The Power of VIN-level Marketing Over Traditional Discounting Strategies

Discounting vehicle inventory has become a routine yet frustrating chore, with successive price reductions often failing to yield the expected uptick in interest. This leaves dealerships in a perpetual cycle of diminishing returns, particularly for new cars that continue to consume resources while sitting on the lot. For used cars, the endgame might involve wholesaling at minimal profits.

So the question arises: could investing in targeted, VIN-level paid campaigns be a more effective strategy from the start?

This article explores key strategies that can transform how dealerships approach discounting versus marketing:

• Comparing the costs of discounting vehicles with targeted marketing campaigns.
• Addressing the challenges posed by traditional paid campaigns that fail to adequately showcase much of the inventory.
• Demonstrating how VIN-level targeted campaigns can significantly enhance exposure and budget efficiency.

By shifting focus from discounts to VIN-level marketing strategies, dealerships can enhance vehicle visibility and sales, ultimately increasing profitability and reducing vehicle discounts.

Comparing the Costs: Discounting vs Targeted Marketing Campaigns

For many dealerships, the default reaction to slow-moving inventory is to introduce price reductions. These discounts, although aimed at quickening sales, often fail to produce the desired effect and can significantly erode profit margins. According to VIN IQ’s recent assessment of 2024 Q1 performance metrics, the average amount discounted per vehicle was $1,542, with no guarantee of a sale. The discounts, combined with marketing expenses and flooring costs, are a financial burden that compounds overtime as the vehicles remain unsold.

In contrast, targeted marketing campaigns, especially those focused at the VIN level, present a different financial scenario. Based on VIN IQ’s analysis of 2024 Q1 metrics, the cost of a paid campaign averaged $80 per sold unit. This comparison highlights the significant difference in return on investment between targeted marketing campaigns and initiating vehicle discounts.

The precision of VIN-level targeting allows dealerships to focus their advertising dollars on the inventory most in need of exposure. This method not only increases the likelihood of sales but also ensures that marketing budgets are used efficiently.

By reallocating funds from broad discounts to more precise marketing efforts, dealerships can achieve better sales results while maintaining healthier profit margins. This shift from a discount-driven strategy to a focus on targeted exposure alleviates the financial strain of carrying slow-moving inventory and enhances the dealership’s overall market presence.

Addressing the Challenges of Traditional Paid Campaigns

Traditional paid advertising campaigns, particularly those driven by algorithm-based marketing platforms are designed to maximize revenue by optimizing for clicks. The algorithmic approach primarily aims to enhance general metrics such as traffic and engagement, frequently overlooking the vehicles that need exposure in favor of the top vehicles that would be popular even without paid campaigns.

To counter this inefficiency, dealerships are moving towards VIN-level targeted marketing campaigns. By leveraging detailed data analytics, these campaigns prioritize advertising the vehicles that require more exposure, thereby ensuring that marketing efforts are more evenly distributed across all inventory. This method improves the visibility of underexposed vehicles and helps utilize the advertising budget more effectively. By focusing on the needs of the inventory rather than just driving general traffic, dealerships can enhance the overall effectiveness and efficiency of their marketing efforts.

Demonstrating the Effectiveness of VIN-level Targeted Campaigns

VIN-level targeted marketing represents a strategic shift in how dealerships approach advertising. Instead of casting a wide net with generalized campaigns, these targeted campaigns focus precisely on the vehicles that need more attention. This approach not only ensures that all parts of the inventory receive adequate exposure but also maximizes the efficiency of each dollar spent on the campaign.

Direct Benefits of VIN-level Targeting:

• Increased Exposure for Low-Visibility Vehicles: By prioritizing vehicles that have not been getting enough attention, VIN-level campaigns help to balance the exposure across the dealership’s inventory. This targeted approach ensures that even the least popular vehicles are seen by potential buyers, which is essential for moving stagnant inventory.
• Faster Inventory Turn: VIN-level advertising ensures that marketing is funnelled toward the vehicles that need exposure. This leads to a faster turnover of inventory, reducing holding costs and improving cash flow.
• Cost Efficiency: By reducing waste in paid campaign spend, VIN-level targeted campaigns allow for a more judicious use of the marketing budget. Dealerships can avoid overspending on broad campaigns and yield more inventory exposure with the same or less marketing budget.

Strategic Shift: Embracing VIN-level Marketing

The benefits of VIN-level paid campaigns reveal a compelling alternative to traditional discounting strategies. By focusing on precise, data-driven marketing, dealerships can enhance their marketing efficacy and financial outcomes. Focusing on VIN-level strategies enables a smarter allocation of marketing resources, ensuring that each campaign dollar works harder to promote the vehicles that need it the most.

Implementing this approach can lead to transformative results, from achieving better visibility for overlooked inventory to faster sales cycles. As the automotive market continues to evolve, embracing innovative strategies like VIN-level paid campaigns will be crucial for dealerships aiming to stay ahead in a competitive landscape.