Why Internet budgets are bad

Too many dealers are limiting their success online and hampering profitability
because they have Internet budgets. Having an “Internet budget” is the result of a
short sighted marketing approach that helped dealers move into the digital realm,
but today, it disconnects the dealership and costs the dealer potential synergies
that could otherwise be exploited for positive growth. If you are still operating
with an “internet budget,” it’s time to throw it out and move on to bigger and better
things.

How the mess got started:
Internet budgets came about to help us manage the shift from 100% traditional
budgets to incorporating Internet marketing into the mix. We were able to
benchmark against peers and against our prior performance, and develop a goals. It
was a way to track shifts into the digital landscape as more consumers went online,
and it worked for what it did.

Today, because approximately 90% of consumers are using the Internet to help
them shop for a vehicle, the Internet is not a niche market. I’m not suggesting that
automatically 90% of your budget should be online; however, Internet marketing
should be as important a part of your strategy as anything else. The percent you
invest in each medium should directly correlate to that particular medium’s ability
to deliver the most cost effective results for the goal you have laid out.

Understand your goals, understand your mix:
Each dealership will have a unique recipe to create the success that they need;
however, if you have an “Internet budget” you are working off a predetermined
benchmark that will confuse what goal you are really trying to achieve.

For example, let’s assume you are doing transactional marketing and using a
successful keyword + landing page strategy that is yielding a cost per sale of $275
per vehicle sold. Great, but since you are currently spending 12% of your total
budget online, your spending is capped. Deciding upfront to have an “Internet
budget” of 10% means you are already over budget by 20% and must look to cut
something out to get back on track.

Conversely, say that the traditional media transactional marketing is yielding a cost
per sale of $525. Does it still make sense to cut your Internet budget back so you
can put the money to work in a less effective marketing medium? Absolutely not,
but unfortunately, that’s what most dealerships do so they can stay on track with
their “Internet budget.”

Don’t create unnecessary silos:
Another reason dealerships have “Internet budgets” is because they usually have
a GSM or GM who oversees the total marketing for the store and they hand off a

portion of their budget to an ISM or ISD who handles the Internet marketing. It’s
easiest to tell the ISM you can have X dollars per month or X% of the total budget,
and hold them accountable for the ROI on the budget they are given.

The problem with this approach is that you create unnecessary silos of operations
inside the dealership. Creating silos inside your dealership (rather than having one
person or team that works together to oversee marketing for the whole dealership)
costs you money in lost profits no matter how you look at it.

The solution is to take a holistic approach to your dealership marketing, and to
invest in the media that are the most profitable for your store’s goals today while
not sacrificing long term success.

Let me make it a point to say that traditional media IS NOT bad, like many “web
experts” want you to believe. To think traditional marketing is bad is also a very
short-sided view into how the market operates. Rather, it’s important to have a
balanced approach, which will include both traditional and digital in a custom blend
to allow you to achieve the goals most needed by your store.

Ditch the “Internet budget” and work towards something better:
Rather than benchmark what percent you are investing in Internet Marketing,
understand the unique goals for your store, create a custom holistic marketing
recipe that you believe will help you achieve your goals, and track the metrics
associated with the investments that make up your investment recipe. The ultimate
question is, “Are you achieving your goals as inexpensively as possible to generate
the most ROI?”

Marketing is marketing regardless of weather it is part of your traditional or
Internet budget. Stop creating unnecessary silos that cost your store lost profits and
forces on your team needless budget restrictions. Start marketing holistically, based
off of what drives ROI for your dealerships goals.

Posted in Blog