Analyzing your advertising spend

Make sure you’re tracking your return on your advertising dollars

When was the last time you analyzed your advertising spend? Is it too much? Too little? Are you allocating the right amount between digital and traditional media? Are items hitting this account that should be posted elsewhere? 

Dealership success is directly linked to marketing efforts. Optimization is key. Your marketing campaigns need to be reviewed and scrutinized monthly. Your plan needs to be nimble—you should be able to “change on the fly”. This will ensure you are maximizing your efforts and increasing the likelihood of success. 

Consider these items when analyzing your marketing plan:

What should actually go into the advertising account:

There seems to be ambiguity around what should actually be posted to the advertising account. This surprises me. OEM accounting manuals, regardless of brands, are very clear about this. Only expenditures directly related to the marketing of vehicles and the promotion of your fixed operations should be accounted for here. This includes:

Traditional media: Newspaper, radio, television, direct mail, billboards, sponsorships; 

Sales promotion expenditures: Business cards, license plate frames, auto show exhibit expenses, showroom displays and promotional banners;

Digital Media: Connecting with customers using the internet and other forms of digital communication. For example, email, social media, text and multimedia messages. 

As you can see, it is extremely clear what items should, and should not, go into this account. Stick to these rules and you will be able to track your marketing success better over time. Clean accounts equal clean analysis. 

Key Performance Indicators

Marketing is pointless unless you generate results. There is a systematic approach to determining your success—measuring Key Performance Indicators (KPIs) that are targeted toward marketing and advertising efforts. 

You should break these down into the following categories: 

Customer KPIs: Sales closing ratio, conversion rates, churn rate, upsell rate.

Financial KPIs: Return on investment, customer acquisition costs, monthly recurring revenue.

Project KPIs: Lead time per project, project costs and time, utilization rates.

Digital Marketing KPIs: Monthly leads/prospects, cost per lead, retention, monthly website traffic, click-through-rate, traffic on social media. 

The list can go on and on. Sure, it takes some work to track these but it’s worth it. Your marketing team must rationalize their decisions on spending. You can’t run this department based on “gut-feel”—you’d be surprised how many dealers do. 

Remember that targeted strategic efforts yield targeted strategic results. Don’t spend without reason. 


It’s important to keep your marketing team accountable. Compare your team’s performance to industry benchmarks. The ones presented below are averages—you should tailor them to your own specific brand, geographic region and dealership style. 

According to NADA, by June of 2022 $4.26 billion was spent on advertising by dealers across the US. The average spent since 2016 is $635 per new retail unit. Going back a decade, this number was thought to be approx. $500 – $550 per new retail unit. The spend per unit seems to be going up. Interesting isn’t it? Retailers were led to believe that the push to digital media would be the solution to outrageous advertising spend. I guess “they” were wrong. 

Email open rates average 21.5% and click-through rates average 2.3% according to This means that despite all your digital marketing efforts, almost 80 per cent of your targeted email campaigns are going unnoticed. Even if you were able to generate a lead to your website, 97.7% of the time, visitors won’t even filter through your site. Staggering to say the least. 

Finally, return on investment in the automotive industry ranges from 10-15 per cent. Are your marketing campaigns generating these returns? If not, you should refocus your efforts to something more rewarding. 

Marking and advertising investments are necessary to run a successful dealership. You can’t survive without them, and you certainly can’t be an industry leader without a strategic plan. 

Focus on the right type of advertising for your market. Ensure you are measuring their success by calculating specific KPIs and comparing them to industry benchmarks. Hold your marketing team accounting—at the end of the day, your dealership’s success depends on it.

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