Running Straightforward Calculations to Set Your Budget
This session was originally presented by C-4 Analytics on the Digital Dealer platform. The question of how much to spend on Paid Search advertising is one of the most common, yet most difficult, questions for dealers to get a straight answer on. This is often because competing interests and conflicted vendor relationships obscure the clear metrics needed for a successful budget. As Bono suggests, it's time to "get out of our own way" and run some straightforward calculations based on truth, facts, and logic.
This framework focuses on transparency and utilizing core business goals—not vendor agendas—to determine the right level of digital investment for your dealership.
Key Inputs Driving Successful Budget Setting
The correct Paid Search budget is not a flat fee; it is a variable calculation anchored to available market demand (search volume) and your dealership's specific sales goals.
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Sales Goal/Conversion Rate: Your budget must start at the end result: sales. By measuring conversion ratios—from lead-to-appointment-set to appointment-kept-to-sale—you can calculate exactly how much a sale is worth and how many clicks are required to achieve it. This is essential for lowering the Cost-per-Acquired Customer (CPA).
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Available Search Volume (The Cap): The amount of money you spend must be anchored to the actual search demand in your market. For core campaigns, there is an upper limit to available traffic (a "rev limiter"). You cannot spend beyond the 83% maximum impression share without seeing diminishing returns.
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Impression Share Targets: Instead of flat spending, the budget must be linked to your target impression share (e.g., 70% or 80%) in your specific geographic area (PMA/AOR). If you are only at 50% impression share, you are leaving deals on the table and should increase spend.
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Quality Score and Cost-Per-Click (CPC): The overall efficiency of your budget relies heavily on maintaining a high Quality Score. A strong Quality Score reduces your CPC, meaning you get more clicks for the same budget.
Spotting Conflicts and Holding Vendors Accountable
A transparent, unconflicted partner is critical for setting the correct budget, as conflicted vendors artificially inflate costs or fail to optimize efficiently.
| Conflict Area | Warning Sign | Accountability Metric |
| Vendor Conflict | They will work with your on-brand competitors. | Demand a No answer to the exclusivity question. If you suspect conflict, insist they use OEM reports (Pump-in/Pump-out) to prove they are fighting for your sales. |
| Transparency/Cost | They prevent you from paying the ad network directly. | Pay the Ad Network directly (Google, Bing, Facebook) to ensure full transparency of ad dollars. |
| Expertise/Time | Your account manager has 50+ accounts or lacks certifications. | Demand an account manager who is Google Certified in multiple disciplines and has the time to dedicate to your hyper-localized strategy. |
| Measurement | They focus on "VDP views" or "traffic". | Hold them to business goals: Sales, Share, and Cost reduction. |
Conclusion
The correct Paid Search budget is not pulled from thin air; it is the result of aligning strategic business goals with clear, transparent market data. By eliminating conflicted relationships and focusing on the core metrics of sales and efficiency, you are in the driver’s seat to hold your partners accountable and ensure your marketing spend is maximized.