The True Cost of Marketing

Where did NADA get the figure of $611 per vehicle sold for marketing costs? I have had dealers tell me recently that because they have cut back on advertising expenses, that they now have a $280 per vehicle cost. Well, yes and no. If you spend $45,000 per month on advertising and sell 160 new and used cars in a month you can say that your cost per vehicle is $281.25, but let’s be serious.

Over the past 15 years I have asked the question to dealers; “If you stopped all advertising for the next 6 months, what percentage of current sales volume would you have average over that period?” The answer is almost always 60% of what I do now. The dealer still has his sign, his location, his reputation and the advertising that the OEM does. So this is a realistic number.

Ok, so in reality, you are spending $45,000 to sell 40% of your vehicles. 40% of 160 = 64. $45,000 divided by 64 = 703.12 per vehicle. This is the number you should be looking at for advertising costs per car, not $281.25.

So, what do you do about it? Only use the most accountable, reportable, budgetable and predictable advertising methods. From a direct marketing standpoint, you should look over ‘services’ on this site and contact me for further discussion


About dealerite/in association with AP Level 4

National affiliations of professionals who are engaged in changing the culture of the automobile retail business. Associated with AP Level 4 and Edifice Group. These companies are bringing sustainable marketing which has proven quantifiable improvements in a dealer's market share performance
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