EMG Proposals 101

Curious what goes into the proposal model’s consideration? There are three main steps that determine the radius targeting and the proper budget.

1. Identify the Dealership’s Existing Market

First, EMG’s data scientists establish the Primary Market Area for each dealership. To identify the dealership’s PMA and define the radius recommendation, we take the following data-driven approach:

1. Surface raw sales data: Pull the dealership’s rolling 6-month sales data from Experian DMV records. This includes every zip code that registered a new or used car sale from this dealership within the 6-month window.
2. Filter out anomalies: The model then filters the raw sales data to remove anomalistic zip codes. This step involves:
   1. Purging zip codes with less than one sale per month over the 6-month period.
   2. Removing used-car, fleet, and auction transfer sales records
   3. Removing outlying zip codes 50+ miles from the dealership.
   4. Considers the dealership’s current market strategy, including its typical customer reach and competitors, with DMV data.

3. Define the primary market: Once we have removed all anomalistic zip codes, we are left with the dealership’s core market. Given that this area can still be quite large and dispersed, we fine-tune the market to include ZIP codes that collectively represent 80% of the dealership’s sales penetration. This involves expanding out from the dealership in 1/2 miles increments until this threshold is reached.

With this comprehensive data, EMG accurately defines the dealership’s primary market, providing a recommended advertising radius.

2. Size the Market

Once the radius is established, EMG gauges the size of this market to determine the required media investment. First, our data scientists identify the populations of the targeted zip codes via U.S. census data. Next, EMG determines the streaming household penetration of that population via streaming media data; this is how many households have streaming subscriptions in those zip codes. To further size the market, EMG determines the percentage of those streaming households that are pre or in-market for a vehicle, via data from Experian and Polk Automotive Solutions. Lastly, the model considers the dealership’s OEM brand to anticipate obtainable market share.

Now that the market has been properly defined and sized, the model can incorporate EMG’s regression data to produce the budget recommendation.

3. Generate a Media Plan Proposal

To finalize the dealership’s streaming proposal, the model leverages EMG’s proprietary regression data to assist in budget determination. This historical campaign data is trained on over 40 million historical dealership arrival data points from more than 12,000 managed automotive campaigns across North America. These real, historic data points best determine the probability of arrivals and market share penetration.

After incorporating EMG’s historical data, our data scientists can produce the appropriate media investment for that market. Dealerships are now equipped with comprehensive campaign planning recommendations for every tactic. It includes a map of the recommended radius, three budget tiers, the proper channel allocation and audience targeting strategy. It also includes the dealership’s current market share and offers insights into the forecasted households reached and projected market share gain after 90 days of campaign activation.

As you may already know, EMG’s proposal offers three budget tiers. These tiers aim to give dealerships and agencies the ability to see the distribution of market share potential. This defines exactly where media money will be most productive, ranging from the (1) minimum spend for any growth, (2) optimal productivity for optimal market share, and (3) maximum spend before market over-saturation.

1. Minimum Productive (MP)

The Minimum Productive budget is the minimum budget that can be spent to see some sort of change over time. This is the least amount of money a dealership can spend to see any growth, and that growth will be minimal. Spending anything less than the Minimum Productive budget will have no noticeable growth because there are simply not enough media dollars to reach a fraction of the market. If compared to dieting, spending the MP budget compares to cutting 25 calories per week; there will be results, but they will be hard to notice.

2. Optimal Performance (OP)

The Optimal Performance budget is the most productive and cost-effective amount of money to spend that achieves maximum performance at maximum efficiency. This budget will achieve the perfect amount of market saturation for the recommended geo-target. This budget is the highly recommended choice because it is generated from the trained model: calculating a dealership’s sales penetration, market strategy, market size, OEM market share, combined with EMG’s proprietary campaign data to assign a budget.

The OP budget is the “sweet spot” that is exactly what the dealership needs to spend to reach its potential market share, without overspending and over-saturating the market. In the dieting analogy, the OP budget would compare to cutting a few hundred calories a day and working out three times a week. It is the perfect amount of effort (AKA spend) to see healthy (optimal) impact.

3. Maximum Efficiency (ME)

The Maximum Efficiency budget is the maximum amount of ad dollars that can be spent before substantially oversaturating the market. Any budget larger than the ME budget will result in diminishing returns and market over-saturation where spending more will get the dealership nothing. In the dieting analogy, the ME budget compares to working out 4 times a week but cutting all dinner meals out of the diet. There will be impact, but it is not the healthiest (most optimal) method and is borderline extreme.

EMG’s proposal tool generates the precise budget to be spent within the exact radius targeting to maximize performance and efficiency. The proposed radius targeting and budget are codependent on one another to be successful, hence why EMG refers to these terms together as a “Geo-Budget Fit.” Using the optimal budget with an expanded or collapsed radius or using the correct radius with a smaller budget is unproductive: reaching the wrong market, diluting the media dollars, cutting the frequency in half, and completely missing valuable households.

At the very least, the right people need to see the dealership’s ads. Even with poor creative and suboptimal channel allocation, reaching the right people with the proper geo-targeting/budget fit will see a 20% market share increase. EMG has dedicated substantial time and research into this trained proposal model because we understand the impact these two tactics have on a campaign’s ability to perform.

The Common Offender: Starting Small

When launching a streaming campaign for the first time, underspending the budget might seem like the conservative, wise choice for a dealership. However, not meeting at least the Minimum Productive budget will show no noticeable performance lift. Spending any amount under the MP is simply not enough to work with. This means that the majority of the people in the dealership’s targeted market will never see the ad because the budget does not allow enough ad spend to reach all potential car-buyers in their market. To see big trajectory growth in dealership market share and walk-ins, the campaign needs a more substantial budget (Optimal Performance) to reach their entire market. Like cutting 25 calories a week will not lead to noticeable weight loss, Under-cutting the market by underspending will not lead to sizeable market penetration.

Generating a dealership streaming proposal is an exact science, meaning there is a right and a wrong answer to “which budget” or “which radius should I use?” An EMG proposal’s purpose is to make that answer easy by giving customers a cheat-sheet for campaign success. The proposal is the exact recommendation the dealership needs to adopt to reach every auto-intender in their existing market.

To generate a custom proposal for your dealership in seconds, click here to access our automated dealership proposal tool.