Red Light, Green Light: The Top 3 Myths About Auction-Based Ads in Digital Retailing Programs

Digital retailing is an automotive marketplace’s most efficient option to deliver the elevated and personalized experiences today’s consumers expect, while optimizing revenue and strengthening relationships with dealers. As OEMs, dealers, third-party marketplaces, and many others are looking to capture their share of the digital retailing boom, automotive marketers and marketplaces should be looking at the rapid growth of retail media as a sign of how advertising will evolve in automotive.

As restrictions crack down on third-party tracking, auto marketers must find new ways to remain effective and agile as the industry rapidly moves vehicle sales online. Look no further than the travel and retail industries, and the publishers and marketplaces like Expedia and Amazon who are winning marketing dollars closest to the point of purchase. 

Of course, it’s common to have some reservations when considering a new approach to marketplace enhancements. Let’s walk through some of the most common reservations marketers and marketplaces encounter as digital retailing programs expand, and find out the truth so you can hit the gas at the green light.


Red Light:
An Auction-Based Native Ad Program Isn’t Necessary, and Might Even Negatively Impact My Marketplace


Green Light:

Auction-based native ad programs perform exceptionally well, and can even improve conversion rates.

Multi-brand publisher marketplaces in the automotive industry generate hundreds of millions in advertising revenue, while still supporting the core business. Cox Automotive’s 2021 Car Buyer Journey Study indicated that dealers who decreased their ad spending between 50% and 89% saw sales drop by 28%. 

Auction-based ad models within digital retailing in the automotive industry provide marketplaces a unique opportunity to evolve their advertising products, increase revenues, enhance consumer experiences and garner advertising budgets from industries beyond automotive. If done right, the rapid evolution of the automotive purchase process will help marketplaces move well beyond a place where consumers simply browse car listings, and into the driver’s seat of car sales. As marketplaces expand their product suite they should also look to evolve their core business ads. 

Since the ads associated with auction-based digital retailing are based on first-party data and consumer behavioral indicators, most programs see a neutral or positive impact on core conversion rates. By utilizing a strong data-based testing strategy during the program build, marketplaces can ensure they’re architecting the most relevant and powerful digital retailing program possible – thereby strengthening the core conversion rate.


Red Light:

Auction-Based Ads Don’t Deliver Increased Relevance Over Subscription Ads

Green Light:

Auction-based ads do in fact deliver increased relevance over subscription ads. 

A fluid and dynamic ecosystem is built on first-party data – behavioral signals from consumers themselves. This means that marketplaces can deliver even more personalized online shopping experiences than ever before, maximizing the potential increase in revenue. In fact, research from states that 38% of current car shoppers expect to complete the entire car-buying process online, with another 38% intending to do all the paperwork online but purchase their vehicle in person.

As marketplaces evolve from consumer browsing to buying, personalization, relevancy, and user experience will hold equal importance across both paid advertising and native content within a marketplace. The leading automotive retailers/marketplaces will weave the advertising products into the marketplace’s native user experience. In this model, ads are delivered based on shopper behavior and site content, driving ad relevance and improving user experience.

Ultimately, if shoppers see ads that allow them to find and purchase the vehicle they’re looking for more efficiently, the user experience improves, and your marketplace benefits.


Red Light:

Marketplaces Don’t Want to Risk Abandoning The Subscription-Based Model, Which Performs Well Enough


Green Light:

Yes, the historically used subscription-based revenue models work well enough, but your marketplace can be optimized even further using a privacy-first auction approach.

Auction-based advertising methods, layered on top of programs, drive incremental revenue via leads that convert – and dealers are noticing. Implementing an auction-based ad program within an auto marketplace helps engage both consumers and suppliers, and the suppliers are eager to optimize their ad performance. These engaged consumers and optimized ads add up to more efficient transactions and accelerated sales.

Additionally, as third-party cookie tracking declines, dealers must shift their spending strategy toward privacy-first data. Marketplaces who lag behind in first-party data sets and proper technology will quickly fall behind their more innovative competitors, as dealers move toward forward-leaning privacy-first sites. The native ads of a digital retailing program provide a compliant and efficient way to target car buyers near the point of sale, giving dealers a significant advantage over their competitors. A marketplace with a first-party digital retailing solution offers an ideal spending opportunity for these savvy digital dealerships.


Now with the most common red lights surrounding evolving an ad program to align with your digital retailing strategy solved, your auto marketplace has the green light to cruise into a custom program that’ll benefit your entire marketplace ecosystem – including both dealers and shoppers.

Ready to discuss what a custom advertising solution can do for your marketplace? Contact us today and let the experts at Koddi walk you through your marketplace’s potential.