Not too long ago, dealers had relatively limited choices in how they chose to advertise. Perhaps they placed ads in the local paper or bought time on the local TV or radio station. Maybe a billboard or a bench ad and perhaps the yellow pages. Then there was always the semi-annual tent sale or similar promotions.
Today there is an army of print publications in every town that flank the longstanding local papers. Television as an advertising medium has been rendered nearly incomprehensible by the introduction of hundreds of cable channels and literally thousands of hours of programming each week. In every market there are dozens of radio stations playing every type of music, talk and news, targeting every conceivable demographic, right down to grammar school children. The yellow pages are out of hand. Half a dozen or more different editions end up on doorsteps each year. Then there is the entirely new issue of the Internet. I could continue, but I think I've made the point.
There is such a glut of media in current society that the chances of any single message getting through become infinitesimal. Today's markets have become so fragmented that only a very scientific approach to advertising offers any assurance that your message will be received by the intended prospective vehicle buyer.
This issue of advertising complexity was first addressed by the various media themselves. Nielson ratings rule television advertising rates and schedules. Arbitron ratings dictate radio station rank and demographics. Newspaper circulation research figures tell us which papers are most read. And so it goes, each medium with its own ratings system in place.
Despite the tremendous energy that has gone into creating these rating systems, we don't know of too many dealers who have actually benefited from them. Most dealers must continually advertise in more media and at greater cost than ever before just to draw the same level of business. It's the old saying of throwing enough up against the wall and hoping something will stick. Fortunately, something usually does stick and it's what helps keep dealers in business. Unfortunately, it also keeps many dealers continuing their same advertising strategies, despite the rising cost.
From a dealer's point of view, there is something inherently wrong with this system. First, let's look at who these rating systems were developed for and who pays for them. They were developed for and paid by the media themselves. They are the real benefactor of all these sophisticated orchestrations of data. With due respect to all media, these systems were created to help sell advertising and set a value on the cost of advertising.
Therefore, all the media rating systems that the media brings to your door to convince you to buy advertising from them are designed to help them sell their product of advertising to you! They are not necessarily designed to help you sell more automobiles. No matter how many people watch the Ten O'Clock News on Channel 3 or subscribe to the Picayune Press, if your potential customers are not among those viewers or readers, it is a complete waste of money.
Giving credit where it is due, advertisers have certainly done well by these rating systems! One look at the burgeoning advertising sections in most newspapers, or the long blocks of advertising on radio and TV broadcasts is enough to demonstrate their effectivenessin creating advertising sales.
Major marketers in other industries have countered this advertising glut by conducting research of their own. They explore the media habits of the potential buyers of their products. They know what percentage of potential buyers are watching the news on what channel and at what time. They direct their advertising accordingly. In order to be more cost-effective in their own advertising purchases, dealers need a similar method to learn the media habits of their potential customers.
With such a system, dealers can study their market and discover what percentages of their potential customers consult a particular media in the shopping process. The dealer can get this information for any media they choose, giving them a full picture of which advertising is actually reaching buyers despite ratings or circulation figures. It then becomes very easy to compare the percentage of buyers influenced by the medium against the cost of the medium. The dealer can then actually work out in dollars exactly how much it will cost to reach each percent of his potential customers. They will have revolutionized the way he conducts his advertising.
With effective local market research, a dealer is well-armed with his own media information specific to his market and auto buyers, not the broad and overly general numbers used by media reps. When they come in with a ream of data telling dealers how their station is number one or their paper has the highest circulation, all dealers have to do is look at their own figures and the cost of the advertising and make their own evaluation as to the cost effectiveness of the buy. They might also use this information as a negotiating tool in bringing down the price of advertising they know is overpriced in relation to its value.
If you're not making your advertising picks this way, chances are you're wasting significant amounts of money on ineffective buys. The important thing to find out is which media the customers in your market consult in their vehicle buying process and use that to guide your advertising buying decisions.
Jim Callahan is the Senior Quality Control Manager of The Dohring Company, a Glendale, California based market research firm. Mr. Callahan has personally worked with thousands of dealers throughout the United States and Canada on market research studies. If you have specific questions or require more information about this subject, please check the appropriate box on the reader response form on page 3.