Minimize Marketing Waste and Boost Profit

Understanding and identifying areas of inefficiency within your marketing strategies can unlock potential savings and significantly improve your return on investment (ROI).

Key takeaways from this article include:

• The importance of precision targeting and VIN-level analytics in minimizing marketing waste.
• The role of real-time data and detailed metrics in driving strategic marketing decisions.
• Tips that can result in faster sales and higher profit margins.
• Armed with insights and examples, you'll be well-equipped to streamline your marketing efforts for better performance and sustainability.

Understanding Marketing Waste

Marketing waste becomes particularly pronounced when digital strategies fail to allocate resources efficiently across inventory. This issue is often the result of an over-reliance on algorithmic approaches that might favor a narrow set of options—like a few specific cars—thus neglecting a broader and potentially more strategic exposure of inventory. The kicker, it’s often the few vehicles in inventory that would be popular organically that consume a large portion of your digital marketing budget leading to significant financial drain and missed opportunities. This can mean the difference between a thriving inventory with high turnover and one that stagnates with overlooked potential resulting in aged units with deep unnecessary discounts.

Key components of marketing waste include:

• Uneven inventory exposure: An algorithm-driven approach that repeatedly highlights the same inventory items, ignoring those that need visibility the most.
• Substituting discounts for exposure: Deeply or repetitively discounting aging inventory as a strategy to increase exposure.
• Lack of targeted advertising: Directing a majority of paid traffic to general pages, like search results pages (SRPs) or home pages, rather than to specific vehicle detail pages (VDPs), resulting in low engagement and zero viewed VDPs.

By pinpointing where resources are misallocated, marketing budgets can be realigned towards more efficient and productive marketing efforts that ensure a balanced exposure across all inventory.

Uncovering Marketing Waste

Increasing Inventory Exposure

One notable example involves a dealer that uncovered during their free custom marketing analysis that a majority of the paid traffic was allocated to the same handful of cars in the inventory and that two specialty vehicles were drawing most of the paid traffic on every campaign. Reallocating some of the marketing budget to VIN-optimized campaigns resulted in a 23% increase in VDP traffic and a 43% improvement in the efficiency of marketing spend in just 60 days.

Reducing Discounts

Analysis of a dealer group showed a number of used vehicles lingering in inventory over 100 days with reductions ranging from $700 to a staggering $10,000. Of those aging units, many were popular vehicles, recent model years, with very few VDP views. This lack of visibility was costing the dealer group an average of $3,380 per vehicle, demonstrating that discounts alone don’t translate to higher visibility.

Leveraging Data-Driven Targeting

A third example features a dealer that discovered that 73% of their paid campaign marketing traffic landed on an SRP and never looked at a VDP. Of the $42,000 invested in this one campaign, $11,200 of it was unnecessary and inefficient spend. Overall, this dealer discovered that 59% of their monthly budget was marketing waste.

These examples underscore a crucial lesson: by identifying and addressing areas of marketing waste, businesses can significantly enhance the efficiency and effectiveness of their marketing efforts. Whether through smarter inventory exposure, optimized traffic allocation, or data-driven targeting, the path to reduced marketing waste is clear and attainable.

Strategies to Minimize Marketing Waste

• Harness VIN-Level Insights: Leverage analytics and reporting at the individual vehicle identification number (VIN) to evaluate targeting and the performance of your marketing efforts.
• Optimize Budget Allocation: Reallocate marketing budget from ineffective campaigns to those that demonstrate high performance and increased exposure, ensuring an optimal use of marketing dollars.
• Empower with Real-Time Analytics: Move beyond vendor-provided reports to a deeper understanding of your marketing effectiveness, including spend per VDP, unnecessary spend, and VDP engagement.
• ROI and Cost Per VIN Calculation: Measure marketing spend per vehicle and calculate ROI for each campaign and vendor. This clarity helps in steering strategic decisions towards reducing unnecessary markdowns and maximizing profitability.

By integrating these strategies dealerships can navigate away from the pitfalls of marketing waste towards a more efficient, profitable future. This transition not only reduces costs but also enhances the overall marketing strategy, driving sales with precision and intelligence.

Conclusion

As you consider the future of your dealership's marketing efforts, remember that the shift towards data-driven, targeted strategies is not just a trend but a fundamental change in how automotive sales are achieved. If you're ready to focus on VIN-level analytics, real-time data, and strategic ad campaign optimization but are unsure where to start, begin with your free custom marketing performance analysis.