Automotive digital marketing has undergone significant recent growth and evolution, and now holds greater-than-ever potential for meeting consumers when and where they are ready to buy. Enter digital retailing into the automotive marketing lexicon. OEMs, dealerships, and third-party marketplaces are quickly moving to capitalize on the shift in consumer behavior as they look to accelerate purchasing momentum, convert leads into sales, and drive revenue through online and offline sales. 

Let’s walk through the ins and outs of automotive digital retailing, and dive into what automotive marketers need to know for a well-informed view of digital retailing programs and auto marketing, to help meet consumers on their path to purchase.

 

What is Digital Retailing?

Simply put, digital retailing is the process through which the auto industry meets consumers where they are – online. It’s the next generation of selling and purchasing, simplifying the sales process and empowering digital purchasing.

Digital retailing in the automotive industry helps shoppers engage with dealership websites and marketplace listings at various stages of the buying process. One key site action triggers another, then another, collecting first-party data along the way – data which marketplace operators can then tailor to customize unique and impactful advertising experiences for individual consumers. This helps automotive marketplaces modernize the way dealers buy advertising.

It’s no secret that COVID-19 changed the e-commerce game. The pandemic’s exponential impact on global digital consumerism and overall activity are all growing at a swift pace; data from eMarketer indicates that e-commerce sales will exceed $1 trillion in 2022. Specifically, there’s money to be made in automotive digital advertising. In fact, eMarketer estimates that US auto’s digital ad spend will grow to $19 billion by 2023.

Third-party vehicle marketplaces (for example, Cars.com, Autotrader.com, KBB.com, and Truecar.com) can put that data to work for their bottom line, capitalizing on the the shift to purchasing vehicles fully online –or predominantly online, after a test drive and/or trial period– by introducing digital retailing experiences. To that end, Cars.com recently announced two new products that move their business closer to financing and car sales. Meanwhile, Autotrader and KBB are touting their first-party data set to deliver more purchase-ready consumers to dealers. 

Today, it’s all about making online purchasing simple and streamlined – with maximized personalization, and as many unique site capabilities as possible: first-party data implementation, precision audience targeting, and more. That’s where digital retailing comes into play. 

 

Third-Party Marketplaces’ Advertising Evolution

Historically, third-party marketplaces depended on subscription-based models to monetize their sites. Typically, the subscription model works by guaranteeing a certain ad position or number of leads on the marketplace during a set time period, for a set price. That model is effective enough, but leaves room for improvement. The subscription model caps both advertisers (dealerships, in this case) and marketplaces with set allotments, thereby narrowing both the number of dealers who see value in participating, and the revenue that the marketplace can generate. 

As the automotive industry embraces auction-based advertising within digital retailing, it’s also converging with a broader industry trend in recognizing the significant value in first-party data. At the center of these two trends are marketplaces who have a rich first-party data set, and can provide end-to-end buying experiences for consumers.  

Now, the industry is shifting toward maximizing as many customization opportunities as possible; to that end, a native ads program gives marketplaces the chance to dig into untapped revenue potential. These native ads blend in seamlessly among their organic listing counterparts, and are served via a bidding-based auction model utilizing customized, first-party consumer data. In this bidding approach, a bid is simply the amount an advertiser agrees to pay a publisher, which in turn determines where their ad is placed within the marketplace’s auction layout. Naturally, advertisers want the best possible positioning for their ads. By allowing advertisers to come into the marketplace with a cost-per-click (CPC) bidding methodology, the ads associated with automotive digital retailing empower dealerships to make the most out of their dollar.

 

The Benefits of Auction-Based Advertising

By introducing an auction model into your marketplace, site operators are ultimately building a fluid, dynamic ecosystem in which advertising is personalized, and customer experiences streamlined – maximizing the potential for revenue growth and repeat customers. 

These are some of the benefits a marketplace can expect from auction-based advertising:

• More Advertisers – Subscription models limit both the type and total quantity of advertisers. Auction-based advertising allows a much higher number of advertisers to compete freely for consumers’ attention. 
• More Competition – More advertisers mean there will be more competition on the marketplace. As the competition heats up, this creates price pressure and drives revenues beyond traditional subscription models. 
• Maximize Yield – Auction-based advertising sets a fair market price for your inventory, even the longest of the long tail, allowing advertisers to capitalize on the lower CPCs while generating incremental revenue for your marketplace. 

 

Don’t forget the benefits for advertiser, too:

• More Control – Auction-based advertising allows more control over budget, targeting, and performance goals.
• More Efficiency – The auction model allows for budget flexibility and agile optimization that drives healthy campaign performance.
• More Reach – Campaigns can extend into additional geographies and/or a broader category set, and utilize additional ad types to reach more consumers as they browse through the marketplace articles, reviews, and listings. 

 

In Conclusion 

Digital spending on digital retailing is only going to continue its forward momentum. Site operators are primed for the unique opportunity to optimize their existing online marketplaces with the introduction of strategic ad placement. Digital retailing opens the door for marketplaces to implement innovative new monetization strategies. Additionally, on the consumer side, it allows interested buyers to begin their shopping journey on a marketplace site, then move further down the funnel when they finalize their purchase in person or online. 

Koddi helps automotive marketplaces facilitate a consumer-centric experience, driving more sales and increased incremental marketplace revenue.

Find out what the power of Koddi Ads can make for your digital retailing plans. Let’s talk!