Online advertising and direct response advertising is expensive. Or is it?
This is what some dealers believe when they hear things like Google Pay Per Click (PPC) ads cost $8 dollars per click in certain markets. But this is failing to look at the entire picture.
Dealers are used to hearing things like, “We run 10,000 commercials and you pay $3,000.” Then they compare that to cost per click. When you run a television or radio ad, some type of mass marketing or mass advertising usually associated with branding, or even if you have an ad put up on a network which could be run by a company that does television and mass advertising, they refer to impressions –not clicks. There’s a BIG, BIG difference!
As an example, one of our clients was paying $5 a click. That may sound expensive, but if we are looking at impressions and comparing apples to apples, we might only pay a tenth of a penny for an impression.
So what do you pay for one impression on the television screen? The truth is, if compare apples to apples and you were to say, “Okay, we’re getting thousands of commercials on television for this price, why would I pay $8 per click?” You have to understand that commercials you run on television may not be seen by many. People have DVRs now, so there is a percentage who can’t possibly see your ad. There are people who change the channel when a commercial comes then after two minutes go back to that channel to avoid commercials. With a DVR they skip through commercials altogether and are not paying attention.
As you probably know, when the family is all sitting in the room and watching television together, everybody is quiet during the show. But when a commercial comes on, everybody starts talking. They talk about their day or finish the conversation they were having before the show came on.
So, you have to compare apples to apples. Now, if you only paid for every individual who watched the commercial and paid attention to it, well, that dollar amount would be much, much higher, more comparable, and will probably be a lot more than a per click charge.
In addition, when talk about a per click or per visitor charge, you only pay for the visitor. You could compare that to a newspaper ad. Let’s say the newspaper had a new system where they are able to tell whenever someone turned to the page that your ad was on and saw it. They were interested so much that they got out their scissors and cut out your ad and put it in their pocket to look at it later. That could be compared to a click when they see an ad on a website.
So if you write ads that target your ideal customer, hopefully you only get people to click on your ad who are interested on what you have. These are highly, highly targeted customers.
For example: You are a Ford dealer and targeting anyone and everyone who is looking for a new vehicle. Your prospective customer goes to Google and type in “new car dealership” in their area. They find your ad and click on it. You may end up paying $5 or $6 or $10 per click. Although you fit within that grouping of new cars, they may not be specifically looking for a Ford. They may have typed in ‘new car dealership, thinking, “Yeah, what do I really want?” They may later decide, “Well, I think I want a Dodge or Chevy.” So you were not targeting your ideal customers.
That’s not to say it won’t pay for itself. You want to start with a small target and expand outward to maximize your advertising dollar, not the other way around. If someone goes to Google and types in “Ford dealer” and you’re a Ford dealer, that’s much better targeting. And that person is worth a lot more money to you than someone who just typed in “car dealer.”
As another example, a narrowed down targeting can be and should be used or at least started with Buy-Here Pay-Here car dealerships. They should not focus on anyone and everyone who goes to Google and types in “car dealer” because that person could be looking for a new car dealership. Even if someone types in “used car dealer,” Buy-Here Pay-Here fits that group, however, people who type in “used car dealer” may be people who have a 600, 700 or 750 credit score. They just don’t want a new car; but there’s no way they’re going to a Buy-Here Pay-Here dealership and pay higher interest rates or pay more for a vehicle than what Kelley Blue book says. So you are wasting money on clicks for people who have no intention of ever buying from you.
This goes back to people tracking the entire picture. If you get lots and lots of clicks on your ad, you can say, “Oh, my ad’s great, it’s working.” But if you are not getting a lot of applications and you don’t have a lot of sales, we have to look at the whole picture to determine if it’s really working, and if it’s too expensive or if it’s perfect. Sometimes you may determine that it is inexpensive based on the amount of sales you get.
So it really goes back to tracking to really determine if your PPC is too expensive or within budget.
And by the way, if you track your advertising and targeting properly, you may not even have a budget. You may obliterate the budget because if you have a marketing machine that you put $1 into and you get $1.20 back, how many dollars do you put in the machine? You just keep taking the $1.20 of that and putting it back and keep putting it through until you no longer get the return, or the return has gone to a point where you don’t want to go any lower. When the market is saturated, you can get to that point.
But if you use tracking and target ideal customers, a dealer’s budget may be maximized by using the marketing machine.