The Catalyst

The following article is an excerpt from ESA & Company’s upcoming white paper Driving Automotive Forward. The paper provides a detailed plan for auto dealers and broadcast sales executives to navigate the changing terrain in the automotive landscape. Visit ESA’s website or The Catalyst on or after August 21st for more information.

Get ready for more transition in the automotive marketplace. These changes will present a window of opportunity to local media sales teams. Local broadcast television stations that demonstrate a relentless prospecting effort, an active commitment to retail intelligence, and a disciplined sales approach, stand to benefit the most from this opportunity.

Fewer Dealers = More Dealer Leverage over TV Stations
Owners of auto dealerships will experience an increase in buying power in the market and will attempt to leverage that power to demand lower rates, more concessions, more creativity, and better service.

Lower Sales Might Not Mean Lower Dealer Budgets
Sales could be declining short-term, but as the economy improves auto dealer budgets will increase quickly. Also, some manufacturers’ Tier 2 dollars will be reassigned to Tier 3, thereby making available to local dealerships an additional 25% – 50% in advertising budget.

A Shortage of “Mega-Dealer” Group Experience
Dealership Groups are growing. New nameplates appearing on dealership lots will be met with a lack of dealer experience in these lines. Television station sales managers must be versed in marketing multiple nameplates in varying ways, all while serving the greater good of the group. A special page of this report will reveal the most successful “mega-dealer” TV and web advertising tactics.

Branding Dealerships will End
The continued high cost and overall ineffectiveness of “branding” dealerships will be exposed. Dealership owners will realize it’s not about the dealership, it’s about the customer buying and owning experience.

It’s Not Just About “Ups” Anymore
Generating foot traffic used to satisfy dealership owners and advertising agencies. In the future, traffic increases will not be the only deciding factor in a successful sales performance. Separating “shoppers’ from “buyers” is one new skill set in demand by the best auto marketers in the industry. In regard to demographics we predict that Hispanic consumers will continue to grow in importance to auto dealers.

Agency Fallout
Dealership retail marketing skills will be tested over the next 12-18 months. The automotive industry has undergone more change in the past five years than in the previous fifty, and that trend will continue. Advertising agencies that don’t evolve with the needs of the auto industry will fall prey to cancellation or consolidation.

Measurement Matters More
Dealers will buy advertising that is both effective and measurable. Knowledge of proper advertising measurement technique will serve both the auto dealer and television station

Adam Armbruster is a senior partner with Red Bank, N.J.-based retail and broadcasting consulting firm Eckstein, Summers, Armbruster & Co. He can be reached at adam @ esacompany . com.

Sources: AutoPacific 2009 Report, ESA & Company auto dealership principal interviews, Automotive News, Wards Dealer Business, AutoPacific 2008, Business Week 2009, The Wall Street Journal 2009, Hispanic Marketing 2009, Nielsen 2009, Arbitron 2007-2009, ESA & Company 1985-2009.

Contributing Authors: David Eckstein, Roland J. Eckstein.