Understanding the Balancing Act of an Effective Digital Advertising Strategy

All digital advertising can be broken down into two groups: demand capitalization and demand generation. Paid search and retargeting are demand capitalization: you’re going after those already searching for your inventory/services, or those that have already visited your site. Display advertising, on the other hand, is demand generation: it builds awareness for and interest in your dealership by exposing potential shoppers that haven’t yet shown interest to your brand, inventory, and specials.

The key to success with this strategy is balance. By using multiple channels, you capitalize on existing demand in your market while also seeing the long game and generating new demand. You truly un-limit your potential opportunity. Not only do you score sales from the shoppers already available, but you also grow your business by influencing the unidentified or undecided shoppers.

Think about it like the election: you don’t win by playing only to your base; you have to sway the undecided and carry a couple swing votes, as well.

Where you decide to go after your potential demand is the big decision. Digital advertising costs fluctuate like they do in real estate: the more densely populated an area, the more potential demand, and the higher the cost. Setting your geolocation is picking your campaign battlefield: where and with whom do you want to fight?

If you’ve only got a modest budget, it’s probably best to keep your campaigns in your own backyard. If you’ve got more financial resources, go bigger, and spread your reach into competitors’ backyards to bring new shoppers into your showroom.

Hesitant to increase your budget and go for a bigger radius?

The Autotrader Geo-Distance Study found that buyers who used the Internet on their path to purchase were much more likely to make a longer trip to the dealership. In fact, 9,449 new and used car buyers, or 23 percent of all car buyers who used the Internet, traveled more than 30 miles to a dealership to purchase a vehicle versus only 3,864 non-Internet users, or 15 percent of the total. And speaking of radius, consider this Dealer.com Advertising data from February 2016: dealers running new vehicle paid search campaigns with a more than 30-mile radius are seeing 95 percent more clicks, 35 percent more impressions, 50 percent more leads, and .75 percent higher click-through rate per month per campaign than dealers running paid search campaigns in a 30 mile or less radius.

Talk to your advertising partner and ensure you are applying the demand-driven approach and aren’t limiting your coverage. It may be cheaper to stick to one channel and cover only your local area, but you have to think about how far your dollars can go and how hard they can work for you. But, remember, if you don’t have the funds to back the big play, shrink it back down to get the best ROI.