The Secret to Success in Digital Marketing for the Auto Industry

In today's marketplace, auto dealers and retailers must face several daunting challenges when selling their inventory. For example, there is often an over-saturation within specific geographic markets. Sellers must compete with other dealers and online retailers — and even private sellers that advertise online. Besides, many sellers are not proficient in terms of diversified marketing strategies or tactics.

Despite these and other challenges, however, success is possible in auto sales. One of the keys to success lies in the proper use of digital marketing. But what is the ultimate goal of digital marketing in the auto industry, and how can you successfully leverage it to drive sales?

The Ultimate KPI

The key performance indicators (KPIs) typically used in other industries don't carry the same weight for the auto sector. 

For instance, views, clicks, and click-through rate (CTR) are important to a SaaS company that relies on customer subscriptions for its revenue. Still, for an auto seller that (generally) deals in one-time transactions, such KPIs are virtually meaningless unless they directly correlate to units sold. 

Your digital marketing strategy should have sales as its ultimate KPI and measure of success. "Units sold" is not only a concrete, quantifiable metric, but it is also a direct indicator of your company's financial health and long-term sustainability.

The Recipe for Success

This does not mean you should ignore the internet. Instead, ask how you can leverage online advertising to achieve exceptional results.

Many potential car buyers today do their research on search engines, such as Google. Therefore, it's important for auto sellers to attract these consumers, especially those that fit the dealer's "ideal customer profile.” The combination of 4 digital marketing tactics can make this happen:

• Search Engine Marketing (SEM)
• Custom Audience Targeting (CAT)
• Geo-fencing
• Impression Share Optimization

Each can be used individually, but their real power comes out when used in combination.

1. Search Engine Marketing

SEM is a broad term that includes pay-per-click (PPC) advertising, bid placement, and other techniques. It can be defined as: "A process by which multiple [digital] methods are utilized to improve market visibility and exposure for a brand, product or service." This usually takes place on search engine results pages (SERPs) or through related ad networks.

A few examples of such SEM tactics include:

• Dynamic keyword insertion. Dynamic keyword insertion (DKI for short) is a feature of several ad networks that allows you to dynamically customize an ad to match a consumer's search query. For example, you can program your ad headline to change from "2020 Ford Trucks" to "2020 Dodge Trucks," depending on which brand a user types into the search engine's query bar. DKI is a great way to attract the most relevant traffic from one of your ads.
• Broad match with modifiers. Some less successful or inexperienced marketing agencies tend to focus on "exact matches" when developing SEM tactics for a client. The problem with this approach is that a lot of high-quality search traffic can be lost. Not all consumers will use the same phrasing or terminology when submitting a query. A more effective alternative is to utilize a "broad match with modifiers." As a simple example, if you use "truck" as a broad match with a modifier, then searches that include "truck," "trucks," "semi-trucks," etc., will all qualify for your ad.
• Negative keywords. Google states that "negative keywords let you exclude search terms from your campaigns and help you focus on only the keywords that matter to your customers." Negative keywords can be a great help in filtering out irrelevant traffic or low-value prospects from your bidding strategy. For example, if you only sell higher-end models at your dealership, you can include a negative keyword/phrase like "cheap" to filter out consumers looking for lower-end used vehicles.

2. Custom Audience Targeting

According to Microsoft, "a custom audience is a type of remarketing list that is generated by using first-party data to create richer user segments." Simply put, custom audience targeting (CAT) allows you to deliver ads to highly interested consumers — those who are likely to purchase from you in the near future.

Custom audience targeting is closely related to "retargeting" tactics. For instance, technology like Simpli.fi enables you to measure and track view-throughs (in other words, visits to your website that were likely caused by the delivery of an online ad, although the consumer navigated to your site independently). This tracking technique can encompass website visits that occur even 30 days after the ad’s initial viewing. Once you have identified consumers that fit this criterion, you'll be able to target them specifically as a "custom audience," which will likely result in a better CTR and a higher conversion rate.

CAT is an excellent means of targeting consumers that are still in the research stage of their "buyer's journey." Since CAT can be set to end after a predefined time frame (say, 30 days), it can also minimize wasted ad spend on consumers that are no longer interested (perhaps because they already bought a car from somewhere else).

Another form of CAT is the use of "dynamic inventory ads." In many cases, these ads can link potential consumers to specific vehicles found in your inventory. You can also choose to have these ads delivered to consumers based on what they're researching on other websites (not just auto websites). This is a great way to target audience segments based on broad lifestyle considerations, rather than specific search queries that include brand names.

3. Geo-fencing

Geo-fencing is "a technology that defines a virtual boundary around a real-world geographical area. In doing so, a radius of interest is established that can trigger an action in a geo-enabled phone or other portable electronic devices." In terms of digital marketing, geo-fencing is a way to target consumers within a specific geographical area, whether extremely small (like a certain street) or much larger (a city or county). Only consumers within the target area receive "geo-fenced" ads.

This technique couples very well with custom audience targeting. For instance, with the combination of geo-fencing and CAT capabilities, it is possible to tell if someone is car shopping, went to one of your competitors, got served your branding ad, and then visited your website within 30 days on their own.

Since relatively few consumers are willing to travel an exceptional distance to purchase a vehicle, geo-fencing is a powerful tool to keep your marketing efforts focused on those individuals most likely to buy from you: residents in the local community.

4. Impression Share

Impression share is "the percentage of impressions that your ads receive compared to the total number of impressions that your ads could get," per Google Ads Help. Expressed as a formula, impression share is: impressions received / total eligible impressions.

A successful digital marketing strategy will focus heavily on impression share since this metric directly relates to how much market share you own in your targeted area. A simple analogy would be newspaper advertisements. If you take out a half-page ad in your local newspaper, but one of your competitors takes out two full-page ads in the same edition, then more consumers are going to form an impression of your competitor's brand compared to yours. The same principle applies to SEM: if your competitors are fighting you for a specific demographic and have placed a higher bid on the ad network, then they'll receive a higher impression share (and ultimately more business).

For that reason, impression share is a more impactful metric than CTR or clicks. Even if your budget doesn't allow you to compete with other dealers bid-for-bid, you can still use impression share metrics to inform your SEM strategy. For example, you can adjust your bidding strategy to focus on pushing top-selling vehicles while "conceding" the impression share of other models to your competition. This approach may allow you to maximize return on ad spend (ROAS) and minimize costs.

Implementing the "Secret to Success" in Digital Marketing

As the above demonstrates, effective digital marketing for the auto industry has many moving parts. It is not a one-time, "set it and forget it" action, but it is an ongoing process that you should continuously audit and optimize to meet your "units sold per month" goals. 

As an auto seller, you already have a lot on your plate; and perhaps digital marketing is not one of your core competencies. If that's the case, then consider partnering with an experienced agency that has a deep understanding of digital marketing's "secret to success." If you do, you'll almost certainly see an increase in sales — and an even brighter future for your company on the horizon.