No names will be given to protect the innocent, but in a recent ad meeting, the following conversation occurred – “We can’t run that car at $15,995 – it’s an $1800 right-hand hit.” The dealer followed up to his sales manager’s comment with, “well how many of that model do we have?” The sales manager said, “We have two in stock and one incoming.” After some thought and conversation about the ability of the staff to step sell, and based on our current rank among the competition on that specific vehicle, we decided to take the $1800 right-hand hit and advertise the car at a price that would currently put us $1100 under our closest competition.
Some people will read this and think, “that’s stupid” or “there goes their gross.” Others will read this and be thankful they have a great location or product that is fuel-efficient and on the upswing even in a down market. But for those who live and die based on the traffic they create, I hope you read this and understand the following:
Your ad dollars are an investment in traffic. If you are going to spend $40,000 a month advertising a core product and hoping to use the mass appeal of that product to draw more traffic to your store than your competitor does, you better do everything in your power to maximize the $40,000. It does you no good to run $40,000 worth of advertising at a price point above your competition. It is only somewhat effective if you run your ad price at the same price your competitor does, but if you get more aggressive than anyone else in the market, and you suffer on the one or two ad cars that you will actually sell at that price, the $40,000 does exactly what it is suppose to do, it creates traffic. Automotive advertising can sometimes seem like rocket science, but for people who truly understand it and see the value of potentially taking $1800 of loss to maximize the $40,000, they will see the greatest results.
Would you question your advertising company too much if they had $41,800 on your media budget instead of $40,000? However you want to account for the dollars used – in this market, with the current climate, you must be aggressive in order to be effective.