In my 12 years working in dealerships and now as a consultant, I’ve seen a few problems repeated over and over in dealership after dealership. One of the most common is ineffective advertising spending.

In an era where dealerships are averaging $621 in advertising spend per vehicle sold, this represents a huge expense and also a huge area for improvement.

To help determine if you need to get better at your ad spend strategy, here are three very-common symptoms I see in dealerships who aren’t effectively using their advertising dollars:

1. Standard Monthly Budget Without Results Tracked

If your dealership is like most dealerships, there’s a standard line in the monthly budget for advertising spend. That’s fine if the results are being tracked, but I’ve seen many dealerships that blindly spend advertising money without tracking results and that can cause problems.

2. Ad Choices Made Because of Vendor Relationships

I’m amazed by how often I see ad budgets determined by vendor relationships. In this scenario, your managers choose to spend their advertising dollars mostly because of the perks involved, including incentives like tickets to games or concerts. When this happens, your ad dollars get spent based on management’s personal attitudes and feelings about a vendor, instead of on what’s actually best for the dealership.

3. Belief That Tracking Ad Spend Results Is Difficult

When I bring up these problems with dealers, many tell me they’re concerned with the difficulty and labor it takes to track the effectiveness of advertising sources. My response is always the same: with a good CRM tool, a defined review process, and a good management team, it’s actually pretty easy to correlate advertising dollars to customer sources.

Conclusion

Making a commitment to track your advertising effectiveness can mean huge shifts in your marketing strategy, but don’t let that scare you. Once you begin to see which of your efforts are actually paying off, it becomes a pretty simple decision. You just invest your dollars in the sources that bring traffic to your dealership, and discard or scale back the rest.

Next time: In next month’s article, we’ll dive into another one of the most common profit leaks I see in dealerships – ineffective inventory selection.

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