How Dirty Data is Driving Up Advertising Costs for Dealerships

As advertising costs continue to climb, dealerships are feeling the pressure to maximize the value of every dollar spent. The 2024 NADA Mid-Year Report highlights this trend, revealing that both total advertising costs and the advertising cost per new unit sold are projected to surpass 2023 levels, indicating that these budgets will likely grow even further in alignment with broader industry trends. 

Source: NADA Data 

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But spending more doesn’t guarantee better results. Many dealerships struggle to see a meaningful return on investment (ROI) on their email campaigns, direct mail pieces, and digital advertising campaigns, leaving them wondering: Where is all this money going?

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The answer often lies in the quality of your data. Dirty or fragmented customer records hinders the ability to target the right shoppers which leads to inefficient campaigns, wasted ad dollars, and missed opportunities. But it doesn’t have to be this way. With clean, enriched data, dealerships can take control of their advertising spend and drive real results.

Let’s explore how better data practices can be the secret weapon for marketing strategies.

The Challenge: Rising Advertising Costs and Wasted Spend

Every dealership marketer tries to stretch their budget as far as possible, all while vying to stand out in an increasingly crowded marketplace and capture the attention of in-market shoppers.

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Poor data management amplifies the challenges, making it harder to create effective campaigns. Here’s why:

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• Ineffective Targeting: Outdated or incomplete customer records result in ads being shown to people who have no interest in buying a car.
• Missed Opportunities: Without accurate contact details, follow-ups go unanswered, and email campaigns underperform.
• Broad Audience Strategies: Casting too wide of a net on digital platforms leads to higher costs and lower conversions.

Studies show that nearly 90% of dealerships' customer data is incomplete, with a large percentage of that data being outdated or duplicated. This leads to wasted ad spend, as campaigns target invalid contacts or shoppers who are no longer in-market. The result? Budgets are exhausted quickly, with little to show for the investment.

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So, what can dealerships do to ensure their marketing dollars aren’t going to waste? The answer lies in better data management, hygiene and enrichment.

The Solution: Use Clean and Enriched Data to Maximize ROI

By addressing the root problem—poor data quality—dealerships can unlock smarter strategies for managing their marketing spend. Here’s how clean and enriched data helps:

1. Pinpoint Your Perfect Audience

Messy data leads to wasteful ad spending. Clean data allows dealerships to identify the right shoppers with the right messaging and expand their targeting with look-alike audiences.

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By ensuring accurate identifiers like email addresses, phone numbers, and household addresses are available, dealerships can send high-quality data to advertising platforms such as Meta. This increases the likelihood that these platforms can match shoppers to active users on sites like Facebook, ensuring that ads reach the right audience.

2. Increase Engagement with Accurate Contact Information

With clean data, such as up-to-date phone numbers and email addresses, your dealership can engage with customers more effectively. Email campaigns are no longer a guessing game—when you have valid email addresses, you can deliver personalized offers that get noticed. Clean contact data means higher open rates, increased customer engagement, and, most importantly, more conversions.

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Similarly, with accurate home addresses, your dealership can leverage direct mail campaigns to reach the right shoppers. Instead of wasting resources on mistargeted mailers, you can send offers and promotions directly to the right customers, building stronger connections and driving interest in your inventory and offers.

3. Maximize Your Budget for Future Growth

By improving campaign performance today, you create room to reinvest in other growth initiatives, such as personalized experiences or expanding your inventory.

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More importantly, clean, accurate data also unlocks the ability to nurture leads and engage existing customers within your database. Instead of relying solely on expensive advertising platforms, you can turn to cost-effective marketing channels like email, SMS, or direct mail. With clean data, these campaigns become more targeted and impactful, delivering high engagement at a fraction of the cost.

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Think of it this way: Instead of spending $15,000 on a broad campaign that barely converts, you allocate $10,000 toward tailored campaigns that deliver double the results. Or, you use even less to reach qualified leads through personalized emails and text messages. Clean data makes this possible, helping your dealership maintain a competitive edge while reducing dependency on high-cost advertising channels.

Why Now is the Time to Clean Up Your Data

With advertising costs rising, dealerships can’t afford to waste money on ineffective campaigns. Cleaning and enriching your customer data not only makes your marketing more efficient but also more cost-effective, personalized, and successful. The cornerstone of reducing your ad spend and increasing ROI lies in the health of your database.

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To start, consider conducting a data health assessment. This process evaluates the quality of your data, ensuring it is up-to-date, accurate, and reliable for decision-making. Ask critical questions like:

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• Is their email address still valid?
• Do they still reside at the address in your CRM?
• Is their phone number still accurate?
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The more fields you verify for each customer record, the more precise and impactful your targeting will be. A clean, enriched dataset isn’t just about filling in the gaps—it’s about empowering your dealership to make smarter, more strategic decisions.

If you're ready to optimize your advertising budget, start by evaluating your data health. By investing in your data health now, you’re positioning your dealership to stand out in a crowded marketplace and capture more opportunities than ever before.

Ready to get started?

Download our free white paper on how data hygiene and enrichment can transform your dealership’s marketing and drive better customer engagement. Don’t let messy data eat up your advertising budget—take control and start seeing results.