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Neo Marketing LLC

P.O. Box 8198
Canton, OH 44711
P: 330.933.1843
F: 866.861.5648

Drew W. Cooke
President
330.933.1843
drew@neomarketingonline.com

Chris Edington
Vice President
614.561.2712
chris@neomarketingonline.com

 

Direct Marketing Dealer Advertising, Direct Mail, Newspapers

…what does the future hold?

The following information can benefit dealers across the nation. This article is a small part of a series we are writing about marketing in America for the years 2007 – 2010. It contains research and information that we have accumulated over the past 2 years. We hope you enjoy and learn from it. All dealers have struggled with finding cost effective advertising that works for years. We decided to offer some free advice and results of our studies and experiences nationwide.

If you are like most auto dealers you are aware of the fact that your newspaper’s ads are getting less and less effective. The same applies to your TV and radio spots. The prices continue to increase but the return on the dollars spent is no longer justified. Newspapers have seen record declines in readership and that trend will continue over the next 5 – 10 years. The average age of a newspaper subscriber is 55+ years old. Not really the target market for most auto dealers. Younger consumers now get most of their news and information via the internet or snap shots from the 50 plus streaming news channels available.

Studies have shown that younger consumers will not make the transition to print. Once they have their information gathering habits, they are unlikely to change. This is even worse news for newspapers as an already declining reader base will shrink even more rapidly. There is no “replacement generation” on the way.

So how does a dealer effectively advertise to consumers in today’s market and in the years to come?

First, you must understand the theory of commerce or trade circles. This refers to the radius away from your store that a customer is willing to drive to purchase your product or service. These circles have many variances.

  • Ticket price: Consumers are willing to travel longer distances for larger ticket items. A gallon of milk is always purchased at the closest, most convenient location. A new riding lawn mower however may be worth a 50 mile drive to a specialty store having a sale.
  • Rural vs Urban markets: If you live in a densely populated area, there is a very good chance there is another dealer carrying the same brand only a few miles away. This has a tendency to shorten the buying circle range in most cases. Rural customers however, understand that driving 50 miles to make a significant purchase is the norm.
  • Dealership Branding Power: Some larger more powerful chains have an advantage over smaller dealers in many cases. Many consumers feel that such a large dealer must offer great savings, thus the buying circle often widens.
  • Strange pockets: This phenomenon occurs when there is a dealer in an area close to you but they are missing / losing business in their own backyard. This allows you to pull out of a pocket that may normally be out of your circle. You will find this to be sporadic and measurable without patterns.

Every dealer’s circle is different; however you can use this rule of thumb.

Rural:
0 - 20 miles is a definite hot zone.
20 – 40 miles is a warm zone.
40 – 60 miles is a maybe
60 and beyond is typically very cold.

Urban:
0 – 10 miles is a hot zone
10 – 25 miles is a warm zone
25 – 35 is a maybe
Beyond 35 is typically very cold.

So how does this apply to your advertising buying trends?

Simple math if you think about it. Your greatest advertising investment should go in the areas that have the greatest chance of return. If 85% of the consumers in a “circle” are likely to drive to your store, or become buyers, that is a great place to advertise. However, repeatedly advertising in areas with a lower probability is a poor habit / ineffective use of dollars.

When you buy mass media products such as TV, radio and newspapers, the numbers sound ‘really great’. You are sold on the total viewership of their product and the numbers are large. Remember however, this also includes are a large number of consumers that will never consider making the trip to your store. (Out of your buying circle.)

If a TV station boasts an 80 mile effective delivery range and your circle is only 15 miles, you are wasting 81% of your advertising dollars on consumers that will not buy from you. The same applies to newspapers and radio

.

Saturation direct mail however, allows you to pick exact zip codes within your effective zones / circles and “dominate them”. We also see this effect hold true when you mail to a hot zone vs. a warm zone. Hot zone response generally is higher than warm zones. However, the warm zones still produce response and sales. When we mail to cold zones, the response drops dramatically. We urge dealers to stay away from cold zones.

There are a few hidden benefits to saturation direct mail that not many dealers realize.

  • In many markets fewer than 35% of households get a newspaper / but every home has a mailbox.
  • Very few consumers between the ages of 22 and 39 read the paper / but each one checks their mail daily.
  • There are now over 400 tv channels for consumers to watch / but each person only has one mail box.
  • Local retailers can’t reach satellite radio customers / but they all stop at the end of the driveway to get their mail each day.
  • Every form of advertising has increased in retail price except direct mail. Saturation mail rates have actually dropped due to a competitive atmosphere.

A common question about direct mail

What is the difference between saturation mail and shared mail?

Saturation mail is an actual piece of mail that is individually delivered to a customer’s home. The most common size is 11” x 17”.

Shared mail is just what it sounds like. It is a wrap or group of flyers that is delivered all at once. Most people know this as coupon mail. It is full of pizza coupons, quick lube offers, personal check flyers, etc. It is a great source if you are a pizza shop, but not good for car dealers. It has a ‘cheapening affect’ and is read less.

Do you see newspapers surviving in the future?

Yes, but they need to learn 3 things:

  1. They need to learn that volume is the key to their future. If every home in your area got a free paper every day, it would probably get read. It would also then become a valuable resource for advertisers. When they realize that advertising must produce measured results, they will regain some lost ground.
  2. They need to learn that while covering hard hitting world stories is the glamorous part of publishing, the school lunch menu and obituaries get read more often. One of our common sayings around the office about newspapers is that the news is old before the ink is dry due to modern technology.
  3. They need to triple their classified sections and bring them back to life. They need to be free to individuals and very affordable for businesses.

How often can you mail to your market?

How often do you run an ad in the paper? What do you do when you run an ad week to week in the newspaper? You change the message. The same is true with direct mail. Change the message and mail again. New buyers come into the market every day.


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