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Automobile Dealerships and the Digital Display

Digital signage performs more efficiently than a “shotgun” advertising approach.

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Every business has a particular affinity to a preferred form of advertising. For the automobile retail industry, it’s always been newspapers. In every U.S. city, a significant bulk of the daily papers contains car advertisements, but this trend is definitely changing.
Historically, the traditional automobile retailer, compared to other place-based, retail-type outlets, has relied on newspapers. The most recent data from the National Auto Dealers Assn. (NADA) reveals that the average dealership pays $360,225 per year for all advertising. Dealers who sell more than 750 cars per year average a whopping $749,788 per year, or $1,000 per car.
The most revealing data is represented in a NADA chart (see www.nada.com) that compares total advertising expenditures for the years 1995 to 2005. The chart shows the auto industry continues to spend most of its ad budget with the newspaper industry, but that the total amount has dropped from 53.9% over the last 10 years to 33% today. An even earlier NADA chart, dated 1991 and posted in 2001, discloses that automobile dealerships then spent 58.1% of their ad monies for newspaper advertising. These figures validate what I’ve heard on the street – the average auto dealer’s love affair with the newspaper is ending.
 

New and inventive ways
Retail industries, such as automotive, are scrambling for new and inventive ways to sell their products. The NADA chart says Internet companies now receive close to 10% of the auto dealer’s 2005 advertising dollars. In 2004, the Internet didn’t qualify as a NADA advertising category. At this time, NADA doesn’t list large-format, electronic-display category. But I wouldn’t be surprised to see it on future charts.
Most local car dealerships have the essential infrastructure for successful digital-display advertising. Car stores invariably locate on high-traffic thoroughfares that pass through commercial districts. Often, they’re at a busy intersection with a traffic light and excellent street-front visibility. Together, these factors generate prolonged exposure times for passing motorists, all who could be viewing – via electronic digital signage – product advertisements.
Each automobile dealership is actually a group of business entities, all centered on automobiles. In addition to the new-car and used-car sales centers, dealerships have service, finance and credit centers, plus a parts departments and body shop; all contribute to the store’s bottom line.
As an advertising medium, digital signage uniquely offers an advantage to each entity. A dealership can present various messages to its passing audience and provide a window to its entire enterprise.
Consider this: The people passing in front of a dealership are already using the product! They represent those most likely to become customers.
Historically, people buy their cars, like most purchases, within their home-market area. Broad-market media, such as newspaper, radio and television, send ad messages across a large, geographic area. Therefore, many advertising dollars are spent to reach distant audiences. However, buyers rarely travel 30 miles to visit a particular brand’s dealership when one sits within a few minutes from home.
The average dealership spends $118,874.24 per year, or approximately $10,000 per month, on newspaper advertising. Larger dealerships may spend an average $20,619 per month. It could, and probably should, be argued that many of those dollars would be better spent on place-based marquee advertising with EDS technology.
You can make the same assumption with radio and television. In 2005, the larger dealers spent an average of $11,492 per month on radio ads and another $14,067 on television. That means that the average big-market dealer spent – for newspaper, radio and television – an average of $46,000 per month on “shotgun” media. Conceivably, most of the messages reached an audience outside of the dealership’s primary market area.
Wow, what an opportunity for the digital-display salesperson.

Never-ending stream
Digital signage is intrusive in a very positive way. It draws a person’s attention and provides an audience with an entertaining diversion. Consider the impact to an automobile dealership that’s equipped with a well-placed, digital display that cycles a never-ending stream of ad messages to an audience waiting for a traffic-light changes.
In the past, the greater advertising community sneered at low-resolution digital-signage technology. Large-lamp signs spelled out short, word messages of limited impact. Today, a high-resolution, full-color display competes with other visual media.
Advertising agencies already focus on the burgeoning digital media typified by the instore networks and the digital-billboard industry. Technology is no longer an obstacle. The ad agencies are onboard and anxious to create content for the new media.
As with off-premise digital displays, a car dealership can create customized messages for specific times of the day. Morning drive-time messages could highlight a service special such as, “Leave your car here. We’ll drive you to work.” That ad might be followed with a visual of a sparkling new car with the words, “10 in stock, starting from $399/month.” Evening drive time might feature an ad that reads, “Grab the family and come on back – open till 10 with free hotdogs for the kids.”
As with all media, the creative message is the key. The programmable sign is a blank palette on which any message of any theme, length or content can be painted. It is a powerful, impossible-to-ignore, medium that specifically focuses on the very audience that is most likely to become customers.

My greatest success
In my 28 years of EDS sign sales, my greatest successes have come from automobile dealerships. Each store is a highly competitive selling machine, constantly in search of a better edge over its competition. The dealers themselves are driven entrepreneurs who thrive on creative marketing ideas. In my experience, they’re tough-minded salespeople who love other good salespeople. They want to hear your sales presentation, and they want to be sold. But, most of all, they want a deal.
Always leave room for negotiation. If you don’t lower your price from your initial proposal, you’ll never sell to a car dealer. When presenting to a automobile dealer, always measure the value of the medium, not the cost of the sign. Ad budgets are measured in monthly allotments. Therefore, it’s easier to compare a monthly lease figure than a total purchase price. For example, a $200,000 sign can be leased, typically, for 60 months for approximately $4,100 per month to a dealer with good credit at his business bank. In some markets, that payment equates to the approximate cost of one Sunday full-page ad in the local newspaper.
After wetting his whistle with an illustration of a proposed screen, tell him he can advertise all month, on that sign, for approximately the same cost as a single page in one Sunday newspaper. This means something to a car dealer. If, however, you answer the price question with $200,000, you’ve just jarred him with a large number.
Find the major automobile dealerships in your market area with good visibility from a highly traveled thoroughfare. Call your state Dept. of Transportation to learn the most recent traffic count for the location. Multiply that number by 1.35 (the average number of people per car) and then walk into the dealership and ask for the main man.
In my experience, you may well get to see him. If he’s unavailable, ask to set an appointment. If that fails, ask for an opportunity to leave him some information. Then, go back to your office and write him a short personal note about the power of advertising to the people stopped in the traffic that accumulates in front of his dealership. Tell him he can advertise all month for less than he pays for one newspaper display ad. Believe me, you’ll likely get an audience.
If your company has the resources, package a monthly programming contract with a maintenance contract and the lease figure. Give him a monthly number that’s within his budget. With some resourcefulness, you can create a powerful medium for your customer and a wonderful revenue stream for your business.
Good selling!

(This Moving Message column appeared originally in the September 2006 issue, page. 50, of Signs of the Times.)

 

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