One of the issues dealers constantly wrestle with is where to advertise-not just the type of media, but the geographical coverage of the media. There are only three types of advertising media that provide tightly controlled borders of physical area: direct mail, cable television, and signage (including billboards). Direct mail is the only available medium where the user can determine intended coverage. Newspapers tend to overflow market boundaries, and radio and television know no boundaries.
So where do you place your advertising dollars for maximum effectiveness and efficiency? First, you must determine what is the best media to reach your primary potential market, usually the folks within eight to twelve miles of your dealership. A dealer client of our agency, prior to our relationship, used a small AM radio station because the station was physically located three miles from the dealership. The dealer also told us radio just wasn't that effective. Research determined that the large majority of his primary customer base listened to radio stations in a larger market 15 miles away. The dealer was reluctant to buy radio in this larger market because of the high cost and because he felt the reach was "too large."
Two things happened after embarking on a radio campaign using stations in this larger market. First, radio became the most effective source of advertising to customers in the dealer's primary market. Second, the dealer's "pump-out" sales grew 20% within twelve months. And something else happened: the dealer's advertising costs dropped a full percentage point. Five years later that dealer has tripled sales, outsells four of the six dealers in the adjacent larger market, and is the most profitable dealership with his franchises in the region. That dealer now uses both network television and radio as primary media for advertising.
Recently, a dealer told me he did not use a particular television station in a neighboring city because he had an "agreement" with his competitor not to advertise in that market. I pointed out that research showed the majority of his customer base, as well as his competitor's customer base, watched early edition news on that television station. I also noted that this dealer's "competitor" advertised in the same newspaper. "Well, of course!" replied the dealer, "It's the only newspaper in town!"
Not all the irrational thinking on media placement originates with dealers. Many manufacturers have tried to dictate media placement to dealerships, insisting that dealers advertise only on mediums within their market. In effect, this dictates which media the dealer must use because, as I said in the beginning, there are just a few advertising venues available for closely controlled borders, and they are often not the most effective use of advertising dollars.
You cannot determine a medium's effectiveness for your particular market area until you understand the relationship between the medium and your potential primary-market customer. While most media offer tons of survey information, this is best accomplished with a simple research program conducted in your market area.
Start with your own employees. Have them fill out a questionnaire regarding their media preferences. Conduct research with at least 100 of your customers. Then consistently update this information, because market demographics and available media are constantly changing.
Always keep the value relationship of media purchases in mind. Some small-market stations are in fact very effective and cost efficient. Also, your budget simply may not allow you to advertise effectively on larger-market stations.
Several dealers have told me they use cable television stations to promote service and used vehicle specials, while using network television to advertise new vehicle promotions and dealership image messages. This makes a lot of sense. The bulk of your service business and used car business will probably come from the immediate surrounding areas of cable coverage. But you want the whole world to know about a spectacular new vehicle opportunity, since research shows that customers are willing to drive further to purchase a new vehicle. Of course you want to build your image with as wide an audience as possible as well. Network television and radio have the potential to reach over 90% of the people in most market areas.
If your dealership is isolated in a market of its own with a clearly defined marketing area free of overlapping media intrusion, you don't have to worry about any of this, right? Wrongo! Turn on your computer, go to any search engine and type in the words "automobile," "dealer," and your franchise, and watch what happens. Just prior to writing this article I did a search on YAHOO with the words "automobile," "dealer," and "Ford," and came up with 1906 dealers. The first page listed dealers in Hollywood, Florida, St. Louis, Washington, Los Angeles, and Macon, Georgia.
When you are on the Worldwide Web, your market is the world. But your web site focus should be on your primary potential customer base. You can't prevent your message from reaching every corner of the globe, nor can you prevent any competitor anywhere in the world from advertising in your market. While the Internet may not be the very best medium to reach your potential customers right now, it might be in the future.
So where is YOUR market? Your best market is probably still right in your backyard, but the media needed to reach those customers might not be. Map out your marketing plans with solid facts and lots of research. Then use the right tools to get the job done.
Jim Boldebook is President of Creative Broadcast Concepts (CBC), an advertising/marketing agency working with some of America's most successful dealerships.