Table 1.

	Internet	Newspaper
Investment	$2,500	$20,000
Leads or Ups Generated	100	100
Average Close Rate	10%	20%
Vehicles Sold	10	20
Cost per Vehicle Sold	$250	$1,000
Total Sales from Both Campaigns	30
Overall Marketing Investment	$22,500
Overall Cost per Vehicle Sold	$750

If you decided to cut your budget in half for both campaigns, all things being equal, your cost per unit sold would remain consistent, but you’d sell half as many cars. 

Suppose you try another scenario.  You decide to make a budget cut, but of course you want to keep sales up. You decide you’ll drop your marketing investment to $15,000 this month.  In this scenario, you choose to up your leads budget to $5,000 (therefore doubling your lead volume) and spend the balance on newspaper ads.  (See Table 2.)

Table 2.

	Internet	Newspaper
Investment	$5,000	$10,000
Leads or Ups Generated	200	50
Average Close Rate	10%	20%
Units Sold	20	10
Cost per Vehicle Sold	$250	$1,000
Total Sales from Both Campaigns	30
Overall Marketing Investment	$15,000
Overall Cost per Vehicle Sold	$500

The result: your cost per unit sold drops by 33%, but you still sell 30 units.  It may seem obvious – adding more Internet leads to your marketing mix will decrease your overall cost per unit sold because Internet leads are effective and cost less.  Nevertheless, many dealers still invest a large portion of their marketing budgets in traditional advertising. 

The reasoning for this is multi-faceted.  It may be as simple as your current Internet team is not yet able to handle an increase in lead volume.  Or, it may be that you feel the need to cover all your marketing bases, so to speak.  Consumers do engage with a variety of mediums throughout their day, both on and off work: the Internet, television, the radio, the newspaper.  There is something to be said for marketing cross-pollination.  A consumer may be looking for incentives in the newspaper and then go online for further research and to submit a lead.  Even so, dealers need to keep in mind that only the Internet offers a measurable way to gauge whether consumers are actually paying attention and responding to an offer.    

Another reason for dealers to continue investing part of their budget in traditional advertising is that the number of leads available for certain market areas may be limited.  In this case, dealers may have to resort to other channels in order to get the attention of all the prospects in their area.  Some dealers choose to expand their Internet lead territories in order to get the volume they need.  Keep in mind, however, that increasing your territory by another 30 miles could lower your close rate by 1-4%.  Nevertheless, for volume dealers selling Ford, GM, Toyota, Honda, or Nissan, the major lead providers should have no problem supplying over 300 leads per month within a 25 mile radius.