What Should you Budget for a Digital Marketing Spend?

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4 min read

Every dealership in 2019 is participating in digital advertising to some extent. Factories mandate programs, agencies offer all kinds of digital programs and packages, and vendors are always pitching you the next big thing to sell more cars. Digital Advertising is taken as a given at this point, but not all advertising plans are created equally. Have you ever stopped to think about what a good digital advertising plan looks like? In this blog we’ll examine the characteristics of a good advertising plan, how to budget for that, and the impact on the big picture of your advertising efforts.

Clear and Attainable Goals

I know you want to know all about cost, but this is the absolute first step to the formulation of any advertising plan, and a step that can be easily overlooked. With each advertising investment you should have a clear and attainable goal defined and frame your approach with that goal in mind.

Now you might be thinking “Of course we have a goal, to sell more cars!” While that is a good overall goal for a dealership, advertising goals should be much more granular, or you risk having a broad, unfocused campaign. Unfocused campaigns aren’t the most efficient use of dollars and that’s the last thing you want to do.  

 You can start narrowing this goal down by asking yourself some questions. Who do I want to sell more cars to? Where do I want to sell more cars? Which cars do I want to sell more of? How many more cars can I sell? Who is currently taking the sales that I want? Once you have the answers to those questions, you’re ready to make a clear and attainable goal for your campaign to be drive by.

Accurately Targeted

Now that you’ve established your goals, it’s time to decide how to target your ads. Digital Advertising can reach the right people at the right time like never before. A properly targeted campaign will have excellent engagement and put your ad right in front of the people who matter on a consistent basis. To arrive at this targeting, consult with your agency about your market area, the people you’re trying to reach, and when you’re trying to reach them. At Digital to Dealer Direct, we look at overall sales by zip code both within the PMA and outside the PMA. We look at who’s currently taking sales from you, and who you’re currently taking sales from. Our team also dives in to the marketing in general to see what cars are selling best in your area. This helps us define very clear targets with our dealerships. Develop an initial targeting strategy, monitor campaigns for success relevant to your goal and adjust as needed along the way.

Fund your Goals

Here’s the big question – What Should you Budget for Digital Marketing Spends? If you wanted to win the Indy 500, you wouldn’t pull up to the starting line in a 4-cylinder subcompact. Under funding is one of the biggest reasons for campaign failure. It is extremely important to fund your efforts adequately to achieve your goals. Every market is different, every dealers’ goals are different, and every dealers’ budget needs are going to be different. According to Google, 95% of vehicle buyers use digital as a source of information for purchasing. That’s a big audience, and you need to capture it.

The best way to determine the budget needed is to develop a trusting relationship with a transparent automotive marketing agency partner when strategizing your campaigns. A good agency will be open and honest about budget requirements, and back their recommendations up with data and market research. If sticker shock is a factor, it might be time to re-evaluate your campaign goals and narrow the scope of the campaign or see if you can achieve your goals with another partner at a more budget friendly price point. Going the route of cutting proposed budgets and expecting the same results is a recipe for disappointment.

The market has some bench marks you can consider before you get started. According to an article from Automotive News, in the past five years, digital advertising spend has grown from 25 to 53%. This number is expected to grow to 60% in the next two years. If you use this industry average as a guideline, you can determine a rough estimate of what you should spend. If your total marketing budget is $25,000 per month, allocating between $13,000 and $15,000 per month would be average.

Diversity is Key

The best advertising campaigns come from all sides and dominate the space. While it may be tempting to put most of your budget behind campaigns driving the most direct conversions, a diversified campaign incorporating a wide array of mediums will be much more effective for your long term goals.

Someone who was searching for a vehicle you offer may have seen your display ad triggered by a keyword search, then heard your radio ad, which prompted them to search you on Google, click your CPC ad and convert on your website. While the conversion is directly attributed to the Google CPC advertisement, there were multiple touches along the way that helped drive that conversion.

Ideally, the mediums involved in an advertising campaign should feed each other and boost the results across mediums. It’s a team effort to get customers through the door, and if your campaigns aren’t diversified it’s like playing shorthanded. To learn more about how to build a more cohesive digital and traditional advertising plan, download our guide on Bridging the Gap Between Traditional and Digital Advertising.

Digital Advertising has come over the automotive industry like a whirlwind, and it can feel like you’re being pulled in a million directions at once. If you keep these steps in mind when formulating your campaigns, you’ll find that it’s much less stressful to manage them. Your expectations and goals will be clear, your campaigns will be competitive and well rounded, and you’ll know if you’re hitting your goals or not in clear and distinct terms.

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