When to Increase Your Ad Budget

Similar to walking away from a blackjack table after a string of bad cards, car dealers often cut advertising budgets at the first signs of perceived risks; manufacturer recalls, rising interest rates, a bad day on Wall Street, an impending natural disaster, etc. and they all sound the alarm to slash advertising budgets.

Right or wrong, hacking at the ad budget makes one feel as though the risk-reward nexus has been re-balanced. However, an ultra-conservative mindset may lower stress levels when looking at a spreadsheet, but at the very same time it also lowers expectations, erodes morale and gives your competitors an edge.

Scale Up to Gain Market Share
While advertising decision-makers believe they should tactically decrease their ad spend, successful car dealers know when to strategically increase their ad spend.

Scaling up a winning media plan as competitors operate in risk-management mode presents ample opportunity to sell more cars, gain permanent market share and pump up the bottom line.

There’s no shortage of advice and pressure to reduce media budgets from dealer principals, general managers and NADA consultants “to save money,” they say. On the other hand, when you have the wherewithal and presence of mind to seize the opportunity to scale up your Tier-3 ad spend — it pays very generous dividends.

Recognizing opportunity and capitalizing upon it however requires speed and expertise — a sense of urgency. It must be said that for the most part, non-auto-retail ad people do not have a comprehensive understanding of our industry — selling cars — and they often apply inappropriate techniques toward that end.

Advertising That Doesn’t Sell Cars Today, Will Not Sell Cars Tomorrow
Does your advertising work?

If you are unsure as to how well your advertising is working, it’s probably not working as well as you might have hoped. When your advertising works, the numbers show it, your people show it and your prospects show it. The following checklist will help identify how well your media plan and creative are performing.

1. Do prospects and customers call, click and walk in asking about specific offers in your ads?
2. Do leads convert into sales at an acceptable ROI?
3. Does your market share exceed the franchise’s national market share?
4. Are you among the top-selling dealers in your district?

If you can answer yes to the above, your advertising works. Confident in that, the un-tapped opportunities presented by scaling up your ad spend are significant and should be never be left on the table.

Increase Your Reach
When your advertising works, it means that frequency is good, you accurately target your prospects, and they remember who you are and respond to your offers. The overwhelming logic of it all is quite direct: When you scale up your media budget by 20 percent, you’ll add an additional 20 percent of brand-new prospects, and you’ll see a 20 percent increase in sales.

Ad Campaign:
Population: 197,200
Audience Reached:  98,600
Weekly Frequency:  6X

Ad Campaign +20% Boost in Reach:
Population: 197,200
Audience Reached:  118,320
Weekly Frequency:  6X

For an additional $2,500 in weekly budget, we increased reach by 20 percent, adding 19,720 unique audience members (new prospects) to an already effective advertising plan.

Generally, lackluster campaigns are usually the result of inadequate frequency, but when the frequency issue is settled and the campaign is working, you should always be prepared to scale up.

Boosting reach generates brand-new prospects — a fresh set of eyes, ears, hearts and minds. As mentioned earlier, the best time to expand reach is when competitors contract. That is when you gain permanent increases in market share, see an accelerated pace in sales and achieve greater stature in your market and region. Jon Albert