Waste Not Want Not – Why You Should Optimize Your Monthly Advertising Spend


John Wanamaker coined the phrase: “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”

According to Ad Age, June 2019, $218 billion is spent on advertising in the US. $13.8 billion is spent by the automotive industry (based on Kantar Media data). Of this spend, 26% – 40% is wasted according to a number of different reports and surveys.

Lucky for us, marketers are in a much different place then they were back in Wannamaker’s day. Today, successful advertising is where science and art intersect to deliver superior results.

But even with the advancements in technology and marketing strategy, knowing how much to spend on advertising and where to spend it can be very complex to do, especially for the automotive industry.

In the automotive industry, car sales are different each month and sales are impacted by a variety of factors such as market demand, competitors, incentives, competitors’ incentives, seasonality, market trends and pricing. Advertising decisions should reflect these monthly differences and account for all these factors, but they are often not.

Without an easy way to consider all these factors, it is easier and less time consuming for dealers to fall into the marketing habit of doing the same thing month after month, year after year, potentially wasting 26-40% of their advertising budgets.

Today it is typical for most Owners, General Managers and even some Marketing Managers at local dealerships to relinquish their budgets to their advertising agency and wash their hands of marketing. It is very common for the advertising spend to be roughly the same each month. This approach works well if the dealership experiences similar market conditions month over month. But the reality is that it does not. Each month is different – from incentives to buying patterns to seasonality to name a few – and therefore each month needs its own set of budget considerations.

Imagine if you could factor the incentives from your competitors into your advertising strategy. Would you spend more or less on digital advertising if your competitors were offering a lower incentive than you? Imagine if you knew where your buyers lived and how those zip codes were trending over time. Would you spend more or less on digital advertising if one of your top zip codes was not performing as well as others?

These are examples of how unique factors impacting the automotive industry can be considered, and should be considered, in making advertising spend decisions and how you can optimize your advertising spend by doing so.

Imagine if you could get a recommendation of how much to spend on advertising in the following month based on considering all the prevailing factors. Imagine instead of wasting 26%-40% of your advertising budget, you saved up to 30% because you were optimizing it each month. What would you do with that savings? What would you do with that confidence knowing that each dollar spent was returning the optimal amount in unit sales for your dealership? You would be on top of your competition, is where you would be. You would increase sales, eliminate advertising waste, and improve business processes and performance. And this is why you should optimize your monthly advertising spend. What would John Wanamaker have to say about that?