If you’ve watched or read the news recently you’ve seen headlines such as Tourists in Hawaii are driving U-Hauls because rental cars are so expensive or Used pickup prices are skyrocketing amid new vehicle shortage. The lasting supply chain effects from Covid-19 are hitting the auto industry harder than many other industries. Because of this, used cars are having a moment; prices are high and as we’ve previously written about, the share of dealership ads devoted to used cars is increasing. For this article, we’re going to take a look at some of the biggest used car dealers in the country, their advertising trends and what their advertising looks like during this unique moment.
We’ll start with Carvana because we’ve written about them in the past. Of the big used car dealers, Carvana is far and away the biggest advertiser. Especially given trends starting Q2 of this year which we’ll get into later. Since the beginning of the year, Carvana has been steadily advertising with about 6,700 airings a week. As with most auto advertisers, Carvana ad airings drop significantly on weekends, in Carvana’s case by about half. Carvana’s top ad of the past month has been about the ease of selling your car to Carvana, presumably in an attempt to use the new car shortage to their advantage and stock up on and sell used cars while they’re selling at a premium.
Among dealers and auto manufacturers, two trends stick out: 1. Advertising drops significantly on the weekends and 2. Advertising builds throughout the month and then drops precipitously at the beginning of the next month. Autotrader, while not a dealership, bucks both of these trends in order to stand out. They advertise exclusively during the first half of the month with no perceivable pattern distinguishing weekend and weekday spending. It looks like the marketing team at Autotrader saw the industry trends and decided that their best bet at standing out was to do the exact opposite of the rest of the used car advertisers. Autotrader averaged 2,300 airings a week during the first three months of 2021 but has been off air since mid-March.
Carmax is less consistent in their advertising pattern, but the schedule they stick to most often is for them to be off air the first and third weeks of the month and back on the second and fourth. Last year, airings peaked during the month of July, though given the current state of affairs and the advertising we’ve seen (or not seen – Carmax has also been off air since mid-March) it doesn’t look like they’re following the same game plan as last year. Until they went off air, they were averaging 2,500 ad airings a week.
While Autotrader and Carmax are not currently advertising on TV, all three dealers are currently running digital ads. Digital advertising is difficult to collect and messy to sort through, but it appears that Carmax has the most robust online advertising presence, followed by Carvana and then Autotrader. All three are running both static ads that appear on a webpage and video ads that precede content on sites like Facebook and YouTube.
Big used car dealers have had to find ways to stand out among the crowd. For Carvana that has meant saturating the airwaves with their ads, for Carmax it’s using their budget two weeks out of the month instead of the entire month to maximize salience, and for Autotrader it’s advertising exactly the opposite as the rest of the industry. It remains to be seen how these companies will pivot during this unique time of microchip and rubber and all kinds of other shortages, Carvana seems to be trying to use the new car shortage to their advantage. Like the rest of the world, we’re excited for the day when Covid doesn’t color every aspect of our analysis, but until then we look forward to seeing how these companies continue to adapt their marketing and advertising strategies to an uncertain marketplace.