What dealerships actually spend on advertising

Every dealer eventually asks the same question, usually in the same tone: what should we be spending on advertising? It is a fair question with an unhelpful industry answer, because the number everyone quotes describes a kind of store that may not be yours.

Here is the actual benchmark, what it does and does not cover, and three ways to size a budget that hold up when a month goes sideways.

The benchmark, and its fine print

According to NADA DATA, franchised new-car dealerships spent an average of about $739 in advertising per new vehicle retailed in 2025, up roughly 4.8 percent on the prior year. Average total advertising spend per dealership was around $586,000 for the year, and advertising ran about 0.77 percent of total dealership revenue.

Those are real numbers and they are useful. They are also franchised-dealer numbers, which is the part that gets dropped when they are repeated. NADA surveys franchised new-car stores. If you run an independent used lot, that average describes a business with a different cost structure, different inventory economics, and a manufacturer quietly paying for part of the advertising through co-op.

So use $739 per unit as a reference point, not a target. A single-point store in a small market and a twenty-rooftop group in a metro can both be spending correctly and land nowhere near it.

Why percent of revenue is the worst of the three

The most commonly cited method is a percentage of revenue, and it is the one most likely to hurt you. Revenue moves with vehicle price, and vehicle price has moved a lot. A budget pegged to revenue quietly inflates when transaction prices rise and quietly starves when they fall, neither of which has much to do with how hard you need to work to move a unit.

It also behaves backwards in a downturn. Sales slow, revenue drops, the formula cuts the budget, and the store advertises least at the exact moment it needs traffic most. Percent of revenue is a reporting metric. It is a poor thermostat.

Three ways to size it that actually work

Pick one of these as the primary method and use the others as sanity checks.

• Per unit. Decide what you are willing to spend to sell one car, multiply by your unit target, and hold it. This is the easiest to explain to a GM and the easiest to hold a vendor to, because it converts advertising into the same currency as everything else on the floor.
• Percent of gross. Anchor to gross profit rather than revenue. Gross already reflects what a sale is actually worth to you, so the budget flexes with profitability instead of with sticker prices.
• Zero-based by objective. Start from what you need to accomplish this month, aged units to move, a model year to sell down, a service bay to fill, and price the media to do it. Slowest to build, and the only one that reliably kills spend that exists purely out of habit.

The line item nobody counts

Most dealer advertising budgets are counted as media only. The creative is either free, because the OEM supplied it, or a once-a-year cost that everyone has forgotten by March.

That accounting hides the most common failure in dealer advertising. One spot, produced last year, runs across every channel until the market stops seeing it. The media invoice looks fine every month while the return quietly decays, and because creative is not a line item, nothing in the budget review points at the cause.

If you take one thing from this, make creative a recurring line rather than a capital expense. It is the variable with the widest effect on what the same media budget returns.

• Ask what percentage of last year's spend went to creative. At most stores it is close to zero.
• Ask when the current spot was produced. If the answer is a model year ago, the market has memorized it.
• Ask how many versions exist per platform. One 16:9 master stretched into a vertical feed is not a version.

What co-op does to the real number

For a franchised store, the headline budget and the money actually leaving the business are two different figures. Co-op reimbursement can cover a meaningful share of qualifying spend, which is why a franchised dealer and an independent lot spending identical gross amounts are not in the same fight.

It also means the compliance details are budget decisions, not paperwork. Creative built to the OEM spec from the first frame qualifies. Creative retrofitted after the fact often misses the claim window, and an unclaimed reimbursement is a straight increase in what the campaign cost you.

• Build to spec before production, not after the edit is locked.
• Track claim deadlines with the campaign calendar, not separately.
• Treat unclaimed co-op as overspend, because that is what it is.

A sane place to start

If you are starting from nothing, set a per-unit number you can defend, split it so that creative is a real and recurring share rather than an afterthought, and weight media toward the channels where you can see what happened.

Then review monthly against units sold rather than impressions delivered, and move money toward whatever is producing shown appointments. The specific split matters far less than having a method you will actually hold to in a bad month, which is precisely when most dealers abandon the plan and buy whatever a rep is selling that week.

Sources

Advertising expenditure figures are from NADA DATA, the National Automobile Dealers Association's annual financial profile of franchised new-car dealerships. Figures describe franchised new-car stores and should be read as a reference point rather than a target for independent or single-point operations.