What Percentage of your Ad Budget is Targeting Actual Shoppers?

This is not a trick question, but the answer to the question is not what you think. In fact, your answer will likely be way off!

Challenge: Dealers are unknowingly spending tens of thousands of dollars a month advertising to people who are not shopping and won’t be for a long time.? Before you reject this claim, let me put this challenge statement into context.

Context: A General Manager may ask their agency to help them move inventory, especially new models which are aging on the lot. The agency tells the dealer that they will use different digital advertising strategies (audiences) to generate more leads and showroom traffic.

Strategies: The agency will likely include ad strategies which leverage third-party audiences from Google, Meta, Amazon, or other list brokers. These ad platforms claim to build audiences of “in-market” shoppers which can be deployed to supplement advertising campaigns which use a list of zip codes or geo-locations for targeting.? Agencies may also leverage retargeting audiences, which could include consumers who visited the dealer’s website in the last 60 days.

Outcome: A month goes by, and the additional marketing spend has not accelerated vehicle sales.? The dealer and agency are frustrated, but the same strategies are deployed the next month. ?Maybe some funds are shifted to different platforms, but the audience strategies stay the same.

Does this sound familiar?

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We have to ask a different question.

No one had the foresight (or data) to ask these audience brokers a different question. How many people in your list are actually shopping (i.e. right now) for a vehicle? Without the ability to answer this question, dealers will spend $5,000 - $30,000 a month on “spray and pray “ marketing to generate leads for vehicles on their lot.

What would a dealer’s sales results look like if they decided to allocate a higher percentage of their budget to target currently in-market shoppers?

With growing inventories, rising interest rates, and falling consumer demand, dealers may want to carefully look at what percentage of their advertising dollars are spent marketing to people that are shopping right now. Building and maintaining brand awareness has its place in a dealer’s marketing strategy, but for most dealers, that place may need to be right sized.

Dealers we spoke with think that 70+% of their digital advertising budget is being directed to actual shoppers.

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Getting to the Truth

At Client Command, we wanted to know what percentage of the people targeted with a typical dealer’s ad budget were really shopping for a car. To determine that, we compared the most common marketing audiences used by dealers against the Active Shopper Network?.

We took standard audiences from numerous well-known vendors and simply asked the question, what percentage of these people are shopping right now? The results are eye-popping. In-market audiences are so full of look-alike consumers, that only 20.5% of the audiences are shopping for a car.

Across the industry these audiences are used to power social, mail, email, and display campaigns. That sounds terrible, but if demographics or credit scores are used for targeting, the numbers are much worse with only 1.2-1.9% of those audiences shopping for a car right now.

On the opposite end of the spectrum, 3rd?party sites are great for getting in front of people that are currently shopping with shoppers accounting for over 80% of those audiences. The downside is, third parties place a dealer next to their competition which creates brand dilution and commoditization.

Dealers may feel that they are caught in the trap of having to choose between wasting 80% of their budget on people that aren’t shopping or diluting their brand and settling for the lower gross margins which come with advertising on 3rd?party sites. ?That is a false choice.

Any marketing vendor willing to work in an open ecosystem can use an Active Shopper Network? audience.

If any dealers or agencies are curious to know what percentage of their current advertising budget is focused on people who are actually shopping for a car, come see us at NADA! We will be happy to do a free analysis of your current ad budget. Any interested parties who are not going to NADA, can set a time with us to conduct the analysis over a Zoom call.?

In 2024, dealers who know how to target Active Shoppers? will win. Client Command’s Active Shoppers? combine the focus of 3rd party site consumers with the ability to control your brand and message. They will reduce marketing waste and provide a scalable strategy to sell the hardest-to-move vehicles on your lot. They also provide flexibility to your marketing team/agency. Once a dealer knows who an Active Shopper? is, they can deploy our audiences on any media platform.

So, decide how you want to spend your money. Target audiences of Active Shoppers?, or continue to use audiences which only include 3-6% in-market shoppers. In that context, the choice is clear. Now you know why your marketing has not been as effective as promised.

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* Using the Active Shopper Network? Client Command? completed a study across numerous customers and vendors comparing common marketing audiences with consumers that are actually shopping.

**Source: 3rd party published data for % of site visitors that are actually shopping ranges from 80-83%

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