Key trends in marketing include more choices in advertising channels, greater data complexity, larger volumes of data and significant innovation in measuring marketing performance. These growing opportunities give the dealers and marketers more choice than ever — but at a cost.

Writing in 2012, I felt that we were reaching a tipping point in marketing but, with the proliferation of new advertising technologies, it was still unclear to me what direction the industry was heading. I did realize, however, that there was a sea change happening, and that there was also an increasing gap between those that could take advantage of the new paradigm, and those that could not.

Marketing analytics and measurement of advertising performance has fundamentally changed. Many dealership executives have revolted and demanded that advertisers demonstrate how their solutions contribute to sales and service transactions.

As dealership managers and owners review their marketing budgets, they will, at some point, question which combination of specific marketing investments influence their companies’ target audience to increase sales. Sales attribution projects have the potential to create media efficiencies and conversion gains. Progressive dealers want to know their return on ad spend (ROAS), which is the amount of revenue a company receives for every dollar spent on an advertising channel.

In larger companies, the chief marketing officer (CMO) or marketing manager will normally field these questions. They will be required to present attribution reports which show the influence of each marketing channel on sales. In smaller dealerships, the business owner will often wear multiple hats, including marketing manager, creative director, video producer or Website administrator, and have no training on how to determine sales influence or attribution.

Large and small companies are equally challenged in their ability to measure the ROAS of their marketing investments to increase sales. Dealers will likely be able to list cases where marketing investments failed and others that the business “thought” worked, but business leaders are not sure.

Every dealer has sales objectives and marketing goals, which could include:
• You want to sell X more cars this month and can’t continue to invest Y advertising dollars per unit sold.
• You want to know which channel, media and message is most efficient at helping you sell your new, used and CPO vehicles.
• You need better reporting KPIs to spot changes in consumer response rates.
• You want to increase customer loyalty and lifetime revenue through more targeted customer outreach.
• You need a trusted third-party to validate the data from your marketing agency reports.

To reach these objectives, dealership managers will need to embrace change. There are new metrics and methods to determine which marketing channels are supporting the goals of the business. One of the changes managers will need to embrace, for example, is that metrics such as cost per click (CPC), impression share, bounce rate, and time on site (TOS) should not be included in the list of key performance indicators (KPIs).

One of my most admired industry friends, James Grace who leads analytic products at Cox Automotive, offers this simple advice to clients:

“If you are just starting to optimize your digital marketing, first focus on getting quality traffic over quantity traffic. Many of us are so focused on visitor counts, however, this metric is not important at all; instead, focus on how many quality visitors are interacting with the site. If the marketing manager is already there, then focus on understanding and optimizing what assists with generating quality traffic. Advancing further, establish attribution values for each of those assists so that each channel or solution can be weighted and scored.”

I’d add to that sentiment by also saying that before embarking on this journey, make sure your content, merchandising and data quality are all in order. It all begins though with strategy.

To create a more effective advertising strategy you must:
• Document all advertising investments, agency partners, and methods by which campaign data and results are presented.
• Confirm you are collecting and have access to your marketing data for proper analysis with analytic tools and sales attribution consultants.
• Measure the right things; you may be looking at report KPIs that are not actionable.
• Differentiate KPIs based on the type of marketing campaign. For example, differentiate performance metrics on brand awareness vs ready-to-buy campaigns.
• Continually test and optimize marketing campaigns based on actionable KPIs.
• Pick the right set of tools to facilitate the analysis and insights generated from your marketing data.
• Make sure your messaging, customer experience and merchandising are not getting in the way of your success.

By building a strong foundation for marketing campaign measurements and sales attribution models, you will build the required confidence to create a practical set of metrics to determine your ROAS.

Brian Pasch