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Abstract: Are automotive marketplaces leading to diminishing returns?

This research article delves into the efficacy and return on investment (ROI) of using online marketplaces for dealership advertising, addressing a pivotal concern in the automotive sales industry. While dealerships have traditionally relied on platforms such as Autotrader, CarGurus,, and Carfax for advertising, there’s an ongoing debate regarding the actual ROI from these marketplaces. The research reveals that while online marketplaces offer broad reach, they also present challenges like high costs, limited dealership differentiation, and variable conversion rates​​.

A key finding is the significant expenditure by dealerships on these platforms, ranging from $2,000 to $20,000 per month per vendor, often without clear sales attribution. This lack of definitive ROI raises questions about the overall effectiveness of these platforms for independent dealerships​​.

However, the landscape of dealership advertising is evolving. Alternatives such as Facebook & Instagram Ads, Google Ads with Vehicle Listing Ads (VLAs), and email marketing are emerging as more cost-effective and targeted solutions. These platforms provide dealerships with the tools to reach potential buyers more directly and efficiently, often at a lower cost compared to traditional online marketplaces. For instance, digital marketing is found to be more cost-effective, with a study revealing it costs around $150 in digital marketing spend to sell one car, compared to $1,581 using traditional media​​.

The research also highlights innovative strategies like proactive outreach and leveraging modern marketing tools for a more comprehensive approach to dealership marketing. These strategies involve identifying opportunities across loyalty, service, and conquest portfolios, using data-driven insights to understand customer behavior and preferences​​.

Furthermore, the importance of a consistent customer experience is emphasized, aligning with the shift in consumer behavior towards online purchasing. Dealerships are encouraged to adopt a customer-centric approach, focusing on transparent and concise messaging across all channels to build trust and rapport with potential buyers​​.

In conclusion, while online marketplaces remain a significant channel for dealership advertising, exploring and integrating alternative digital marketing strategies could potentially yield a higher ROI and better align with changing consumer behaviors and market dynamics.