Should Car Dealers Dump Co-Op?

Brand identification with cars is at an all-time low.  You just don’t hear “He’s a Cadillac man” anymore, or “my father was a Chevrolet guy,” or even "Mustang Sally."  Buyers rush toward the cheapest pricetag, to the detriment of car dealerships who are being turned into pick-up lots. We even have car vending machines now. So it would seem that brand advertising would be vital to dealers.

Why, then, did brand-loving Ford Motor Co. axe two powerful types of branding media from its co-op program? Outdoor is out. So are local magazines. They've joined the list of 14 other types of exiled marketing (see list atop this column).  

Co-op often accounts for about 50% of a dealer's budget. That means few dealers will want to suffer a 50% cut to their ad budget and thus follow the plan. The overbearing focus by Ford and other OEMs on digital media is putting dealers in a headlock.

It left me wondering why dealers aren’t revolting. And that led me to a guy named John Fitzpatrick.

Dealers are beginning to revolt, John told me. And he thinks local agencies and media companies should join the fight. Then he told me this: “We have case studies that show, across the board, those who op out of co-op programs are getting better ROI.”

John co-founded Force Marketing a dozen years ago. It's a tech-focused marketing company that works with more than 1,200 dealerships across the country. His understanding of tech-driven marketing makes his view on traditional media even more interesting. I was so impressed with his thoughts and energy on this important issue that I opened up a pre-conference slot on the #LOAC2019 agenda on March 12 so he can tell us more.

“We live in a multichannel world from a consumer standpoint,” John told me.  “Google will even tell you that. Yet the mindset of the OEMs is that it’s all digital.”

Linear media such as outdoor, print, TV, and radio, hold great value to automotive marketing. But at the rate it’s going, they may eventually be scissored from automotive budgets entirely. 

“Dealers are being convinced that traditional media, which has been a great brand-awareness driver, is no longer an effective media,” John said, “when we all know that traditional media is a fantastic brand driver.”

What can be done? 

“I think (media and agencies) have to come to the table with the story to say, ‘let’s marry those co-op plans with a multichannel experience',” he said. I agree. There's much to be lost here on both sides. It makes perfect sense to see buyers and sellers band together at the local level.

We'll explore that during John's #LOAC2019 session March 12 in New York. I’m eager to hear what he's got to say, and how other agency and media executives in attendance react. There's a star-studded list of attendees, so it should be a lively session. If you haven’t already registered, you can do so here.