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On 10/19 Your Cost Per Click Is Going Up.  Here's Why.

Posted by Aaron Nicely on Sep 14, 2020 9:51:00 AM
Aaron Nicely

On August 18, Google announced that it would no longer allow zip code targeting for specific industries. This specifically affects automotive because it’s included in the credit category for advertising. As of October 19, Zip Code targeting is dead, and there will be consequences across the board.

That sounds a little dramatic, but costs are going up and efficiency is going down as dealers and agencies attempt to adapt to an unfamiliar strategy.

Zip targeting has worked for a long time. It was clean and easy to define. “These are MY zips”. Manufacturers assign areas of responsibility based on census tracts, which are translated to zip codes. Dealers are responsible for selling into those zips. They target their marketing towards those zips, sell cars in those zips, and report those numbers. Google did a nice job making it easy to import or add lists of zip codes for a clean marketing strategy so you could prioritize ad spend on areas you are responsible for.

So, now you can’t use zip codes, most will target based on radius.

There are several differences between using a radius and zip codes. Zip Code targeting is bound by exactly that, the boundaries of the zip code. Most campaigns are set to include people in those bounds, or people interested in those bounds. There is a margin of error involved in this due to the way IP Addresses are resolved and often changed within an area but registered mobile devices have made this more precise.

Radius targeting, on the other hand, looks for people within a certain distance from the point of interest, as the crow flies. It may cut in and out of zip codes, include large swaths of uninhabited area such as bodies of water, and other areas you might not otherwise include. There are problems with this approach. If you want to reach a target further to the east, you make your radius wider. Consequently, your radius gets wider to the west, north, and south as well, including areas you may not be interested in. Those areas may not convert, or may not be part of your PMA, or may just be too far to drive.

Now, imagine every dealership, even ones that shouldn’t be competing as much with you, simply tossing up a large radius around their store to include as much of their area as possible. The results are going to be horrendous. Not only will efficiency plummet because of targeting outside of a reasonable market, but everyone will be interfering in markets they don’t belong in while trying to cover the territory for which they are responsible. Costs are going to skyrocket as unnecessary competition pushes CPC higher and higher. This is great for Google, but bad for dealers, as cost per acquisition soars, and closing rates tumble because they’re targeting customer who are too far away.

FB-ZipCodeFriction-1Driven Data solves this problem 2 ways.

  1. Drive Time Targeting: By calculating the drive time from locations around your dealership to your front door, our algorithm targets areas that are within an acceptable driving time, not distance, and places a concise radius around each primary point, improving targeting even over zip codes. Then, using our insights engine, we weight each point and adjust ad spend to the most effective areas. As we learn more about each targeted area, we continuously adapt our strategy to spend your money in the most efficient way possible.
  2. 1st Party Audiences: We dynamically refresh all of your CRM and DMS customer data directly into Google Ads, which allows to more precisely target your exact customers, and create incredibly accurate look-a-like audiences that Google says are up to 20 times more likely to be in market than zip or radius targeting alone.

By combining these two strategies, we’ve developed a powerful and efficient marketing strategy with the reporting to prove it. Because we’re built on data and our processes are automated, we were able to adjust any campaigns using zip code targeting automatically, and all of our managed accounts are now using this system, dialing in our efforts more than a month before the deadline.

For those agencies or dealerships attempting to manually adjust all of their accounts, this is a massive undertaking. Each campaign has to be rebuilt from the ground up. For dealer groups managing this in-house, completing this task in 60 days will be impossible for some, damaging to most, and costly to all.

If you'd like to learn more about how Driven Data is driving unprecedented success, even in today's turbulent landscape, schedule a call today.

Topics: Marketing, Paid Search

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