So the old saying goes, “I know half my advertising is wasted, I just don’t know which half.” But that is an old saying, and today with new technology and advanced analytics you no longer have to operate in the dark.

Advertising effectiveness whether print, tv, or digital is always critical to any dealership if you want make the most of every advertising or marketing dollar. The harder those dollars work, the greater your bottom line will ultimately be.

Understanding which of your ad dollars is working requires accurate and timely attribution of where your traffic is coming from, and measuring both volume and quality. Lots of traffic to your showroom or website that is more curious than serious can often be more harmful than helpful as critical sales resources are consumed without conversion or closes.

With 90% of your future customers first stopping by your virtual showroom, let’s focus there today.

So what is attribution or sometimes called unbroken attribution? It is the measurement of your various media or marketing channels related to the actual outcomes they produce. In today’s media world, this is often difficult because the search engines and analytics tools often act like a “firewall” to having a clear view of which marketing channels are the most effective in volume, revenue, and margin.

Because so many consumers use Google and other search engines as “digital phonebooks,” often the medium which created awareness of your dealership or inventory is blinded from your analytics or reporting. The classic example is a consumer that visits an automotive marketplace or portal and then a few days later searches your dealership name via Google or Bing. The analytics provided by your website provider or the search engine itself will show you the individual came via their search engine (not surprising), but not that a few days before they were learning about your dealership at the automotive portal.

A quick point, it has always amazed me how in the digital advertising world most reporting or performance measurement is provided by the digital medium or marketer themselves. Unlike in traditional media where reporting from Nielsen or Arbitron measure and independently reports TV and radio performance. In the digital world it feels a bit like the fox guarding the hen house.

So back to our search engine example. Your typical analytics report will show that 38% of your website traffic comes from a search engine. This is accurate in that this traffic linked from the search engine to your website. But, of this traffic, 78% used some form of your dealership name and/or website URL. This means only 22% of the traffic finds your website via a search for a specific car, for example, “2013 Honda Accord”, or a generic search like “Nashville Honda Dealers” or “top rated sedans.”

Now let’s break this down even further:

• Traffic to dealership site via search engine: 38%
• % of traffic via keyword referencing dealership name: 78%
• Traffic via keyword other than dealership name: 22%
• % of Traffic to dealership website via search engine without dealership name: 8.3%
• % of traffic to dealership site via PPC or SEM advertising: 6%
• Conversion rate of traffic from PPC or SEM advertising: less than 1%
• Conversion rate of all traffic on dealership website: 1.3%
• Average conversion rate of traffic from automotive market place: 8.3%

In fact, independent research indicates that there is an optimum spend level for PPC or SEM advertising which yields the greatest ROI. In fact, often higher spends can actually yield lower performance, there is an elasticity to all advertising spend and it is important you know this number for all your marketing channels.

Another critical point to consider is the traffic to your website via a keyword using your dealership name. It is the mission of the search engines to deliver relevant search results. If they do not the consumer will cease to use them. That is, if I search for Eric’s Nissan and I don’t find it on the first results page, then as a consumer I will be dissatisfied and look for another search engine. This means, the search engine is forced to list your website on the first results page whether you pay them or not.

So using this particular example let’s look at advertising effectiveness. What percent of your digital advertising budget are you spending on PPC or SEM? For the typical dealership it is 55%. A quick “moneyball” analysis tells us that 55% of your ad budget for a medium that delivers 6% of your traffic is likely not effective. That said, SEM and PPC advertising should be part of your advertising plan, the key is to find the right level of spend to optimize your return and its effectiveness. SEM/PPC is meant to augment what your site does not do organically, but it can also help for special events or new vehicle launches where your site will not optimize on its own fast enough.

Now let’s look at our earlier example of a consumer searching the internet for a car and then using the search engine to find your dealership website. What was the path to the search engine the consumer took, what media has influenced their behavior and decision making, and how does that medium impact the traffic or users on your website?

In independent research recently completed for a large automotive portal, a few interesting facts emerged.

• 36% of traffic to a dealership website has the portal in its browsing history. Ironically nearly identical to search engines.
• 22% of all leads submitted to dealer websites came directly from the portal.
• 4X faster, consumers who have visited the portal are four times faster to submit a lead on a dealer’s website than those who have not.
• 48 hours verses 8 days, that is, consumers who first visit dealership website will take 8 days on average to submit a lead, unless they have been to a portal prior, then its 48 hours.

Of course automotive portals are likely not the only advertising or marketing services you use, this is only one example of the type of analysis available.  This type of data is independently available today for all your online and offline media and marketing channels. And you should be performing this type of analysis on all your advertising and marketing spend.

One final example of the power of this type of research and analytics: A Midwestern dealership group recently completed this analysis and discovered that they were over spending by $5,000,000 annually on PPC.  In some cases the overspending was actually reducing effectiveness. Today, they have right sized their spend, improved their results from PPC/SEM, and saved five million.

Which half of your advertising is wasted? Today, there is no reason not to know.