The nation's car and truck dealers spent more than $6.6 billion a year on advertising last year. Most of it goes to newspapers. TV gets only a sliver of the local auto advertising pie.
But that split doesn't have to be so uneven, says Carter Myers, who knows something about selling, and ad buying. Myers, 60, is a third-generation auto dealer with successful "stores" in Charlottesville, Petersburg and Richmond, Va., and a heavy advertiser in those markets. He's the front man for thousands of other dealers as the current chairman of the National Automobile Dealers Association (NADA). And he will be a featured speaker tomorrow at the Television Bureau of Advertising's Annual Marketing Conference in New York during the New York Auto Show.
In this edited interview with BROADCASTING & CABLE Editor in Chief Harry A. Jessell, Myers says TV stations can increase their take of local dealer dollars if they think and act like dealers, as newspaper and radio sales execs already do. That may mean tearing up a planned campaign and quickly creating a new one simply because showroom traffic inexplicably falters or a manufacturer offers an unexpected sales incentive or the dealer's gut says so. Broadcasters who want annual commitments for carefully planned campaigns should go see the local banks. Those who want a bigger piece of the dealers' ad budget had better be quick on their feet.
It will be worth the effort, Myers says. Although dealers may not sell as many cars as last year, he says, they expect to sell plenty and spend more on advertising. "It's probably a good time to make calls on dealers and get them to reach out."
Overall, business is good, a little soft in some particular franchises. But there is a feeling of optimism that seems to pervade the dealer body. Interest rates are low, and carrying costs on inventory are low. Manufacturers seem aggressive about their programs. And we came into the year with low inventories.
But, from what I read, nobody expects car sales to be up this year compared with last.
It might be down a little bit from last year. We thought last year would be down from the year before, and it wasn't down that much. They say we've been running ahead of trend lines with these 17 million-car years. I'm not convinced that there isn't a great need for cars. More people have jobs. Welfare-to-work means somebody has got to have a car. So I think the 17 million-car year is not a short-term phenomenon.
Does that translate into more or less advertising by car dealers?
I think you will see advertising increase this year. I guess it declined a little bit overall last year. But I think, as a result of the aggressive programs the manufacturers will put out—to get the word out on the programs and keep the market moving—you will see more advertising.
How important are the regional advertising ad groups?
Dealers generally like ad groups because they have some input into the content of the ad. And when you combine the manufacturers' ideas with the dealers' ideas, you probably get an ad that is more appropriate for that marketplace and that particular product.
Something that is very helpful to me is when my station manager or reps let me know when Lincoln-Mercury or one of the other manufacturers cuts back on the spot advertising in that market. He'll give me feedback. If Pontiac last year spent $50,000 and this year only spent $20,000, the dealer needs to go to work on the manufacturer and make sure he is getting his fair share. If you are not on top of that, you don't realize that you have been shorted. That's good for the station, good for the dealer.
Between your three markets—Charlottesville, Richmond and Petersburg, Va.—you sell Honda, Chevrolet, Pontiac, Cadillac, Buick, GMC, Lincoln-Mercury, Nissan and Mitsubishi. What's hot?
Honda's hot. Nissan's moving along, making improvements. The high-end imports are the hottest. General Motors looks a lot better than they did a year ago. With the change in leadership at General Motors, bringing Bob Lutz in, the whole attitude of the GM dealer body has shifted. Cadillac has been rejuvenated—and that was before Lutz. They have some interesting product: the new CTS and a sports car that's going to be built on the Corvette platform. GM's truck line has been completely revamped. I see that remaining nothing but strong.
What's not hot?
The domestics have been struggling. GM, which was at the bottom of the heap of three, is probably at the top of the domestics. Ford is struggling; Chrysler seems to be struggling.
Why is that?
Probably because they got spoiled on the profits they were making from trucks and the fact they didn't have to compete except with each other on trucks. They didn't have that much competition from imports on trucks. They just lost their ability to make exciting sedans. The [Ford] Taurus kind of got old on everybody. It sort of turned into a rental car.
How much do you set aside for advertising? And do you expect that amount to increase or decrease?
It's pretty much based on volume. It might be $200 per car. If the manufacturer kicks in some money, the dealers might spend more.
So, for the typical dealer, it's almost a mathematical equation: number of cars times some constant like $200.
Pretty close. But you can break that. I remember once we decided to cut our advertising, but somebody came to us with an ad program and said this is going to work. We threw out all the rules and spent money on all the campaign.
You set aside a certain amount of money for advertising. How do you allocate that among the various media?
Subjective question. Subjective answer. It's such a matter of personal feeling of the general manager or the dealer who books the advertising. I believe you can make any medium work, if you work it consistently, if you've got your message right and it fits with that medium.
I've told my general manager here [Charlottesville], if I were making those decisions, working that floor every day, I would be much stronger in television. We can reach out much further with television, get to the overlying areas and draw more traffic in with TV. But he's kind of a radio guy. The radio guys are a bit quicker. They can respond a bit faster. They meet your timetable, and production costs are less. Newspapers are fairly easy to work with. TV is more difficult to work with.
Television is the least tangible in the minds of the general managers. They don't have time to watch a lot of television because they work a lot of hours. But they always see the newspaper. They hang it up on the window; they can bring it into the sales meeting. Radio is the next most tangible, because general managers drive some in cars. They get to hear the ads. And the radio stations have remote [trucks].
TV stations ought to do everything they can to create a more tangible benefit and feeling for the general manager. That may mean bringing him videotapes of the ads so he can show them at the sales meeting. You've got to find ways so that ad is in front of him. Let them know what ads are running. And make sure the ads are relevant to what the dealer is doing. Don't let spots overrun. Watch what the guy is doing and communicate.
You seem to be saying that dealers spend their advertising dollars based on gut instinct and the personal feedback they get from the ads rather than on research.
We measure traffic [during ad campaigns], but, generally, the dealer is not that scientific about his decision. The process of making that decision is not concrete. It's a feeling. A dealer's attitude can change. One good day on the sales floor can change a dealer's attitude.
So TV and radio sales people need to provide more feedback.
Right. The ad reps need to show the guy the results, encourage him to measure, do anything he can do to make him feel that that medium is doing more for him. The radio people actually do a pretty good job of this with remotes. They probably follow up better. Radio reps, for one reason or another, maybe don't have as much to do with their time, and so they tend to follow up: 'How are things going? How did that thing go?' The more you talk to them about how it went probably creates some feeling that it went pretty well. I think TV can do that.
I understand that just 15% of dealer money is now being spent on TV.
Actually, it's been dropping. Between 1998 and 2000, it dropped nearly two points, to 14.5%.
Why is that? Why is TV's share going down?
Each spot costs you more on TV than it does on radio. When you've got to cut, you can go after the big dollars easier. If the dealer feels it is a little less tangible, then you go after those dollars.
TV also requires more planning and more time and money to produce. It's less flexible than radio. You can go into a radio station and cut an ad and, in two hours, have a radio ad on the air. We couldn't do that with TV. TV stations, at least in this market, like to know how much we plan to spend for the year. A dealer works on shorter spans of time.
An ad agency probably loves to deal with a bank. They work something out, and it will stay that way all year. On the other hand, they could work something out with the car dealer and have a game plan lined up for the next six months. But then we have a three-week slowdown, and the manufacturer puts an incentive in with a trip to Cancun, and the doggone dealer wants to change everything. It's got to be frustrating for the agency and the media. But we've got to figure out how to deal with this schizophrenia or whatever it is we have in this business.
But you do know what new cars are coming out. You can plan for them, can't you?
We respond less to what new cars are coming and more to what the [manufacturer] incentives are, floor traffic and consumer attitudes. We feel good to know that we have a new [Honda] Accord coming in or a new SUV this fall. But we are not eating breakfast on that. We have to live today.
It's amazing how consumer attitudes can shift. I can have a slow day of traffic and call a dealer 200 miles away. It's shocking that he has the same cycle. It's like there is a connection among consumers all over this country, and they can be as fickle as hell.
The toughest part is the production side of it. Find a way to make it easy. That general manager is not planning out a month or two months like he ought to be. He is responding to what is happening today, what happened yesterday and what he thinks is going to happen tomorrow. You have to figure out how to work more closely on his deadlines. Make the production easier. Make it more cost-efficient. It costs him $1,500 to do a 30-second ad that is probably going to run but a week. The newspaper sets the ad up free and needs copy by Thursday to run Saturday.
Newspapers still get the lion's share of the dealer dollars—about half. Is there more to that than flexibility and lower production costs?
The newspaper people will tell you that, when people get ready to buy a car, they buy a newspaper. They might not look at it all year, but they going to look at it when they are ready to buy.
The Internet has drained some marketing dollars away. And then there are all these cable stations. Personally, I would rather run on ch. 29 [NBC affiliate WVIR-TV Charlottesville] on the evening news or the Today
show. They've just got great coverage all around the area.
Is cable a factor?
Yes, it is. But it's difficult to use. To cover what I cover with my ch. 29 signal, I have to deal with five systems. They have to do a better job of packaging.
You mentioned that some of your marketing dollars are going to the Internet?
Ninety percent of the dealers in the country are on the Internet. It's been proven that it does help. It's not a way of selling cars, but it's another way to connect with the customer, and 66% of people who are buying cars these days are looking on the Internet. You need to be there to communicate today.
You've got to have your own site. You've got to make it so [the customer] can connect with you. We probably spend around $12,000 to maintain Web sites.
Are Web sites that sell cars directly to consumers cutting into your business?
The dotcom takeover of the retail car business has been a total failure. There are still some services that are selling leads, but I don't know if there is anybody trying to sell direct anymore.
As an advertising medium, the Internet is not the magic bullet. Just like TV isn't the magic bullet. It's just one more way of communicating to the customer.
Why don't dealers advertise their service departments? That's a big part of your business, right?
Service is so much based on reputation and experience. The best way to get service customers is sell them a car, get them to bring in the car and treat them right during the warranty period. You are not going to be able to bring a whole lot of people into your service department like you might be able to bring them into your showroom with an ad. They are more leery of the term "good service."
NADA officials complain all the time about how dealers are portrayed in the media? How come?
I think it is taking a few situations that aren't good and perpetuating them. I think the large majority of dealers are concerned about their image, about the way they take care of customers, are available to resolve problems in what is a complicated transaction. There are a few people who don't have that kind of attitude. News seems to pick up bad news; we certainly don't think it is the total picture. A Gallup study found that 94% of people who bought at the dealership were pleased or extremely pleased with the experience.
The news media doesn't tell the good stories, all the wonderful things the dealers do. The Richmond Times-Dispatch
, probably once every two weeks, runs a full page on the things that the dealers are doing. It tells the story about what dealers are doing in the community. I haven't seen a TV station talk about contribution the dealers make in the community.
A final word for TV-station sales people?
It's probably a good time to make calls on dealers and get them to reach out. But go in there with an attitude to add value, to add tangibility, to be as flexible as you can and to customize to how that dealer operates. And try to make sure dealers feel that TV is on their side. You've got to bridge that feeling between the news department and the advertising department. If dealers are only spending 14% on TV today, you certainly ought to get that back up to 20%.
The television industry's top news stories, analysis and blogs of the day.