Determining the Online Advertising Budget for Used Car Dealerships

When it comes to used car dealerships, the question of how much to spend on online advertising is not a trivial one. It’s a delicate balancing act between spending enough to attract customers and not overspending to the point of diminishing returns. This article will delve into the factors that influence this decision and provide some guidelines to help you make an informed choice.

Understanding the Importance of Online Advertising

Before we dive into the numbers, let’s take a moment to appreciate the significance of online advertising in today’s automotive industry. With the majority of consumers now starting their car buying journey online, having a strong digital presence is no longer optional for used car dealerships.

Understanding the Importance of Online Advertising

Online advertising not only increases your dealership’s visibility but also allows you to target specific demographics and track your return on investment (ROI). This makes it a powerful tool for driving sales and growing your business.

The Factors Influencing Your Online Advertising Budget

Several factors will influence how much your dealership should spend on online advertising. Understanding these factors will help you make a more informed decision.

The Factors Influencing Your Online Advertising Budget

The Size of Your Dealership

Generally, larger dealerships have larger advertising budgets. This is because they have more inventory to sell and, therefore, more revenue to reinvest into advertising. However, this doesn’t mean that smaller dealerships can’t compete. By focusing on cost-effective online advertising strategies, small dealerships can still make a big impact.

It’s also worth noting that the size of your dealership can influence the type of online advertising that you choose. For example, larger dealerships might benefit from more comprehensive strategies that include SEO, PPC, and social media advertising, while smaller dealerships might focus on one or two key areas.

Your Dealership’s Goals

Your dealership’s goals will also play a significant role in determining your online advertising budget. If you’re looking to aggressively grow your business, you’ll likely need to invest more in online advertising. On the other hand, if you’re simply looking to maintain your current level of sales, your advertising budget might be smaller.

Remember, your goals should be SMART (Specific, Measurable, Achievable, Relevant, and Time-bound). This will help you track your progress and adjust your advertising budget as necessary.

The Local Market Conditions

The conditions of your local market can significantly impact your online advertising budget. If you’re operating in a highly competitive market, you’ll likely need to spend more to stand out from the crowd. Conversely, if there’s little competition, your advertising budget might be lower.

It’s also important to consider the economic conditions of your local market. During tough economic times, consumers are less likely to buy used cars, which might necessitate a larger advertising budget to attract the few buyers that are out there.

How Much Should You Spend?

Now that we’ve covered the factors that influence your online advertising budget, let’s talk numbers. The U.S. Small Business Administration recommends spending 7-8% of your gross revenue on marketing if your business makes less than $5 million a year. Of this marketing budget, about 50% should be allocated to digital marketing, according to the Gartner CMO Spend Survey.

However, these are just guidelines. The actual amount you should spend on online advertising will depend on the factors we’ve discussed above. It’s also a good idea to regularly review your advertising budget and adjust it as necessary to ensure you’re getting the best possible ROI.

Maximizing Your Online Advertising Budget

Regardless of how much you decide to spend on online advertising, it’s important to make the most of your budget. This means choosing the right online advertising strategies for your dealership and tracking your results to ensure you’re getting a good ROI.

Choosing the Right Online Advertising Strategies

There are many different online advertising strategies to choose from, including SEO, PPC, social media advertising, and email marketing. The right strategies for your dealership will depend on your goals, your target audience, and your budget.

For example, if you’re looking to increase your dealership’s visibility, SEO and PPC might be good options. If you’re looking to engage with your customers and build relationships, social media advertising and email marketing might be more appropriate.

Tracking Your Results

Tracking your results is crucial to maximizing your online advertising budget. By monitoring your metrics, you can see which strategies are working and which ones aren’t, allowing you to adjust your budget accordingly.

There are many different metrics you can track, including click-through rates, conversion rates, and ROI. The key is to choose the metrics that are most relevant to your goals and to track them consistently.


Determining how much to spend on online advertising is a complex decision that depends on many factors. However, by understanding these factors and following the guidelines we’ve discussed, you can make an informed decision that will help your used car dealership thrive in the digital age.

Online Advertising Budget

Now that you’re equipped with the knowledge to determine your online advertising budget, it’s time to put that plan into action. At Woobound Marketing, we’re driven by the joy of collaborating with clients who value our dedication. We’re here to help you grow, bringing our A-Game and specialized automotive marketing expertise to drive your dealership’s success. With our passion for cars and cutting-edge marketing technology, we’re ready to bridge the gap and elevate your online presence. Ready to shift gears? Let’s chat.

Need customers? We can help!