Auto Dealer Outlook Improves, Co-op Ad Funding Is A Concern

New data indicates that your local franchised auto dealer outlook has improved as we draw closer to the end of the second quarter of 2020. The Q2 2020 Cox Automotive Dealer Sentiment Index (CADSI) results show a score of 20, which is much lower than the Q1 level of 49. The better news is that franchised dealers have a three-month market outlook of 57. Their reasons for the optimistic outlook range from believing there’s pent-up demand in the market to low interest rates. Before long, consumers won’t be able to pass up the great deals being offered in the new vehicle market.

Digital Advertising Co-op Funds

The new vehicle market will be more competitive than ever, and your clients will need to advertise to get the attention they want. Some dealers will continue to rely on co-op advertising support from their factory suppliers. But analysts have found that dealers are frustrated with the strings that come attached to the digital co-op advertising support. When auto manufacturers started making co-op advertising support available for digital formats, dealers rushed to tap into these funds. The quality of some of this advertising may not have been what everyone had hoped for. In an attempt to control how funds were being spent and to standardize quality, auto makers began to approve digital service providers. In order to qualify for co-op funding, dealers were required to use one of these providers. Before long, third-party operators rushed to get themselves listed as preferred or sole suppliers for digital advertising services when factory-supplied co-op funds were involved.

Preferred Vendor Frustrations

According to a report in Automotive News, this process hasn’t gone smoothly. Dealers can’t count on getting ads localized the way they want. And dealers have run into additional complications when the preferred vendors aren’t able to handle the workload and put off the advertising work for months. In fact, several dealers believe this process works much better for the automaker’s internal operations than it does in terms of them being able to sell vehicles under their nameplate.

In some cases, unhappy dealers have joined forces and asked the manufacturer to make changes to their preferred vendor list, especially when one vendor has managed to arrange for sole provider status. Another approach is that some dealers have decided not to use co-op funding. They work with a vendor of their choice — one that can manage digital advertising that drive traffic to the dealership, whether it’s search or website development. This action may be especially crucial now that the auto dealer outlook is improving.