02 Nov HOW MUCH SHOULD YOU BE SPENDING ON OTT FOR YOUR DEALERSHIP
Over-the-top (OTT) advertising has become an increasingly important part of the marketing mix for car dealerships. OTT platforms like YouTube, Hulu, and Connected TV allow you to reach highly targeted audiences with video ads to drive sales. But with so many options now, how much should you actually be spending on OTT for your dealership?
Benefits of OTT Advertising
The main benefits of OTT advertising include:
- Laser-focused targeting – Target your ads by demographics, interests, behaviors, makes/models, and more.
- Powerful video format – Video ads grab attention and tell an engaging brand story.
- Cost efficiency – OTT tends to offer better ROI than linear TV.
- Ease of measurement – Track views, completions, clicks, and conversions.
With OTT, you can really hone in on your ideal car shoppers and serve them relevant video ads. This level of targeting and the engaging format lead to higher ad recall and response rates.
Typical OTT Budget Percentages
So what should your monthly OTT ad spend be? Here are some general benchmarks to consider:
- 1-2% of overall marketing budget
- 10-20% of total digital ad spend
- $2,500-$5,000 per month for a mid-size dealership
- $10,000-$15,000 for a large dealership
Those are reasonable starting points. From there, you can adjust based on performance and sales objectives.
Factors That Determine OTT Spend
How much you ultimately devote to OTT will depend on several factors:
- Sales goals – If you want OTT to drive 15+ incremental sales per month, budget accordingly.
- Target CPA – Set an acceptable cost per acquisition and use it to guide spend.
- Market size – Bigger markets warrant larger OTT budgets.
- Campaign scope – Are you doing a regional or national campaign?
- Total ad budget – OTT should represent a set portion, as noted above.
Take the time to project your sales goals and model CPA to arrive at an optimal monthly OTT budget. Test spend levels and track outcomes to tweak as needed.
Getting the Most from Your OTT Spend
To maximize effectiveness of your OTT advertising:
- Use audience insights to fine-tune targeting.
- Develop creative personalized video ads.
- Retarget engaged viewers.
- Complement OTT with other digital ads.
- Monitor and optimize campaigns actively.
With strategic execution, you can drive more conversions and ROI from your OTT ad dollars.
The Bottom Line
OTT advertising offers car dealerships an effective new avenue for reaching and engaging targeted car shoppers. While there are no fixed rules on ideal OTT spend, a monthly budget representing 1-2% of total marketing or 10-20% of digital ad spend is a good starting point. Consider your specific sales goals, costs per acquisition, market, campaign scope, and overall budget to determine the right OTT investment for driving more dealership sales.
Local Dealer provides services in Project Management and OTT/CTV Advertising. To learn more Schedule a Demo here.