Automotive Digital Marketing Foundations

Foreward

Most How-To-Guides Guides seem to copy and paste content from various sources. These different sources usually specialize in one of the different advertising tactics (e.g., search, social, display, e-mail, etc) and are a bit disjointed. We decided to write this Ultimate Automotive Digital Marketing guide to help you see the forest through the trees. We will start with a solid foundation in marketing and then add on specific tactics that can help support your overall marketing strategy.

WHO WAS THIS WRITTEN FOR?

This guide is written for the Director of Marketing for an Automotive Group, CMO of a publicly traded automotive group, CMO of an automotive brand, or an Internet director. It’s important to connect all the individual tactics so that they support the overall marketing strategy for your dealership.

Let’s start at the very beginning. Because that’s a good place to start.

If you find this helpful, share it!

AUTOMOTIVE MARKETING STRATEGY

Automotive marketing strategy works on your customer’s mind and demonstrates the benefits of buying a vehicle from your dealership, getting their vehicle serviced in your service center, or buying parts from your parts department. It lays out a clear set of choices of what you’re going to do. And what you’re not going to do from an automotive marketing standpoint. Automotive marketing strategy is often confused with tactics. Marketing tactics are things that you’re going to do to support your overall automotive marketing strategy. There are probably more than a thousand different tactics that you could use. And there are tactics within tactics and tactics, and tactics that go across different channels and networks. But more on that later.

4 P's of Automotive Marketing

It’s good to think about automotive marketing through the 4 P’s of Marketing.

1. Price

What is the value to the buyer? Are there established price points? Is customer price sensitive? It’s important to see marketing through these 4 P’s because oftentimes the challenge is that you are selling the same vehicle using the same MSRP from the manufacturer. And you already know that you can’t compete on price alone.

2. Place

Where do buyers find your product? If they look in a store, what kind? What do competitors do? This is fairly straightforward because 95% of all dealerships have a physical location and that is high customer value in showing up at your dealership to take a test drive of a new vehicle before they buy it.

3. Promotion

Where and when can you reach your target audience with your message? When is the best time to promote? Where do your competitors promote? This is usually the bucket where automotive dealers spend the most amount of time. And the most amount of money. Advertising.

Let’s make sure that we’re all using the same terminology. Ad channels in the traditional sense maps to things like television, radio, magazine as a few examples. The network that corresponds to each would something like this:

Aligning our terminology

Television (channel) > ABC, CBS, ESPN (network)

Radio (channel) > Pandora, your local radio station (network)

Magazine (channel) > Newsweek, Times, Sports Illustrated

Ad Channel	Ad Network

This pretty much looks the same in the digital landscape

Search (channel) > Google, Bing (network)

Social (channel) > Instagram, Twitter, Facebook (network)

Display (channel) > Google Display (network)

Ad Channel	Ad Network

Goal of Advertising

What is the goal of advertising? Usually, people tell us things like “take possession of the consumer’s mind and preferences” or “engage customers and address their concerns” or “Sell more cars.”

Those aren’t bad answers. Maybe the question is bad. It should probably be asked “What is the measurable goal of advertising?”

It’s basically to reach 75% of your target audience at least times? But isn’t that kind of an old school approach? Like with TV and radio? Nope, not really. It’s based in human psychology.

The human brain has to hear something at least three times before it takes action.
The human brain has to hear something at least three times before it takes action.
The human brain has to hear something at least three times before it takes action.

People need to be aware that there’s a hot new vehicle out there, or they need to be aware of your dealership, before they will consider buying a vehicle from you.

Get it. Awareness, Consideration, Decision. Reaching people 3 times was relatively easy to do back in the 1950’s and 1960’s when there were only 3 television networks. Back then, reach was scarce and attention plentiful. Now, it’s the exact opposite. Reach is plentiful and attention scarce.

Let’s take a quick pause and make sure we define two words that we just used. Reach and frequency. Reach is basically the unduplicated percent of an audience that is exposed to your message. Frequency is simply the number of times they see your message. And there are times when you want to optimize for one or the other. Here’s a quick summary table:

Optimize Reach	Optimize Frequency
Few competitors	Many competitors
Strong established brand	Less established brand
Brand leader in category	Low brand awareness
Infrequent purchase	Low involvement purchase decision
Continuous advertising schedule	Lower priced goods / services
Powerful creative	Strong competition in category
Ad message easily understood	Complex ad message
Major sales promotion launch	Flighted schedule
Seasonal peak for sales	Frequent purchase

And what’s especially cool about reach and frequency is if you multiply them together you get the number of gross rating points you need to run for a traditional advertising campaign (think television, radio) or it gives you the total number of gross impressions you need to deliver to reach those people.

What’s super cool about this is that you can flip back and forth between the two so that you can basically connect your traditional advertising and digital advertising all into one cohesive strategy.

Typical Car-buyer Journey

The typical car-buyer travels through a journey that usually ends up looking something like this:

It’s not linear and pretty much all over the place. You may have heard that the marketing funnel is dead or it no longer applies. But you still need a simple framework to help guide your marketing so that it matches the buyer’s journey. Otherwise, you will end up being very ineffective with your marketing efforts.

There are all sorts of frameworks out there that try to capture this. But we believe the simpler the better. Here are a few creative frameworks:

However it really can be as simple as a 3-stage marketing funnel

Your goal is to drive your potential buyer through their journey using the automotive marketing funnel as a framework as your guide.

What does that mean? Each stage of the automotive marketing funnel serves a different purpose.

All you have to think about are these 4 things as it relates to each stage of the marketing funnel.

	Awareness	Consideration	Decision
Targeting	Target Audience (80 / 20 rule). 80% of your revenue comes from 20% of your customers. Find those people or people just like them. Broad match keywords	Retargeting (Remarketing if you’re Google) audiences always	Exact match keywords, double retargeting audiences
Budgeting	Reach and Frequency based on either CPP or CPM (impressions). Ideally, reach 75% of your audience 3 times. 3 stages of the marketing funnel. 3 frequency.	CPP or CPM based off retargeting audience size	Impression Share of 70% or more if using search. CPM of retargeting audience
KPI’s	CPM (Cost per Thousand Impressions) Cost Per Completed View (CPV) VCR (Video Completion Rate) CPP (Cost Per Point)	View-Through Conversion Rate Conversion Rate	CPP (Cost Per Point) CPV (Cost per Conversion)
Creative Messaging	Inspirational Type. Why Buys. Why buy from your dealership	Comparison pages. Either dealership comparison pages or model comparison pages	$99 / month $0 down 0% APR for 5-years

Here are the supporting tactics that align with different stages of the funnel across a mix of traditional and mostly digital advertising.

And since Google and Facebook, get more than 60% of all digital advertising spend in the world, they want to make sure that they have some sort of product offering that will occupy all stages of the funnel.

Multichannel & Omnichannel Automotive Digital Marketing

You will often hear Multichannel marketing and Omnichannel marketing used interchangeably. But they are actually quite different. Multichannel marketing spans several different channels (like social, mobile, direct mail, and even a physical location). Every channel is separate and independent from the others and works in a vacuum, each with its own strategy and goals. The lack of integration from a multichannel approach can create a confusing and impersonal experience that often leaves shoppers feeling frustrated. And it often causes a significant amount of advertising waste.

Omnichannel marketing. Focuses on delivering a consistent, personalized experience for shoppers across all channels and devices. The guiding principle of omnichannel marketing is that it’s shopper-based, not channel-based. The main goal is to make the shopper experience as easy as possible, and that means consistent engagement no matter where or how a shopper is interacting with you. It makes it easy for customers to complete desired conversions on whatever medium they like to use. And if they just bought a vehicle from you, they aren’t going to see a retargeting ad from you the next day.

Digital Currency

Adding Math to the Mix

You’re probably used to Cost-Per-Point (CPP) when you have purchased television and radio flights in the past. For digital marketing, the most common currencies used are Cost-Per-Thousand (CPM - M is Roman number for thousand) and Cost Per Click (CPC).

Some Quick Math Examples May Help

What is the CPM for a campaign that delivered 1,000,000 and you paid $5,000?

Simply take the cost ($2,500) and divide it by thousands:
$5,000 / (1,000,000 / 1000) = $5 CPM.

This will be helpful when comparing different advertising options and you want to compare CPM’s for say display advertising, video advertising, or digital radio like Pandora. Going with the lowest CPM is not always the clearest choice.

Another way to look at this is:

Assume you are running a display ad and it’s delivered “delivered” 100,000 times (i.e., 100,000 ad impressions). The CPM cost is $4. That is going to cost you $400

Formula is:

CPM = (Impressions / 1000) x Rate

(100,000 impressions / 1000) x 4 CPM = $400

CPC (also called Pay Per Click)

Google AdWords is based on CPC

In a CPC campaign, advertisers pay only when / if users click on their ads and not based on impressions. Impressions are free

A key metric in all of this is Click Through Rate (CTR). It’s basically, the number of clicks of an ad divided by the number of times that ad is shown (number of impressions) expressed in a percentage. A high click through rate doesn’t always mean success. Your automotive ad may be catchy but may be misleading once they click on the ad and arrive at the home page. Or maybe they arrive at a specific landing page, or a vehicle detail page. If the landing page is counter-intuitive and clunky to navigate or poorly designed for the mobile experience, then they are most likely to leave in frustration.

Before we list out the specific metrics that matter, let’s make sure we’re all talking about the same thing.

Metric
A metric is essentially any signal that can be tracked. It’s an objective system of measurement, which means that you might have an entire dashboard of metrics that you’ve set up to be tracked. But dashboards only serve as directionless numbers without goals and KPI’s.

KPI
KPIs (key performance indicators) are the metrics that you’ve decided to use in tracking how efficiently your business is meeting its objectives. Or the specific metrics that you’ve decided to tune and run your marketing campaigns. It’s a little tricky to get down the difference, but just remember that while all KPIs are metrics, not all metrics are KPIs. KPIs are the metrics your business chooses to focus on in driving forward your goals.

Goal
A goal is a metric-driven objective, defined by a clear timetable and tactics, you are trying to reach. Goals set a bar for the future of certain KPIs that you then strive to achieve. Goals should move your marketing department and business forward.

Maybe this table will help a bit.

	Metrics	KPI	Goal
Examples	Organic Traffic Keyword Rankings Conversion Rate	Organic Conversions	100 organic conversions over the next quarter
Definition	Measurable signals that contribute to the KPI	Business-driven metric driven from related sub-metrics	Specific, measurable, attainable, realistic, and time-bound objective tied to a KPI

Conversions
Conversions are the closest metric to revenue that you can track. What conversions look like varies based on the business — for an e-commerce site that could be a checkout, for a B2B site it could be a lead or closed deal. Most importantly, however, marketers need to ensure that the conversions they track have monetary attachments. For e-commerce businesses that can be quite easy. A desired action that a customer (or potential customer) takes. This can be anything meaningful to you at the dealership. The most common way to measure conversions is through completed forms throughout your website (e.g., Schedule a Test Drive, Apply for Credit) or phone calls to your store. Some consider viewing Map and Directions as a conversion. But defining it is entirely up to you and what’s meaningful for you and your dealership.

Conversion rate
Knowing the rate at which your site converts traffic to conversions is critical. Paying attention to historical and trending conversion rates will help you know where to focus your attention. For example, if you see that one month shows a conversion rate that is only 50% of the month prior, you might dig further and see that was the month you launched a new ad campaign. This would tell you that this ad campaign likely wasn’t fruitful.Compare conversion rate and total number of conversions, because there can be times when the number of conversions increase while conversion rate falls.

Leads
Leads are contacts in your database that have indicated some signal that they are willing to learn more than surface level information about your company, and they’ve given you information to make that happen. Examples of this might come from a tradeshow giveaway or a free trial sign up.

Cost per lead (CPL)
CPL is the total cost to acquire a lead. This is typically used as a long term benchmark, even though this number may change. Not all leads are created equal. There may be opportunities to acquire leads for much less than the yearly average that would be a waste of company time and money. Be sure to be wise in your use of metrics, and look at the viability of the entire situation before making your decisions.

Revenue
Revenue is something every marketing leader should have in their sight. Tracking this is sometimes easier said than done. A good marketing leader will make every effort to get good data that associates revenue with your various efforts. If done correctly, all other metrics will fall under this single metric

Return on ad spend (ROAS)
This metric is helpful if your dealership is running paid ads. Most major advertising platforms (i.e. Google, Facebook, and LinkedIn) have snippets of code called pixels that you can put directly on your site that allows the ad platform and advertisers track the ad’s performance — including conversions that take place on your site. It’s basically a ratio showing how much you spend to how much you earn. Here’s a very simplified example:

Return on Ad Spend (ROAS)
A simple calculation really.

Conversion Value / Cost = Return on Ad Spend

So let's say that every conversion is worth $100. And it cost you $20 in advertising to promote that specific thing. So ROAS is $100 / $20 = $5.

If it costs you $20 in ad spend to sell one unit of a $100 product, your ROAS is $5. A good ROAS varies, but shoot for something a $4 ROAS or higher.

Return on Investment (ROI)
This metric is similar to return on ad spend but represented by a percentage rather than a dollar amount. It’s a similar calculation and conveys if the the marketing campaign is worth the investment or not. It’s calculated using the following formula:

(Sales Growth - Marketing Cost) / Marketing Cost = ROI

So, if sales grew $1,000 and the marketing campaign cost $100, then the simple ROI is 900%

(($1,000 - $100) / $100) = 900%

Customer Lifetime Value (CLV)
As its name implies, CLV is the expected return during the life of an average customer. This metric is powerful when filtered across a qualifier (e.g., comparing average CLV of clients that were attracted from organic search might be higher than those brought in with Facebook ads. Indicating that SEO is a worthwhile business focus in the upcoming year).

Total traffic (website)
Almost all businesses utilize some kind of website for their marketing efforts. Knowing how many people visit the site in a given time period is essential to knowing the impact of your online marketing efforts.

Organic website traffic (and conversions)
There are many traffic sources you can measure, such as ad channels, referrals, social, direct, and organic. Many businesses will benefit from measuring many of these channels. Organic will make sense for virtually all businesses. Organic search accounts for at least 50% of all web traffic. Well it should anyway. For some new dealership points, it may take some time to get it to this point. But that's what you should strive to hit. Unlike other channels, SEO has the potential to attract customers at every stage of the funnel. This could include top funnel conversions like email capture or lead capture, or bottom funnel like demo requests or purchases. You might have been able to get away with having search lower on your list even ten years ago, but today that’s not the case. With such great potential and reach, every business should be adopting an SEO strategy.

Be sure to check out our Email Marketing Guide (add link once it's published) where we go into much more detail, but some high line metrics to think about from a foundational perspective are:

Email Subscriber List
Subscribers are the most top funnel contacts. They are the ones who know about your business and have opted in to hear more from you. Often this looks like signing up to be notified of new blog posts or receive a newsletter.These contacts may or may not move farther down the funnel. But that’s okay — growing your subscribers means growing your audience which allows you to amplify your content and reach even more new contacts. Remember the saying, “everyone wants to buy, but no one wants to be sold.” These are your subscribers. Take time to create a content and nurture structure that allows subscribers to become leads at the right time.

Email open rate
Email has one of the most positive ROIs of any channel. It’s believed to be as high as $42 for every $1 spent. It’s also one of the most used channels today. There are quite a few email marketing metrics, but the most fundamental one is open rate.

Email click through rate
Email click through rates measure the effectiveness of the content inside of your email. Having a contact open and read your email is great, but having them follow through on what you asked them to do is even more important. Emails lose much of their usefulness unless contacts take action, so measuring click through rate is worthwhile.

We go into much more detail in our Social Guide so be sure to check that out but it’s important to think about social metrics from a foundational level.

Social Metrics
Social is actually a set of micro metrics (likes, shares, comments, social traffic, impressions, etc.) from which you can choose what makes sense to track for your company.Some businesses will choose not to intentionally track any of these metrics and put social media on the back burner. For some, social metrics will be a large part of their overall marketing strategy. Which social channels businesses focus on will also largely depend on the company. A highly visual brand may be more concerned with Instagram engagements, while an enterprise consultancy might want to look more into LinkedIn engagements.

Summary

We hope that you found the Automotive Digital Marketing Foundations Guide to be helpful.

Advertising is likely one of your biggest expenses at the dealership level and you have to figure out how best to allocate your monthly spend so that you can hit your advertising cost per vehicle. There’s an infinite number of choices out there and it’s your job to best allocate that advertising spend. Here are a few tactics or techniques that you can use.

Here’s a list of digital marketing tactics (or techniques) that is by no means exhaustive. Seems like there are new tactics entering the marketplace every day. But these are the individual tactics that should support your overall marketing strategy. If the tactic is linked then it will send you to our Guide for that linked tactic. Let us know if you would like to see a Guide written for one of the tactics that isn't linked. We'd be happy to write one for you.

Foundations
Search

Social