TV Hits the Spot

Direct response television advertising campaigns, also known as infomercials, are giving BDCs something to talk about in dealerships across the country. While some campaigns set up to brand the dealership can take months, sometimes even years, to ingrain your dealership’s name into the minds of consumers. Direct-response advertising lives up to its name; it generates an immediate response from viewers.

When it comes to infomercial ad campaigns, they can be broken down into two groups: long-form and short-form. Long-form mainly consists of 30-minute segments, but some are an hour-long. Short-form includes 60-second and 120-second spots offering dealers just enough time to create a call-to-action. The traditional 30-second commercial is too brief to do anything more than a little branding or make a quick announcement about an upcoming sale.

What’s your Style?
Whether you choose long-form, short-form, or a combination, it’s important to understand the three styles of infomercials. They are:
1. Customized – Typically shot on the lot and often includes dealership personnel with the help of a spokesperson.
2. Blind – Pre-made and doesn’t include your dealership name. Instead, it focuses on a target market (i.e. special finance) and directs callers to a generic 800 number.
3. Blended – A combination of “stock” video that is used in conjunction with dealership-specific video.

Deciding Who to Work With
Another very important, aspect of beginning an infomercial campaign is deciding which company to collaborate with. When searching for a company to produce a campaign, you need to ask yourself a couple of questions. First, ask yourself if your dealership can handle the calls a campaign will generate. Rob Anderson, president of Focus, Inc., said the most common mistake he sees dealers make is mishandling the calls infomercial campaigns generate. He said, “You really have to be able to answer those calls with a live operator.” He suggests dealers utilize a call center.

Some providers will not work with dealers unless the dealership is ready to handle the traffic a campaign will generate and the provider is the judge of whether the dealership is ready or not. For example, some providers won’t work with dealers because they don’t have a BDC/call center primed to manage the influx of calls. Others decline because they feel the dealership’s inventory isn’t large enough. While it may seem odd that some providers work this way, this method improves the success rate of the dealers’ campaigns. However, it may prevent you from starting a campaign with your preferred provider immediately.

In order to work with certain providers, you may need to increase your training or hire additional personnel. Some of these companies, like Auto Ad, who initially refuse to produce campaigns due to a dealership’s inability to handle calls won’t simply turn dealers away. Instead, they will work with dealerships until everything’s in order and then produce the campaign.

Tim Cole, managing partner of Auto Ad, said his company has worked with numerous dealers for months (sometimes as long as a year) to make sure the dealership is ready to manage the surge in business. “We talk to dealers everyday …The biggest part of our job is to go through the different things that are necessary to make [a campaign] successful,” said Cole, adding that dealers not only need a well-functioning BDC, but also the proper inventory and training, before beginning a campaign.

Ken Nichols, managing partner of Birmingham Suzuki, works closely with Auto Ad to produce customized monthly infomercials for his two dealerships. While each store’s spots are different, all the calls are routed to a centralized call center and are then divvied up between the two stores based on the caller’s zip code.

Other providers will handle the calls and deliver the leads from the campaign via the Web. Then, there are companies that will supply the spots without ever questioning whether your dealership can handle an increase in traffic.

If you aren’t equipped to handle the influx of calls from an infomercial campaign, your dealership is probably best-suited to work with a company that handles all the calls and delivers your staff leads to follow-up on. Mike Ciocco, owner of KC Motors (an independent dealership in Everett, Wash.), chose to purchase leads generated from blind special finance spots. Ciocco’s dealership is guaranteed 170 leads per month by his provider and he’s been receiving these leads for about two years.

Once you determine a style of infomercial to run, the second question you should ask yourself is, “Do I need to work with a company that does the media buying?” Media buying is an extremely important aspect of infomercial campaigns. Hank Tenney, vice president of sales at National Media Connection, said, “Buying media is an art and a science.” National Media Connection handles the media buying and specializes in long-form advertising, but also does short-form for dealers as well.

Some dealerships, particularly those in larger dealership groups, work with advertising agencies that can do the media buying appropriately. If media buying is a concern, it’s vital to discuss that with potential providers. Some companies do the media buying and that’s the only way they will work because they refuse to work with an outside agency. Other providers can do the media buying at the dealer’s request, but don’t require it. Of course, there’s a segment of providers who don’t buy media thus completely leaving it up to the dealership.

Anderson stressed the importance of previous experience when it comes to media buying, especially with long-form, adding, “The other very key part with an infomercial campaign is to work with somebody who knows half-hour media time … Buying half-hour time is a lot different than buying 30-second time or spot-buy because it’s a really limited commodity.”

Be sure the provider you collaborate with is going to meet your advertising needs.

Benefits
Although your market does have an effect on how many calls a campaign can generate, it is possible to generate thousands of leads. For example, Sean McCarthy, general manager of Mastria Buick Pontiac GMC in Rayneham, Mass., receives 800 leads each month from blind infomercials that target credit-challenge customers. He said these leads have a lower closing percentage than some of their other leads because of the customers’ credit problems, but the ROI makes the campaign worthwhile. He’s partial to these leads because the call center does “such a good job of capturing customer information.”

For David Brady, managing partner of University Kia in Huntsville, Ala., customized infomercials are proving to be very profitable. Running infomercials seven days a week has driven approximately 3,000 phone calls to the dealership each month since Brady began the campaign in October 2007. His campaign also produces a substantial amount of walk-in traffic. He estimated 50 percent of his ups reference his infomercial campaign, which consists of 30-minute spots that are updated on a monthly basis—a perk not had with blind spots.

With infomercials, you have much more time than the traditional 30 seconds to grab viewers’ attention. Anderson feels the more time you have, the better your advantage. He asked, “Would you rather have a half-hour to tell your story to a customer, 3 minutes, or 30 seconds?” He added that campaigns on broadcast networks have good market reach; according to Nielson Media Research, the average household has more than two TV sets.

If your campaign includes both long- and short-form spots, the savvy dealer can save money. The majority of a 60-second spot can be taken from a 30-minute spot as a result eliminating a chunk of the production cost. In addition, many dealers run short-form spots in conjunction with infomercials. Anderson said, “What we like to do is have the short-form complement the half-hour infomercial … It gets you a lot of frequency and a lot of awareness.”

Cost and Risk
When considering the investment associated with direct response, there are two major costs: production costs and media costs. Naturally, producing and buying media time for a 60-second spot is cheaper than a 30-minute spot. Surprisingly, according to Anderson, buying time for short-form infomercials is more cost-effective than buying 30-second spots because the networks price the short-form spots better. However, since the three styles of infomercials are produced differently, the production cost varies.

The blind style has the lowest production cost because one ad can run in different markets across the country multiple times. Dealers typically pay a set amount each month for a set number of leads, lessening the risk. One drawback of the blind spot is the obvious lack of branding and recognition. Mike Hanrahan, CEO of Car Shop America, Inc. (an infomercial provider), said, “Most dealers are proud of their dealership name and have spent millions over the years creating brand loyalty in their name. They have a lot of money invested in the brand equity of their name, so we feel they should take advantage of that.”

Conversely, the cost of producing a customized infomercial is higher. A customized show is aired by only one dealership,and should be updated regularly to maintain freshness and effectiveness. Both Cole and Anderson agreed it’s necessary for dealers running customized spots to produce a new show every month for maximum effectiveness.

While Brady drops tens of thousands of dollars a month on a customized product for University Kia, he’s satisfied with the ROI his daily infomercial generates. He averages about $16 per lead, regardless of whether it is a call or an up. Brady especially likes the fact that he can measure the performance of his campaign thanks to his dealership group’s call center. His dealership chooses to only run infomercials when the call center is open, from 7 a.m. to 9 p.m., while many other dealerships run them during late-night or very early morning.

Of course, the cost of the blended campaign falls in the middle. The use of “stock” video in this style reduces production cost, but still allows dealers to customize their dealership’s call-to-action and create a compelling offer. National Media Connection is one company that offers this type of infomercial to dealers. Tenney said, “We do have some kind of templating from which we work. This allows us to keep the price significantly lower than if we did complete customization.”

Hanrahan and his team at Car Shop America, Inc. specialize in blended spots. “A full [half-hour] of local lot footage can oftentimes be rather boring. We find that our custom, pre-produced elements are even more polished than the local footage, so that helps ‘catch the viewer’ and then we are more apt to hold the viewer longer, allowing our dealers to brand their dealerships better,” said Hanrahan.

The second major cost is the media airtime. The cost varies widely from market to market, day of the week, and time of day. For example, when buying 30-minute spots for infomercials, larger markets often demand thousands of dollars while the same airtime in smaller markets can be purchased for as low as $250.

A third cost that doesn’t always apply is licensing fees. Some companies license their infomercials. For example, National Media Connection charges a flat fee up front and then charges a licensing fee for every month the spot runs. If it doesn’t run one month, you don’t pay licensing fees.

Filling the Spot
Dealerships that opt for customized infomercials will need a plan to fill the spot regardless of whether it’s 1 minute or 30 minutes. Some dealerships, like Birmingham Suzuki, focus on entertainment. Nichols compared his infomercials to reality TV. Oftentimes, mistakes are left in their spots to help make the program more genuine, as they don’t read scripts during their 30-minute spots. Many of the dealership’s employees dress up as entertaining alter egos, with Nichols often playing the part of Suzuki Man. In addition to fictional characters, part of their campaign is giving away a car every month.

Many dealers, whether they have fully or semi-customized spots, showcase inventory. With the blended show, dealers can work with their ad agency to fill some of the time with appropriate “stock” or manufacturer video. The remaining time is often used to showcase the dealership and its employees, an inventory lineup, and/or customer testimonials.

Many of the blind spots focus on creating a strong call-to-action to attract callers from a target audience. Anderson said, “Do work with people that have at least a little direct response television experience because they know how to really create a call-to-action. The most important thing is to create a solid offer and a call-to-action.” Blind shows also include customer testimonials. Anderson believes testimonials hold more weight if people sitting at home can relate to the customer and make more of an emotional connection.

Due to the cost associated with direct response ad campaigns, shows must be done correctly in order to generate optimum results, from production to media buying to handling the increased traffic they generate. Anderson said about direct response, “If you do not know what you’re doing, there’s high risk associated … probably more so than with anything else you can do.” Mitigate this risk by readying yourself for the commitment these campaigns require and by employing experienced professionals

Vol. 2, Issue 1