Why “Customer Lifetime Value” Should Be the Auto Advertising Buzz Word for 2023

Auto dealers have been on a bumpy ride over the past few years. As supply chain disruptions continue to impact inventory, the industry is experiencing permanent shifts in auto retailing. Today, up to 75% of vehicles are sold before they hit dealer lots,1 so customers are traveling further for their vehicles, and, as a result, customer loyalty—especially long-term loyalty—is at a six-year low.2 Meanwhile, advertising strategies are not always keeping up.

And while dealers are seeing record profits due to scarcity, allowing for them to maximize MSRP or even go beyond it, the future is somewhat uncertain. How do these less frequent, higher sales translate into long term profitability? And, how many of these transactions are leading to loyal customers?

The challenges facing auto dealers are changing and as a result, their marketing strategies must evolve. Many dealers who have spent years racing to the bottom of the marketing funnel have discovered that those tactics alone won’t nurture their customers in the long run or bring them back for service and other future needs.

In 2023, effective auto advertising needs to be about more than just the immediate sale. The auto advertisers that win now and in the future are the ones that are focused on driving lifetime value.

Focus on the Whole Customer

Advertising has become increasingly focused on speaking to a customer’s most immediate need. But to maximize their return on advertising, auto dealers should use advertising to nurture customers throughout their entire experiences with the dealership.

Dealers should resist the urge to focus solely on new vehicle advertising, because ultimately you are not just trying to sell a vehicle. By exposing customers to all that your dealership offers through advertising, you have a higher chance of converting them at the right time and retaining them for when their needs inevitably change. You want to be the first stop for any auto needs they have: maybe they want to learn more about electric vehicles, have a trade in, need service or will be in-market for a new vehicle years down the road. Work to acquire a loyal customer that will be most profitable to you not just in the short term, but over their lifetime.

Reach The Customers in Your Own Backyard

When bringing your full-funnel messaging to customers, be sure you’re focusing on the right ones. Lifetime value lives and dies with proximity. In other words, geography is key to driving long-term value. When a customer is ready for service or another new vehicle, distance is a big factor in those decisions. Advertising in nearby geographies drives the highest lifetime value, and this is important to your entire dealership – regardless of the entry point.

We all know that, at the start of the pandemic, buyers were willing to travel further to secure a vehicle, but while these far-away dealers may have secured one great sale, they can’t expect customers to return for service. The reality is only about 1/3 of consumers say they prefer service centers at dealerships, and that will drop if they have to travel longer distances for service.3 Service is an important revenue opportunity for any dealership, so maximize that opportunity and drive customer lifetime value by ensuring your advertising is focused on the geographies that matter.

Build a Brand Story and Creative That Resonate

Lifetime value starts with a potential customer’s awareness of your brand, especially among future vehicle buyers who are introduced to your brand for the first time. Whatever it is that makes you the best, remember that an impactful message and brand story that engages and resonates with the target audience is vital. Don’t wait until consumers are ready to buy; start at the top of the funnel and make them aware of your brand from the get-go.

Creative is one of the most powerful tools in your toolbox to make an emotional connection so that your future customers think of your dealership at their time of need. Consider what sets your dealership apart: is it the “no haggle pricing,” the “largest selection in the area,” or are you a “family run business”? Whatever your unique message, be sure consumers in your area are hearing about it, even if they are not “in-market” for a new vehicle. From branding to call-to-action, studies have found that different creative resonates more with customers in different stages of the customer journey.4 Lifetime value spans more than just a first impression, so be sure your advertising does, too.

Reach Audiences Where They Are Watching

TV advertising continues to be one of the best ways to inform and influence audiences. In fact, studies have shown that audience reach is the highest when 70-80% of video is allotted to linear TV, and the rest to streaming.

But today, audiences continue to fragment into more distinctive niches, and it is important that advertisers are willing to reach them where and when they are watching. Ads seen on the big screen, whether through TV or streaming, have been shown to be twice as memorable as short-form mobile digital advertising.5 Additionally, an attentive audience is more likely to respond to an advertiser’s message, further increasing their chances of building lifetime value and strengthening relationships with customers. Accordingly, advertisers must be open to shifting their previous buying habits and approaches—and be sure to measure the results so you can improve for next time.

Prepare for the Future

Eventually, vehicles will make their way back to dealerships in a big way. You can prepare for this return and set up future profits by establishing customers’ long term value through smart advertising strategies that will last a lifetime.

This content has been modified from the original article published here on


1. NY Times Feb 2022 “Half of the cars arriving at dealers are already sold, AutoNation says
2. June 2022 IHS Markit Report “Brand Loyalty Among US Auto Consumers Drops to Six-Year Low”
3. 2021 Cox Automotive Service Industry Study
4. Creative analysis using three distinct commercial messages (Survey conducted by Lucid; Q4 2021; N=1,500)
5. Comcast Advertising and MediaScience, “TV Makes Memories,” October 2022