it delivers content as well as a more selective environment for advertising messages. Connected TV (CTV) has become critical for automotive retailers and agency partners looking for a complete-funnel solution to leverage audience reach and deliver messages to local car shoppers.   Industry estimates show that CTV households are expected to grow 82% by 20231, and cord-cutter and cord-never households will increase to 44% of the population during the same period.  Personalized Video Ads  The move to OTT-driven streaming video content will be a significant advantage to advertisers in the form of addressable and more personalized TV advertising, which allows for unique real-time targeting of custom, complex audiences. This means auto retailers and their agency partners can realize much more detailed measurement and performance tracking in comparison to traditional index-based TV advertising media buying.   Today's OTT digital advertising services allow automotive retailers to broadcast CTV ads to their locally targeted audiences using data-driven programmatic ad purchasing methods. OTT advertising for dealers is essential today for optimized advertising personalization. Local dealers can deliver a specific commercial to a particular person or household. Instead of running the same ad for all viewers of a TV show, dealers can run a variety of ad spots to different people depending on any number of household demographics or characteristics. While watching similar programs, consumers will be shown different dealership ads that better correspond to their likes, interests, age, level of income, etc.  Why are dealers so excited about this?   When executing through PureCars platform, dealers can average lower than $35 CPM and ensure those impressions are only delivered to the target audience, which helps dealers eliminate wasted ad dollars commonly associated with widescale broadcast or cable television buys. A well structured broadcast or cable television buy that would conservatively range from $7-$20+ CPM across all viewers, whether the audience is in the market to buy or not. As dealerships experience ongoing margin erosion, it's important for them to explore opportunities to optimize historically wasteful traditional media channels.   Traditional vs. Digital  To accurately compare traditional to digital, advertisers must apply calculations to the amount of in-market shoppers that are reached by each campaign type. For instance, when assessing TV, assuming 11.51% (14.8 MM SAAR projected for 2020 ) of households will buy a new vehicle in a given year, and a 3-month purchase cycle , that would put the conservative, effective CPM for in-market shoppers reached in traditional television between $230 and $689 (see breakdown below), vs. $30-40 CPM in highly targeted OTT. Currently, 49% of all video ad impressions today are through OTT channels, and the lower CPMs mean dealers can reach in-market shoppers with more frequency and less wasted dollars in their finite ad budget.  According to the Video Advertising Bureau , it is believed that ad spending on addressable TV will reach $3.3 billion by the end of 2020, up 343% dating back to 2016. OTT content will play a large part for users. Premium video ads via OTT are expected to achieve a 98% completion rate according to Freewheel, and this by far outperforms that of tablets, smartphones, and even desktop platforms.  COVID-19 Saw Breakthrough Growth of CTV  Keep in mind that the popularity of CTV exploded during the lockdowns of COVID-19 earlier this year. Media watchdog Ofcom illustrated in its annual study that adults - many stuck indoors - spent 40% of their waking hours in front of a screen, on average. However, time spent on subscription streaming and CTV services doubled during April. Furthermore, during the lockdown, adults spent an average of six hours and 25 minutes each day staring at screens.  The report also indicated that people watched streaming services such as Netflix, Amazon Prime Video and Disney+ for slightly over one hour per day, and 12 million people joined a service they hadn't used previously. Three million of these viewers had never subscribed to any service before.  Highly Engaged Audiences  What's the magic elixir behind OTT? Experts believe that OTT content offers a highly engaged audience, and it also offers an effective medium to drive critical message performance. What's more, mobile measurement platforms and content providers now include resources and insights that allow marketers to attribute app installs, registrations, and session data to OTT ads.   What's more, clickable display ad formats on popular content platforms such as Fire TV and Roku provide a direct-response tool that offers lower acquisition costs than traditional TV ads.  As automotive retailers and their agency partners enter the OTT content space in the foreseeable future, those that begin reaching car shoppers through this platform will be positioning themselves for greater competitive local dominance and overall market share impact as they outpace late arriving competitors. While this will eventually be a crowded field, similar to local search advertising, the automotive retailers that work with the right OTT advertising partner have a unique opportunity to stand out in this rapid transformation of digital advertising. 
Digital Advertising & Marketing Technologies are Helping Dealers Acquire Inventory Entering 2021

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Experts believe sales of new vehicles will close 2020 down approximately 15%, which would mark one of the industry's worst annual declines since at least 1980. In any typical year, this type of ending would illustrate a significant disaster. However, in 2020 there are more than a handful of industry executives thanking their lucky stars it wasn't worse.  There is new hope that 2021 will bring about a rebound in sales activity, driven by new thinking and digital marketing techniques dealers have adopted to help acquire the right inventory and target new customers. The Dark Days of 2020 During the initial first wave of COVID-19 in March and April, sales of new vehicles were obliterated as auto plants closed and many auto dealers could not open their showrooms. During this time, J.D. Power forecast retail sales would decline by as much as 80% in April and had this been true it would have rivaled near-recession sales levels for the year. However, beginning in May dealers began to reopen and consumer demand rebounded quicker than anyone expected. As a result, sales in the second quarter dropped nearly 34%, and incentives such as 0% and payment deferrals helped that percentage from dropping further. Industry observers are expecting final sales of new vehicles for the year to register near 14.5 million for the year, down from roughly a steady 17 million level the previous five years. Inventory, Not Consumer Demand, Created Problems Inventory levels, not consumer demand, may have prevented this number from ending higher for the year. Because of inventory challenges for new vehicles, many consumers opted for used cars and trucks, which not only offered more supply levels but also came at a lower price point.  The issue began early in the pandemic when automakers shuttered factories and closed dealers stopped the sale and trades of vehicles – drastically altering the natural flow of supply and demand. With fewer low-cost new vehicles to purchase, many consumers turned to used vehicles. And when fewer lease turn-ins and trades were happening, that forced a severe shortage of supply, creating high prices at auction. Savvy dealers have been leveraging technology, social marketing and new thinking to circumvent traditional auction houses and the higher-priced inventory that comes with it. New Thinking Driven By Digital Marketing Today's more progressive dealers are activating creative, new ways of sourcing used cars, such as Facebook lead ads featuring "We'll Buy Your Car" or "$1,500 Over KBB for Your Trade" messaging. According to digital advertising leader, PureCars, one dealer group of more than 30 rooftops deployed such a campaign in August and drove over twice the trade leads they were accustomed to, resulting in an abundance of used car acquisitions. Keyword search advertising on Google, Bing or other search engines may not be considered "cutting-edge" today, but it's still a tactic many dealers fail to think of first in their fixed operations advertising strategy. By missing out, dealers could be losing low-hanging fruit to third-party vehicle maintenance providers, especially during seasonal occurrences such as AC work in the summer, or tires and breaks in the winter.  What's more, today's digital advertising technology allows for re-targeting and ads placed ahead of video content on popular sites such as YouTube. The entire purpose is to capture more traffic for fixed ops business, not only because this is good revenue, but these customers represent a prime captive audience for potential sales and trade-ins once they're in the waiting room.    These dealers are also leveraging digital and search marketing techniques to acquire used inventory through Fixed Ops and equity mining as well. This type of innovative thinking has dealers poised to leverage digital marketing in more ways to not only gain better control over their inventory levels, but overall sales and customer satisfaction levels. 
How Dealers Today Leveraged Fixed Ops and Digital Advertising for Quicker Recovery

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During the COVID-19 lockdowns, numerous automotive dealerships radically cut back their general ad expenses to maintain as much of their bottom line as possible. Furthermore, in April, the annual pace of sales dropped steeply to 8.47 million, a dramatic drop from the 17.05 million level it was pacing earlier in January. Nonetheless, dealers have seen significant recoveries in late spring due to their efforts and their swift willingness to embrace a message of wide-spread cleanliness and contactless business operations during the early stages of COVID-19. The dealers' quick and efficient response to the global pandemic helped them gain the confidence and trust of many drivers who still needed to service their vehicles during the most intense period of the stay-at-home executive orders which was enacted in various locations throughout the country. This brilliant tactic used by dealers benefitted their business significantly as the focus of car sales shifted to the maintenance of existing automobiles, as well as the sale of used cars and trucks which requires constant and systematic intervals of service. These strategies were enacted during early summer to assist their service and repair operations and began shifting digital ad spending over to Fixed Ops campaigns. Additionally, this technique focused on-site offers to convert low-funnel service/parts traffic to their websites.   An increase in repair orders and service revenue started during the early weeks of May as dealers increased their focus on repair order activities. The numbers continued to rise extensively by the month of June as dealers worked on improving the process of service to make it even easier for customers by offering enhanced contactless pickup/drop-off. For August, automotive digital advertising firm PureCars reported a 16.9% increase in dealers’ ad spending on Waze by leveraging digital channels that emphasized service-interest drivers.  The power of video noted The longevity of the pandemic has led many dealers to embrace video as another medium and advertising channel. In this present pandemic economy, video usage is significant for brand storytelling. It continuously proves to be a mandatory tool to increase conversion and exposure. Moreover, it allows for more efficient transactions between dealers and their customers. Overall, consumers engage with videos more and they tend to be more popular in comparison to other forms of advertising content today. It is proposed that by the year 2022, more than 82% of all consumer internet traffic will be from online videos, fifteen times higher than it was in 2017. Additionally, reports show that today, users view more than 1 billion hours of video daily on YouTube. Dealers have also learned that videos go beyond engagement and entertainment, and they offer a space to transmit emotionally charged, health-focused, and genuine messages to consumers during the pandemic. This platform allows dealers to convey their meanings and concerns for customers and employees in a more authentic way than any other channel would. Adapting a better strategy for the final months of 2020 Fixed Ops have been the main operator of revenue for auto dealers this summer thanks to this strategy. As 2020 draws to an end, it will most likely continue as long as they continue to emphasize on servicing used vehicles. Some dealers were concentrated on taking a proactive approach to change their operations to cater to the new pandemic customer. Because of this, they are seeing pre-pandemic figures in various cases today. As they worked on making operations safe and easy, they focused on evolving their service and repair opportunities and promotion by using digital advertising channels. Consequently, this approach resulted in a successful system that assists dealers in obtaining a lower cost per customer acquisition level, the ultimate business strategy that will guide them through 2020. Sources 1. https://www.autonews.com/sales/supply-crunch-still-hampering-sales-recovery   2. https://www.cisco.com/c/en/us/solutions/collateral/executive-perspectives/annual-internet-report/white-paper-c11-741490.html   3. https://www.youtube.com/about/press/  
How Will the COVID-19 Pandemic Change the Way Dealers Market to Customers?

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In the early months of 2020, many auto industry observers believed the industry would be looking at an annual pace of approximately 16.5 million new vehicle sales for the year. When the COVID-19 pandemic spread across the globe, this forecasted number had plunged to about 12 million, as hundreds of millions of potential shoppers stayed home and away from auto dealerships. However, as many dealers would like to continue business through online-first platforms, they lack the necessary financial technology that allows them to facilitate online shopping and transactions when buyers aren’t present at the showroom. In a survey issued by Inovatec Systems, 81% of lenders said they are not currently using an online digital origination channel that leverages process automation. This technology is essential for dealers to complete online financial transactions.  This is expected to change quickly in the coming months in order to accommodate new consumer shopping preferences. COVID-19 forced dealers to reallocate advertising budgets As a result of the pandemic, auto that limited their sales declines looked at their advertising and marketing strategies and realized they needed to make strategic pivots in order to preserve their bottom line.  In fact, according to data from auto dealer marketing insights company PureCars, it became clear that dealers needed to reallocate and shift dollars from search to social marketing. Data coming out of PureCars shows that dealers retaining social spend or spending upon those channels are seeing up to 30% higher sales volume than those that have cut all spend. What’s more, the use of video for social marketing became more important as a way to connect, educate and engage with consumers during the pandemic. Videos will become even more important Engagement levels have traditionally been higher, and videos tend to be more memorable when it comes to delivering a marketing message in front of consumers.  For automotive dealers, videos can be a highly effective way to tell a more humanized story in the COVID-19 pandemic, as well as post-pandemic, where consumers want to know how dealers are handling everything from sanitizing the showroom to how they treat their employees. This softer touch, communicated through video, could mean the difference between a few extra transactions each month. Consider these additional stats, as discussed by the experts at PureCars : 81% of businesses use video as a marketing tool — up from 63% over the last year. ( Hubspot ) By 2022, online videos will make up more than 82% of all consumer internet traffic — 15 times higher than it was in 2017. ( Cisco ) Users view more than 1 billion hours of video each day on YouTube. ( YouTube ) Associating your dealership with the term “Coronavirus” Content may be king, but context is everything. Companies that shift their advertising messages and affix them next to the term “Coronavirus” may be walking a slippery slope. Some consumers get a negative feeling for brands that are viewed in advertisements near the term or associated with the term “Coronavirus”. However, the right context is necessary. According to a recent series of advertising studies from Integral Ad Science (IAS) , 58% of people today are actively seeking out Coronavirus news and content online. And certain industries are perceived differently in advertisements that have messages associated with the term “Coronavirus”. For example, the study also shows that Food & Beverage companies have a 37% risk of being viewed negatively with the term Coronavirus. However, that number drops down to 27% for automotive brands. This means that nearly three-quarters of people gain a positive perception of automotive brands that have advertising messages associated with Coronavirus. However, it is wise for auto dealers to take a compassionate and educational approach when designing their advertising content and messages that are associated with COVID-19. Knowing the new world we live in, and understanding how COVID-19 will change the advertising and brand message strategy as a result, will help auto dealers thrive in a post-pandemic world where we get back to selling cars each and every day.
Where the COVID-19 Outbreak Is Impacting Dealers’ Marketing Strategies

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As the world continues to watch and see exactly how the COVID-19 outbreak unfolds, everyone involved in the automotive industry is also eyes wide open on the topic. The outbreak has had a sweeping and profound impact in a short amount of time, and it has been a striking blow to what was a magnificent run of sales dating back to the recession of 2010. How Bad Will Things Get? J.D. Power said recently the industry could see a decline of up to three million retail sales in 2020 as a result of COVID-19. This would equate to an annual sales range of between 14 and 16 million. The analyst’s pre-virus forecast was for 16.8 million in total new sales. Hampering much of this opportunity are the many automakers that decided to suspend production of vehicles, such as General Motors, Ford, and Fiat Chrysler. However, J.D. Power also stated that it is very possible that the industry can recover from such a scenario, driven of course by government stimulus, incentives and other possible measures. What Can Dealers Do? In the near term, dealers are left wondering what to do, how to preserve sales opportunities, and how to be as helpful as possible to their customers. Like many other companies in other industries, dealers have had to make quick and sometimes drastic adjustments to their marketing strategies. Where Dealers Are Adjusting Their Marketing According to Merit Mile Research, in an online poll of roughly 200 dealers around the U.S. during the weekend of March 19 – 22 when the outbreak had begun to reach large proportions, 19% of dealers said they had not made any changes at that point to their marketing budgets. However, 18% said they had already cut as much as half of their marketing budget, and another third of dealers said they had cut between 20% - 40% of their marketing budget. This comes as no surprise, especially since many businesses have had to completely shutter their doors, especially in industries such as hospitality, restaurants, and fitness centers all throughout the U.S. Dealers themselves are looking to not only do right by their customers and employees and show as much empathy as possible, but they’re also trying to stop as much bleeding as possible to the bottom line. Merit Mile Research Findings for 19th - 22nd March 2020 Social, Direct Mail to See Large Cuts In terms of where dealers are making cuts to their marketing budgets, they’re slashing across the board. The majority of dealers (63%) said they are making cuts to their social media marketing, which may be no surprise since social channels were heavily populated by dealers pre-virus. Direct mail (53%) and email marketing (47%) were also reported to be taking large cuts from the marketing budget. In the near-term, most dealers (35%) said they will leverage their marketing strategies to “shift focus to more engagement with existing customers”, which makes sense because they realize their current customers have many questions and they want to ensure proper service levels are being met. Even though social media and direct mail saw a large reduction, dealers say they will continue to rely on these channels in some capacity in an effort to reach and communicate with customers. A Focus on Engaging with Existing Customers This commitment to communication will be critical as 82% of dealers say their customers are most concerned with how dealers are cleaning down cars to prevent the spread of the virus. Another 63% of dealers said their customers are mostly concerned with inquiring about buying or leasing a vehicle online without having to come to the showroom, and also asking if the service centers will remain open for business. These are trying times for dealers, their employees and certainly for their customers. A strong (and continued) focus on serving their communities will carry them through the COVID-19 outbreak, and while sales are sure to take a hit, we will all come through stronger when business returns to normal. Having the right insight into making appropriate adjustments to the marketing strategy will help dealers remain engaged with their customers, and they will be seen as a helpful resource rather than simply promoting deals and offers.