Every dealer scrutinizes their marketing budget, questioning if the investment is either too lavish or insufficient.
No enterprise thrives or expands absent marketing. A certain level of expenditure is imperative. Neglecting it means relying on returning clients, referrals, or the chance passerby.
Yet, a lack of strategy and control could lead dealerships to squander their earnings on ineffective advertising.
The goal is to invest wisely, opting for channels that align with growth objectives.
Starting point? Establish a benchmark.
Exploring the average marketing expenditure within automotive dealerships unveils intriguing insights.
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**Automotive Industry Marketing Expenditure**
Marketing budgets vary by sector. For perspective, American giants like Coca-Cola allocate 10% of their revenue to marketing, reaching $4 billion in 2023, while Procter & Gamble dedicates over $4 billion annually to market household names such as Tide, Crest, and Downy.
In contrast, Ford Motor Company’s marketing spend was $1.4 billion in 2022, a reduction from $2.68 billion in 2015, with GM allocating $3.25 billion the same year.
Zooming in, a Statista survey revealed the average automotive dealer’s marketing budget exceeded $500,000 in 2022. However, this figure, influenced by the budgets of large and small dealers alike, should be interpreted cautiously.
Critical to note is digital marketing’s dominance in dealership advertising, commanding tenfold the expenditure of other advertising forms, according to Statista. In 2022, over 5% of the U.S.’s digital ad revenue originated from the automotive sector, marking a 135% increase from the previous year, with car dealerships dedicating 65% of their total marketing budget to digital avenues.
So, how should dealers allocate their budgets for optimum returns?
**Recommended Budgeting Guidelines**
AutoSweet suggests budgeting metrics that vary by dealership size and other factors, such as:
– Inventory volume – More inventory necessitates a larger budget.
– Local competition – High competition may require increased spending.
– Market trends – Selling products popular in your area can influence budget allocations.
Aiming for a marketing cost of $250 per unit sold, dealers selling 50 vehicles monthly should budget around $12,500 for marketing, a figure that aligns with AutoSweet’s conservative benchmark below industry standards.
By assigning 65% of the total marketing budget to digital (mirroring Statista’s findings), dealers can estimate their overall budget effectively.
**Franchise Dealerships – Suggested Monthly Budget**
[indicative ranges based on several factors]
**Independent Dealerships – Suggested Monthly Budget**
[generally lower than franchises, adjusted for lack of brand name leverage]
**Strategic Marketing Goals**
Independent of the budget size, digital marketing initiatives ought to be goal-oriented, aiming to:
– Drive significant traffic to the website
– Convert visitors to potential leads
– Verify offline sales linked to online advertising
Engaging with AutoSweet or similar partners can assist in crafting a digital marketing strategy that achieves these objectives affordably and efficiently.
Utilizing Dynamic Search Ads on Google and engaging potential customers through Facebook and Instagram can effectively drive traffic. Additionally, leveraging these platforms for retargeting can maintain your inventory’s presence in potential customers’ minds throughout their purchasing journey.
Integration with Dealer Management Systems (DMS) can provide insights into ad performance and sales correlation in real-time, offering tangible ROI data.
**Investing Wisely**
Setting the right dealership marketing budget demands a strategy that is both informed and goal-aligned. While comparing with industry standards helps, tailoring your budget to fit your specific goals is paramount.
Marketing is an investment towards your dealership’s growth and success. By focusing on digital channels, adapting to market dynamics, and remaining authentic, you’ll not just reach your audience but also forge lasting relationships that foster ongoing growth.
Looking to delve deeper? AutoSweet’s free digital marketing playbook for dealerships offers insights on optimizing your advertising investment for improved leads and returns.
*Originally published on AutoSweet.*
Original Article: https://www.autosweet.com/marketing-spending-industry-averages-guidelines/
