Diversification: a risk management technique that mixes a wide variety of investments within a portfolio.
Why define it? No, Dealer.com is not opening a retirement fund management branch. While diversification is commonly associated with the financial industry, it’s relevant to automotive as well.
Diversifying your digital advertising investment is critical to the performance and security of your marketing strategy. Investing across multiple channels (paid search, retargeting, and display), enables you to reach your local shoppers across their whole path to purchase.
With paid search and retargeting, you capitalize on existing demand in your market: the local shoppers searching actively for your inventory or those that have already visited your website. With display, you generate new demand for your brand, inventory, and special events by building awareness amongst a wider audience. For more on how exactly that works, read this article.
If you only invest in one of these channels, you’re limiting your return on investment (ROI) and missing out on opportunities to reach potential customers in your target area. Talk to your account manager and discuss your current strategy. Is your investment covering demand capture and demand generation strategies? Is your digital strategy aligned with your profit centers? Uncover how best to activate existing opportunities in your market.
Fluctuation: an irregular rising and falling in number or amount; a variation.
Just like with the stock market (think about all the talk around oil), the ROI of each advertising channel fluctuates with industry trends and consumer behavior. Let’s review the 2015 sales calendar: per usual, January saw lower sales numbers. Also typical, sales began to spike as we hit March, dip slightly come April, peak a bit in May, and then gradually uptick starting in June all the way through October. While there was solid performance across the holidays, the overall trend was down post-October.
Given these common variations, your advertising provider should monitor your performance across each channel and move funds around as needed to ensure you earn the biggest ROI. Let’s say, for example, that your website traffic is low in January. Most likely, you won’t have enough unique visitors to fully exhaust your retargeting budget. Instead of letting those unused funds just sit there generating an ROI of $0, your advertising provider should proactively reallocate them to display to generate demand or to paid search to take advantage of existing search traffic in your market. Come March, when sales start to rise and your site gets more traffic, funds should be shifted back to retargeting and potentially increased as your unique visitor count grows.
Dealer.com executes these budget-yield optimizations on behalf of all our advertising clients.
Your advertising provider should reallocate your budget based on site visits or industry trends and align it with your profit centers. Doing so ensures that your investment is always working the hardest and most efficiently, driving the best ROI available.
One caveat – in order for that to happen, we have to return to topic one: diversification. If you are only invested in one channel, the optimizations available to increase the efficiency of your advertising spend are limited.
Diversification of your advertising portfolio is a function of anticipating shopping traffic fluctuations, which are simply a fact of life. To smooth out the web traffic bumps inevitable throughout the year, diversify your digital advertising investment to allow for both demand capture and demand generation, and make sure your digital advertising provider is monitoring your investment and making changes as needed to drive the highest ROI month over month. When you do, you’ll find the ride a whole lot smoother throughout the year.
Annie Ode is the advertising product marketing manager at Dealer.com