The Q-4 Scaries

Human hand cutting the budget word

Scenario: it’s the home-stretch of 2018. The fourth fiscal quarter hits and you see consumer traffic dry up like a raisin. Well, maybe things aren’t so dire. But we all know that, as a business, you’ve got to acknowledge and adapt to the seasonal change in consumer focus. No, it’s not like people have completely stopped buying vehicles in the last three months of the year—your amped up Black Friday and fear-mongering “Get Ready for Winter” ads have seen to at least a few vehicles leaving the lot since November but, admittedly, it’s nothing like the crazy consumer action you might have seen in July. “Time to tighten up the purse-strings”, you say, “if sales are down, it must be because our advertising isn’t effective, and we’ve got to seriously scale back for the lean months.” Next thing you know, you’ve slashed your total advertising spend in half, thinking you’ve done yourself a fiscal favour for the time-being.

Computer key - 4th quarter

What we see here is a typical case of the “Q-4 Scaries.” A snap reaction, clawing back ad dollars which most dealers seem to have, in response to the softer end-of-year auto-retail period. Is this the best approach though? Sure, you might be saving some money now, but are you reducing sales opportunities that might come to fruition early in the New Year by doing so?

When campaigns aren’t converting well, there’s always an opportunity to either pause or stop them completely and re-allocate the resources elsewhere. Here at Strathcom, Christmas season is the season of cancelled or cut-back advertising. Routinely clients will lay out their plans to reduce spend in the lean months with the expectation to ramp up their ad spend right as the snow starts to melt. This reaction is understandable; if sales are slow it might make sense to cut back on the trumpets and fanfare you typically employ during the warmer months.

Think on this though, for a second: if you, and everyone else is cutting down in the fourth quarter, who is left advertising? Not only that, think about the amount of online advertising real-estate that becomes available as the auto industry tones it down? The fact is, the proverbial last man advertising stands to stumble into an interesting opportunity, whereby prime ad placements become plentiful and cheap in Q-4.

The advice here isn’t even necessarily to spend more at the end of the year. Rather, the suggestion is to hold the course and maintain a steady ad spend that, if managed prudently, can be re-allocated and refocused to other areas of your business as the time of year demands. Think of moving resources out of the roadster campaign to help your winterization, or seasonal service and parts specials when the mercury drops (I know, that’s a rather obvious example). The rationale here is to not decrease your online presence overall, but instead, be proactive in how to adapt that presence so that your advertising is prepared, and to follow the consumer interest of your online audience. What if Parts and Service aren’t a big part of your business? In that case, you should keep an eye on the sales of early 2019. What’s crucial in advertising —and what seems to be most often forgotten— is that it needs to be thought of in terms of months, not days. The ads that you run now likely won’t materialize as deals before the New Year, and it’s unfair to expect that users will convert that quickly (unless you’re pouring considerable short-term resources into a campaign or promotional advertising . . . considerable). Kudos to those dealers who’ve already taken advantage of advertising formats like Dynamic Inventory ads for Facebook; these sorts of tools ensure that your inventory is served to users on a continuous basis, with ads updated regularly and automatically, drawing on merchandising assets like inventory photos, descriptions, and VIN-decoded specs.   

In the end, you might very well end up giving into the Q-4 Scaries in the usual way; everyone’s situation is different and sometimes an outright paring down of ad spend is a necessary evil. The point of all this has been to suggest that, before immediately taking a scalpel to your budget, you should take a moment to pause and reflect on what you’re possible denying yourself down the road, and who you’re effectively creating an advertising opportunity for. One thing is certain, when you pull back, you can be sure that someone’s waiting in the wings to jump on the chance to move and stay there.

 

 

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