Auto Marketing Budgeting for Online Media
A Carat SVP who works with Hyundai and Kia provides a guideline for allocating online/digital budgets.

By Paul Santello
January 09, 2006

Ever since the reemergence of online advertising several years ago, both automotive marketers and their advertising agencies have struggled with the million dollar question: how much of their total advertising budgets to allocate to online media? Unless marketers deploy a method to accurately determine the right media mix to most efficiently meet their communication objectives, the potential effectiveness of their marketing strategies could be compromised by this issue.

What follows are some practical guidelines that can help any marketer or agency who is responsible for budget setting. Specific budget or percentage recommendations will not be made. Rather, you can use the following as building blocks to arrive at a sound, fact-based business case to back up your budget request.

Finally, these guidelines are for online/digital paid media and do not include other forms of online communication such as eCRM from an OEM’s/dealer’s installed database, or production costs for creative units. Here goes:

Understand your target’s media consumption. A good place to start is to determine how much of your target’s overall media consumption is online. There are a number of credible sources that many marketers and agencies use with some regularity -- the two most notable being Jupiter and Forrester -- and these should provide at least a good reference point. Calculate an online consumption percentage and use this to determine a goal for your budget. For instance, if it’s 15 percent, you might suggest that you allocate the same percentage of your overall advertising budget to online media. Use this formula for whatever the percentage is.

While this first guideline may seem almost overtly obvious, few automotive advertisers have been successful in securing online/digital budgets that mirror online/digital media consumption, so as a medium, we have some catching up to do.

Follow the online/digital trailblazers. Another guideline to establish your baseline is to take a look at the online media trailblazers to see what they are doing and try to approach their allocation. I won’t name specific campaigns or OEMs here, as I don’t have a particular bias, but these are the cases you read about in the online, automotive and general advertising trade publications; they are the case studies that get presented at online/digital conferences. If you’re new to the automotive industry, ask anyone who has spent a few years in the field and they can tell you who the trailblazers are. Then, find reported advertising spending in both online/digital and traditional media for these OEMs and use the resulting percentage as your baseline goal.

Keep your objectives in mind. If you’re looking to largely maintain a presence in bottom-funnel, in-market inventory, then you might want to stick with a baseline goal established using my first two recommendations. However, if you plan to have a number of new brand positionings, significant vehicle-launches or large consumer promotions, you will want to add to your baseline budget. To determine the level to add to your baseline, you’ll want to cost out a few of the upper- and mid-funnel online placements that make sense for your target, such as portal homepages, automotive third-party homepages or relevant lifestyle sites. Add these costs to your baseline budget.

Uncover dealership opportunities. Currently, most online/digital automotive spend supports programs at the OEM level, leaving a huge untapped opportunity at the dealer level. In fact, many automotive marketers have as much money devoted to dealer-related advertising as they do to OEM-related programs, yet few agencies are supporting dealer communication programs to the same extent. Now more than ever, the dealer community is interested in using online/digital channels to support traffic and sales driving activity.

Go niche. Fact is, automobiles are a way of life for most people, and different people have different priorities, so don’t just consider the mass targets. Does your particular brand or vehicle appeal uniquely to a specialized sub-segment of the population, such as African Americans, Hispanics or the gay and lesbian community? If so, don’t forget to add some budget to reach out to them specifically.

Consider emerging media. In addition to conventional online/digital media buys, there are a host of emerging new media that make sense to explore for automotive manufacturers. In particular, interactive television, mobile opportunities and gaming are the hot subjects right now. Interactive television affords longer-form communication opportunities whereby prospective consumers can get more relevant information than a simple :30 or :60 can provide. Mobile applications can provide access to important information that prospects can take directly to dealers to aid in their negotiations. And gaming is a way to reach the elusive younger target of 18- to 34-year-olds, of whom 66 percent are involved in online or console gaming (source: Jupiter, 11/03). While these strategies have yet to be incorporated in a significant way in most automotive digital/online programs, each is fertile with opportunity for marketers that take the dive and find programs that have staying power and produce positive ROI.

Grab for the brass ring.  Once you use the above guidelines and build a budget projection for your digital/online automotive efforts, you will more than likely wind up with an amount that is more than you think you’ll ever get approved. You might find you’re asking for 20 percent of the total advertising budget -- perhaps even more. My advice to you is don’t censor yourself at this juncture. Online/digital media is the topic of the moment right now, and the iron is hot for the striking. For each consideration above, develop sound, fact-based support for your ask and go for it. You may not get it, but more than likely you’ll get more than you had in the previous year.

Just by using these guidelines, the team at my agency, in conjunction with our clients, was able to get our online/digital budget to grow nearly 10-fold in just two short years. Further, by matching our online quote and information requests to actual sales through dealer database matchbacks, we’ve been able to determine that the budget we’ve been allocating is driving highly positive ROI for our clients as well.