Why Dealers Should Maintain Ad Spend During Market Volatility
When uncertain market conditions arise, the first line item many dealers examine is their advertising budget. The logic seems straightforward: unpredictable sales and tighter margins make cutting marketing spend appear to be a practical cost-saving measure. However, this approach often backfires, making dealers less competitive precisely when they need maximum visibility to capture the limited number of shoppers in the market.
Dealers Are Cutting Ad Spend as Sales Decline
According to our MarketAI data, major dealer groups and individual franchises alike are pulling back on marketing spend, with brands like Chrysler, Volkswagen, and Acura seeing significant reductions in dealer advertising budgets as sales decline.
This pullback trend coincides with broader market challenges. New vehicle momentum is plateauing, with “hangover effects” looming from half-a-million accelerated vehicle purchases due to tariff concerns. And according to our data, two-thirds of models are seeing average marketed price increases, creating a more challenging environment where strategic advertising decisions are essential.
The Advantages of Maintaining Your Market Presence During Uncertain Times
While new vehicle sales face headwinds, the current market presents unique advertising opportunities that shouldn’t get cut from dealership budgets.
As new inventory is harder to come by, used and certified inventory is holding strong and should be advertised. And when new inventory dwindles and popular vehicles are harder to get, dealers should use more targeted VIN-level advertising for new vehicles so that the inventory on your lot is being advertised to in-market shoppers.
When competitors reduce their advertising presence, dealers who maintain strong marketing visibility gain three significant advantages.
- Your ads face less competition. With fewer dealers bidding on the same keywords and ad placements, your cost-per-click may decrease while your ad visibility increases.
- Your dealership stays top-of-mind. When there are fewer total shoppers in the market, each interaction becomes more valuable. Your consistent advertising presence means you’re occupying more of each shopper’s consideration set.
- Your inventory gets continued exposure. In-market shoppers will see your inventory multiple times during their research process, while competitors who cut spending become invisible.
Consider this example: if 100 people are shopping for cars in your market this month versus 200 last month, you want to ensure your dealership is visible to as many of those 100 shoppers as possible. The dealers who maintain advertising presence during downturns position themselves to capture market share from competitors who retreat.
Changes in Co-op Dollars Shouldn’t Drive All Your Ad Spend Decisions
Many dealers justify advertising cuts by pointing to anticipated changes in co-op dollars due to declining sales. However, this doesn’t change the fundamental reality of market competition. Your competitors still need to sell cars, and consumers still need to purchase vehicles.
The key insight is that co-op dollar changes shouldn’t dictate your overall advertising strategy. The current market requires a different approach than traditional automotive planning cycles. Monthly inventory reviews and quarterly strategy sessions move too slowly when external factors can impact pricing and consumer behavior within days.
The dealers who thrive during challenging periods use real-time intelligence rather than prediction-based planning to make informed marketing decisions. They focus on understanding which vehicles on their lot need additional marketing support and which campaigns deliver the strongest ROI, regardless of how fast or slow the market is moving.
Consistent Advertising During Downturns Builds Long-Term Market Share
Rather than viewing advertising as a slashed budget item during market volatility, successful dealers treat it as an investment in maintaining and growing market position. The goal isn’t necessarily to spend more during challenging times, but to spend smarter.
This approach means maintaining a baseline advertising presence, focusing on inventory that needs support, and taking advantage of reduced competition in the advertising marketplace. Dealers who maintain strategic advertising during this normalization period position themselves to capture customers who delayed purchases or are now seeking alternatives (used and certified pre-owned) to expensive new vehicles.
When market conditions improve, these dealers find themselves in a stronger competitive position, with increased visibility and market share that continues to deliver results.
Ready to maintain your competitive edge during challenging market conditions? Adpearance provides the real-time intelligence and automated optimization you need to make smart advertising decisions as market conditions change rapidly. Schedule a demo today to see how data-driven advertising can help you capture market share while competitors pull back.