Insights: Dealer advertising during COVID-19
During the early stages of the Coronavirus crisis, many businesses were rendered powerless and left floundering as customer numbers dwindled and revenue dried up. At the time, it was difficult to predict what the future would hold, and as the public was told to stay home, and restaurants and retailers were shut down, many businesses were left questioning what the right tactics would be to get them through the uncertain time.
The automotive industry was no different. During March and April, many of our dealer clients chose to tighten their budgets and cut their advertising spends in an attempt to reduce as much cost as possible. The view was that with people isolated in their homes and fearful of contracting COVID-19, no one would be looking to purchase a vehicle, and so they saw little point in advertising.
Although a seemingly logical strategy at the time, hindsight has proven that many of the dealerships who made this call, ended up being outperformed by competitors who bucked the trend by continuing to advertise as normal.
The aim of automotive digital advertising is to drive prospective customers to your website and encourage engagement with your dealership that results in a sale. The insights we have gained following the peak of the Coronavirus uncertainty have found that car dealers who continued to invest in digital campaigns during March and April achieved, on average, 43 percent more website traffic than those who stopped advertising. This shows that, despite social distancing and isolation, people were still looking at purchasing a vehicle.
We also discovered through our call tracking system that around 40 percent of all phone calls coming into dealerships during this time were to confirm that the showroom and service department were open. Dealers who did not run advertising promoting the fact that they were conducting business as usual saw a 60-70 percent drop in sales, however those who continued their advertising only suffered a 30-40 percent reduction.
These optimistic dealers also benefitted from their decision from a budget point of view, paying a lower cost-per-click on the search and social platforms due to the reduced competition for space. Advertising charges on Google dropped by 70 percent and Facebook by 50 percent, meaning that dealers who did continue to advertise, were able to do so at a much lower fee.
Sale events proved to be game changers during the level 3 restrictions. Our findings show that dealers who ran promotions such as “Stimulus Sales” in April sold approximately the same number of cars as they would in a normal month, demonstrating that, despite the crisis, customers were still keen to take advantage of a good deal.
As part of our analysis, we also looked at three of our of Melbourne-based dealer clients, each of which was averaging 10-15 new vehicle sales per week at the beginning of the pandemic. When these dealerships increased their advertising and promoted that they were open for business, their weekly new car sales figures increased by 160 percent. By comparison, two of their competitors who did not advertise during this period, continued to record weekly sales figures of 12 and 14 vehicles respectively, which was a reduction on their pre-COVID sales of approximately 70 percent.
As we continually hear, it is still early days as far as the Coronavirus is concerned, and there is an ongoing threat of potential outbreaks resulting in restrictions being tightened again. Even if we continue on the current, positive trajectory, the automotive market as we knew it, is going to take some time to recover.
What we have learned however, from the last several months is that for dealerships, “always-on” digital advertising that continually adapts its messaging dependent on the offer or what their customers want to know, can play a massive role in hitting those sales and service targets. Regardless of whether it’s during an economic downturn, or just following a month of significant sales activity (e.g. end of financial year), investing in ongoing advertising is key to running a successful dealership.
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