John Sternal

It is estimated that 39% of adults are watching video on a CTV device on a daily basis. This is up from 31% back in 2019 according to  data  from Leichtman Research Group (LRG)1. This represents a large audience with spending power and the desire to shop for a vehicle. As a result, dealerships are taking a closer look at the connected television medium because of who is viewing CTV, as well as how often, not just the overall households.  The increase in CTV also represents a disruptive leveling of the playing field for advertisers who historically have purchased traditional TV, and those who could not previously afford it due to budget constraints or efficiency concerns.  The programmatic targeting capabilities of CTV allows for large advertisers to buy more efficiently through diversification of their media mix and better data fidelity in their audience reach. It also allows smaller or more niche advertisers an opportunity to advertise in front of larger audiences on television without the high cost and ad waste associated with traditional media buys. Creating greater efficiencies The decision for auto retailers and their advertising agency partners to consider CTV is less about re-allocating digital media budgets to video, which most dealers already execute through programmatic and social video campaigns.  Furthermore, dealers should not entirely abandon their traditional media buys and budgets, either. However, in many cases those dealers that begin to explore a reallocation of portions of their traditional media investments over to CTV see significant improvement in the performance of their overall media mix and experience a positive impact on their cost per unit sold and serviced.  Increases in target markets The first CTV benefit is scale, where dealers can leverage large programming opportunities and access across major recognizable logos that has strong coverage across networks and devices. Secondly, dealers and their partners in CTV are continuously working to understand the market penetration they are gaining or losing, and have access to unique data technology to ensure campaigns are on par with the reach of top cable providers. These partners also offer dealers access to digital media purchase technology that leverages a Demand Side Platform (DSP), which is software that allows media buyers to buy each impression based on whether the viewer meets their audience parameters. They can also help ensure ad content is not played along side or in tandem with violence or other sensitive subjects that would be detrimental to a dealer’s overall brand values. Driving greater bottom-line results While all of this sounds promising, results are what matters. One mid-size regional dealer in Florida recently tested an Amazon DSP against other traditional media platforms and ran a two-week CTV campaign, directed to in-market shoppers on FireTV, within their store’s PMA. Their campaign measured correlative metrics holistically against all digital media channels including search, fixed ops, social, sales, and ROs. The dealer saw significant gains in performance across every measured metric when looking both at period-over-period and month-over-month. Furthermore, to test the fidelity of the data, they also measured key metrics when the campaign was terminated and saw almost a 15% decline in impressions and clicks in search, coupled with a distinct drop in shopper engagement on the website. This included a +57% increase in sales, +17% increase in closed ROs, and a +16% month-over-month increase in dealership revenue, according to data from PureCars. Dealers are naturally hesitant to jump into the CTV pool all at once. However, with the results from this dealer’s trial along with the ongoing growth of the CTV category, this disruptive platform will continue to grow as a viable alternative providing a competitive edge to those dealers that explore their options early on.   1:  https://www.leichtmanresearch.com/39-of-adults-watch-video-via-a-connected-tv-device-daily/

While a showroom may be full of shoppers and potential leads, dealers shouldn’t cast their advertising to the side. The market for consumers is ever evolving in not only issues but in competition. It is pertinent for dealers to grasp as well as implement several key advertising strategies to continue a successful business. Whether it's shifting advertising spending to help with inventory instead of customer acquisition or figuring out what merchandise is no longer in demand, these advertising strategies are affected heavily by the financial practices of a company. Dealers need to be conscious of their spending if they wish to successfully implement advertising strategies, especially as digital advertising prices continue to increase. How To Combat Price Volatility    Advertisements are one of the most effective ways to reach consumers in the current trend of high media exposure. The demand is high and the cost of ads across retail-focused channels is expensive. Recent evidence supports these claims as reports show a spending increase of 60% on paid search, 41% on paid social channels, 34% on the average cost-per-click (CPC), and 41% on CPM prices for paid social.  Such inflation, measured from last year to the second quarter of 2021, has happened over a short period. Often unaware of such statistics, dealers continue to obliviously spend the routine amount on advertising instead of efficiently eliminating wasteful spending.  More commonplace than expected hundreds if not thousands of dealers across the country deal with the lack of knowledge and the unsuspecting trap of advertisement cost. Reducing Wasteful Media Expenditures    To be a profitable dealership, it is key to reduce advertising waste. Currently, it is estimated that around $13.4 billion on digital advertising will be spent by the automotive industry. Out of approximately 13.4 billion, 40% of digital advertising will be ineffective due to the wrong strategy, bad data, or both. The solution is to leverage advanced advertising data and marketing technology from leading providers such as PureCars. Dealers can take full advantage by distinguishing the best vehicle to aggressively market, the best target audience to cater toward and the best media channels to reach that target audience. With tactics such as these, dealers can focus on the goal of optimizing the lowest cost per sale and RO, instead of vanity metrics such as cost per click and impression volume. Similar to true e-commerce retailers, dealers can market with attention to target cost per sale as well as available inventory. If there is inventory available and the cost per sale targets are accurate, marketing budgets are unlimited! Overall, dealers are at an advantage if they can successfully create a predictable cost per sale, demand, conversion path and inventory to sell! Making The Right Marketing Decisions     Dealers can leverage advanced data and marketing technology to help them make the most suitable marketing decisions when it comes to selling or servicing new and used cars. Moreover, it can be used to properly identify and acquire properly used vehicle opportunities. In either case, however the technology is used, dealers have the resource to maximize profits. Dealers can also utilize this technology to determine if a new vehicle in inventory needs more or less marketing attention as well as the most appropriate media mix models. The proper identification or adjustment of something as simple as a media mix can open a dealer up to millions of dollars in efficiency and profitability. Now, more progressive dealers are thinking creatively of new ways to source used cars at a premium in auctions or by buying directly from consumers in their vicinity. Both approaches have become an attractive way to build customer relationships and outpace competitors’ vehicle acquisition in a sustainable way. Leveraging Data for Better Payments & Offers Dealers, along with their lender and manufacturer partners all need to be seamlessly tied together in a comprehensive system necessary to build, offer and transact. They’re now leveraging solutions from companies like Market Scan that mines, analyzes, and manages the billions of combinations and iterations of all lender and manufacturer programs available in the marketplace and finds truly superior, scientifically perfect solutions for all stakeholders: consumers, dealers, lenders, and manufacturers.  Furthermore, today’s best and most comprehensive solutions enhance the consumer experience and the showroom process by electronically presenting all payment and purchase options to customers with full compliance and transparency – on any computer, tablet, or mobile device – at any/all points along the consumer’s shopping journey. As a result, the process can dramatically shorten transaction times, raise dealership efficiencies and margins, and elevate customer satisfaction as a result of a more streamlined process. The market for consumers will always evolve. To stay current, successful dealers are leveraging a more scientific approach with the help of marking technologies to better align their strategies to retailers who have mastered digital advertising and payment solutions. 

Third-party cookies have slowly phased out of the internet for years with stricter privacy regulations taking effect in Europe and several different states in the U.S. including California. This can also be seen with major web browsers (Firefox, Chrome and Safari) and significant-tech companies (Apple, Google) also making changes to the way they operate search functionality and target marketing products for business customers.    As a result, dealers and their advertising partners are now emphasizing how critical it is for auto retailers to utilize information from their own systems about customers to promote themselves since this industry can no longer track consumer information and trends across different automobile websites. This is not limited to just one dealer as thousands of retailers are all facing a similar situation.   Dealers Must Now Rely on First-Party Data   The end of use of cookies results in the challenges of increased difficulty targeting customers and the threat of fewer personalized ads. However, a solution for dealerships is to work with their marketing partners to identify new strategies to build and access their own first-party customer data for target marketing purposes.   Many dealership marketing executives believe   that eliminating third-party data collection makes customizing marketing more difficult and retargeting campaigns more vulnerable moving forward.   With this major shift now taking place, retailers and their agency partners must see that the first-party data willingly shared by customers gives dealerships a trove of data about their own customers, such as email, home addresses, phone numbers and even shopping intent or vehicle preferences.    This disruption to legacy marketing practices was initially thought to break the connectivity dealerships had with consumers so dealers must evaluate whether their marketing providers are equipped to build campaigns using first-party data.   Social Media Marketing Just Became Even More Important   Marketers said another solution is that dealerships can reach customers through social media platforms like Facebook to track their users’ activity.   The fear among dealers is that a high price tag and the length of time shoppers spend deciding upon a vehicle purchase (typically 3-5 years) would see car sales more negatively affected than other e-commerce-driven products that leverage first-party data practices.    These dealers fear that marketing strategies in the automotive industry cannot reach the same broad audience compared to marketing efforts of household goods, which is why having good insight into first-party customer data is critical.   Using Marketing Technology To Get More Personal   Savvy automotive marketing consultants instead say that with the growing need for first-party data, dealerships can offer something of value (like personalized discounts or loyalty programs) in return for consumers agreeing to share personal information, which can also address customers’ privacy concerns and provide transparency about how the data is used.   What’s more, dealerships can work with social media companies and host vehicle detail pages with the social platform. With Facebook, the site can identify when someone views any automobile content or engages with an ad. Utilizing this data, dealerships and their marketing providers can build an audience and retarget consumers.    These social-specific strategies are being driven by companies such as PureCars, which has taken the last few years to help dealers build custom marketing programs that not only drive traffic to the web, but also help in creating more conversion efficiency during the pre-qualification stage.   Facebook can’t share or sell to other social media platforms but they can use the data to make more informed advertising decisions on their platform.   Facebook executives said the company is working to build privacy-enhancing technologies to help minimize the amount of personal information it processes, while still allowing to show relevant ads and measure ad effectiveness.   Dealers who have not relied solely on third-party data say they aren’t very concerned about the shift since their stores have always used more first-party data from customers in advertising. The data includes information on visitors to the stores’ websites and customer data from the customer relationship management system.    This data not only helps with the initial target marketing, but can also help dealers, lenders and OEM partners construct unique and personalized offers and payments in a more scientifically accurate way, such as the payments data now built by companies like Market Scan and utilized online and in the showroom to create a more seamless, consistent shopping experience for customers.   The world keeps changing for dealers, and that includes the way in which they leverage data to market toward their customers. By focusing on web, social and other marketing technology, dealers will find new ways to collect more targeted data from their customers so that they can build promotions and offers that appeal to them even more than what they had with third-party data.  

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. 

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. 

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/