Advertising Fees

isellpotiac · November 2001

different ad groups i.e. different geographical regions pay different amounts. Some stores are not in ad groups and don't pay advertising fees. It is to cover encompassing TV ads and promotions not the ads you see specific to one store. For example if you see an ad for "Pontiac, wider is better, see your local Pontiac dealer" that would be a national ad. An ad saying "Come on down to isellpotiac and check out our golden clad salesforce for the deal of the century" that would be a local ad my store is running that the advertising is paid by my store. Kind of a simple explanation but I hope it makes sense.

vwguild · November 2001

Each *Market* is different..It costs more for a
multitude of reasons...demographics, market share,
etc. It costs more to advertise in NY & LA than in
Frozen Sneakers, Iowa. Hence, Manufacturers bill
out these costs Proportionately...They are not
included in the Base Price of the car because Mfgs. cannot charge more for a car in NY than they
do in Frozen Sneaks...MSRPs are National...

Once again, this would be moot if not for the
availablity of Invoice amounts...

I wish someone would get me the hard Invoice cost
to the Retailer of a ZeroKing or a Polo Golf shirt on the Internet, or another site where I
could learn what a quart of milk costs the fine
folks at Safeway...

frankrichards · November 2001

VW-- can you just email me that .doc? and I'll go over it with you later... we can cut and paste for hours of fun :-)

...taken orders of the cab bug yet, how much over?

vwguild · November 2001

doc are you referring to?

cfg1 · November 2001

Why does it cost more to advertise in New York? Sure the cost of an ad is going to be more, but you are going to reach a lot more people. Seems like it should average out.

vwguild · November 2001

You just answered your own question...The answer is REACH Rate...
and yes, the Advertising costs a ton more because of it...

im_brentwood · November 2001

OK.

First, I have decided (And 50+ e-mails helped.. maybe I am liked

that I'm not gonna leave over a member of TH's behavior.

On to advertising...

What we are talking about here, and what's causing confusion.. Is advertising that is charged TO the dealer BY the manufacturer to cover the MANUFACTURERS regional advertising costs.

If you want to work from internal corporate documents (Which is what invoices are) then you'll get to see the ugly truth.

So what I did was have someone fax me a couple of new car invoices.

And I took digital pics of them.

And I am linking to them here. you'll see a box on the left side that says "FDAF/LMDA Assesment" That's a regional advertising charge, and I can assure you guys that dealers do pay this. Is it being passed on to the consumer? I suppose that depends on how you view it.

If you look up the invoice on edmunds or kbb.com and it says $X and you want to pay $X + $X or X%, and the dealer shows you different figures based on that, yes, you then may view it that way.

If you look up something on edmunds and it says $X is a good deal, you walk in and say "I'll buy that car for $X" then you may not view it that way.

Anyhoo... these invoices are off of a Lincoln Town Car ($420) and a Mercury Grand Marquis ($260).

Hope this clears things up a bit!

Bill

rroyce10 · November 2001

.........What ...? No picture of your dirty, cigarette stained fingers .....?

Welcome back ...!

Terry.

im_brentwood · November 2001

Be careful what you wish for...

You just might get it

And it is good to be back.

Bill

cupholder1 · November 2001

VWGuild:

You say that there can't be a uniform ad fee because it costs more to advertise in Los Angeles/NY than in Oshkosh, Iowa... but then, the destination fee is the same for everywhere in the USA, even though there are ports to offload the cars right in the LA/NY harbors, whereas the car has to be trucked all the way to Iowa.

artwis · November 2001

As I understand it then the ad fee is not part of the total invoice price? Taking the second invoice $38775+$560+$845= $40,180. The $420 ad fee is not included. When I bought my last new vehicle I had figured my target price range and the dealer offered the vehicle within that range and that price included the ad fee which I had figured into my target # so we figured it out the same way.
I think that most think of an ad fee as a dealer local ad fee and forget about all the national car ads we are bombarded with everyday. I also read somewhere that the national ad fee besides being for the national ads also payed for the expenses of the large auto show expenses for the manufacturer.
It sure is a lot easier to do some homework and put together a price you will buy for and then go find a dealer to hit that price and not go through all the agony of grinding for the last few bucks and make a car purchase into something other than a pleasant business transaction. I guess some peoples ego would take too big a hit if they found out someone bought the identical car for $50 less. Not me! Lifes too short for that kind of bs.

rroyce10 · November 2001

......... Is that one of those Roladex's ...l...o...l...

Terry.

frankrichards · November 2001

Welcome back, BILL!

I owe Bill an apology for writting all that BS about doing offline sales. We'll just be straight-up about it. I want to buy a Datsun 510. You know, about a '76. What's one of those worth, Bill? :-)

When's Hiway coming back? People are complaining about my grammer and I need a new editor !!!

vwguild · November 2001

Destination is a Manufacturer imposed number that is
probably sanctioned by the * Dealer Council*...
I can only speak to VW matters...We have cars
coming into US Ports(5)from Germany, Bazil, and
Mexico...Our current Destination Charge is $550 for all cars and $615 for EuroVans...And before I
go too far here we also have a Port at Halifax, Nova Scotia...I do not want to insult my neighbors to the North, but I do not do business
in Canada; so I will refrain from issues that may
be different there.

Back on point!!!Ad Fees are pretty specifically
divided up based on billing...That is Advertising
Billing...A Contract with Arnold, BBD&O, or which
ever Ad Agency, may be for a year, or two, or three, or more. But specific Ad Campaigns will vary depending upon Market. For example, the new
*Truckville* campaign with Aerosmith is probably
not getting as much air play in NY, NJ, and Conn.
as it gets in Texas or California...This is because DODGE sells more trucks in Texas & Calif.
than in the NY Metro area. On the other hand...
The *Round for a Reason* Campaign that VW has been running for months is certainly getting more
airplay in San Francisco, Chicago, NY, and LA than
in Montana or Kansas.

im_brentwood · November 2001

(LOL Terry... 6yrs old and it still works!

Art,

I scanned the whole thing in with some explanations..

It is a 250Kish .jpg File so I'll link to it...

http://members.aol.com/dagpics6/tcinvoice.jpg

You all might want to view it.

The ad fees (I assume.. I always thought it was greed by the Mfrs.. haha) cover the advertising costs of the Manuafacturer. Not the dealer. The local TV ads, newspaper ads..etc.. those are all covered by the dealer's pocketbook.

Fords fees are charged by whatever Zone the car is sold in. That Town Car is/was at a dealer in Northeast Connecticut. So I'd guess that they're in the Boston Zone.

So I posted explanations all over it... This ought to clear things up. If this doesnt, nothing will!

As far as your post. I agree. Some people do not look at the whole picture and beat themselves up over small stuff...

Bill

im_brentwood · November 2001

Thanks!

77 210? About as much as last week's Black Book that I also had in my Hand there!

Bill

vwguild · November 2001

Personally, I think I benefit enormously from
the National spots...an even greater benefit is that I do not have to pay for them!!!

artwis · November 2001

Thanks Bill, I got it all now. I hope those who seem to believe that the ad fee is a scam take the time to look at the scanned (jpeg) invoice. In my last two deals I used the invoice as listed on Edmunds and added the ad fee so I was figuring it right all along. I have noticed that carsdirect adds the ad fee and dest. charge in their listed invoice prices but I don't know how accurate the ad fee is but they do go by zip code.
I live in a rural area of Wis. and while I have a dealer in a small town 7 miles from me I do my buying at another dealer about 25 miles away in another small town. I'm about to buy our 4th vehicle since we moved from the big city (Madison) in 94 and while I never had much trouble dealing before everything is much more layed back at these small rural dealerships. No pushin and shovin just do a fair deal and move on and everybody's happy.
Art

rroyce10 · November 2001

....... Hey good job ...

With your new computer stuff, it makes all those fake invoices look almost real ....

How's that thing with making Dollar bills ...?....l...o...l..

Terry.

fasterthanu · November 2001

Whether they're to cover costs by the manufacturer or dealer, Ad Fees are bogus if they're charged back to the consumer. Why should the buyer have to reimburse a fee for advertising? Advertising is a cost of doing business, and the manufacturers and dealers should count it as part of the cost of the product itself.

What's next? A Janitorial Fee to cover the cost of mopping the showroom floor? A Country Club Fee to cover the cost for executive privileges?

How stupid is this ad fee? Very. I've never paid it, and if someone asked me to, I'd tell him to pay me a Shopping Fee for all the work I do to get a car.

If the fee is built into the final price, and the buyer thinks the price is fair, then that's all good. If it's separately itemized and added to a negotiated selling price, then you need to walk out of the showroom, preferably stepping on some sales toes on the way out.

artwis · November 2001

I've never had the manufacturer ad fee itemized and added to the negotiated price but it's in there somewhere just like when you buy a box of cheerios at the grocery store. It would be better if it was averaged to be the same all over the country and just part of final invoice price. I guess that would be the same as counting it as part of the manufacturing cost. Manufacturers could cut the advertising costs if they would cut back on the regional and national tv ads, they get old and agravating real fast especially when you see the same one 3-4 times in an hour or less on the same channel.
Art

im_brentwood · November 2001

I think you ought to scroll up and read that image that I linked to.

It might explain what we're talking about.

If you negotiate a price with a dealer and then get hit with an advertising charge, yes, that is bogus in all likelihood.

If you're negotiating from the invoice up and see an advertising charge on the invoice, its' likely a legit fee that's part of the invoice of the car.

Bill

rroyce10 · November 2001

.......... You guys have kinda missed the whole point ....

The conversation started because of a question "about them" ...

So what do you get for the small upgrade in cost ...? Well lets see ...

How about 0% financing -- or $2500 rebates..(and in some cases $4,000) .. or both. --- how about some of the manufacturers, who are also giving away full value packages that are 7/8/$900+++ for -0- ....

Gee whiz, lets see .. you only have an opportunity to save somewhere in the area of $2000 to $5,000+ .. and you are whining about a $200 advertising fee ....????

Does your mom still press your shirts and pack your lunches ...? -- l...o...l...

Terry.

fasterthanu · November 2001

Artwis:

The example of Cheerios is extremely appropriate to this discussion. It's been documented that the actual cost of production for cereals and their packaging are NEGLIGIBLE compared to the cost of advertising/marketing them: endless commerials, promotions, supermarket space, etc. When you pay $4 - $6 for a box of Count Chocola or Fruit Loops, that is for advertising and profit, with a minimal amount (pennies, really) towards the productions costs and overhead. Crazy, no?

Brentwood:

Good point, one in which I acknowledged in my post. Sure, ad fees are charged to dealers, but what I'm talking about is the dealer assessing that same charge to the buyer, in addition to the negotiated price. It's happened often, and buyers need to be educated about it - like it's happening here.

im_brentwood · November 2001

That's what I was saying!

What happens a lot is, people will come in, with printouts from the web, and offer, say, $200 over invoice for a car (or something like that). The we'll say "OK, but for us that's $18,785 as we have regional advertising on our cars"

And then the customer says "Well, that $250 fee is not on the internet, so it must be made up to pad your pricing..etc.."

And therein the problem lies.

Bill

hpia4v2 · November 2001

First, both customer and salesman are engaging in transaction, no need to get angry here when things are skewed from what was planned. Just get up and wish each other good day.

Second, the solution, it's easy. Before agreeing on "invoice" just make sure both parties are talking apples, not apple and orange.

Recently, I called a dealer inquiring on a new car, told him what $xxx over invoice I want the car for. Before agreeing he ask me for the actual invoice price with options. I also told him I am not paying other fees except for licensing and tax. Simple.
See, he wasn't going to agree on my "invoice" without seeing the numbers and probably worried I missed the destination charge but I didn't. And now we have a deal.

cwjacobsen · November 2001

I can't. The answer to the question posed by the title of this thread is "It doesn't matter." I'll repeat that, it doesn't matter.

Please bear with me. No one pays "invoice." No one pays "MSRP." They don't even pay "MSRP+ADM." But everyone does pay a final price in dollars. Figure it out and make that your offer. Better yet, factor in sales tax and your estimate of fees and make it an out the door price offer. It will either be an acceptable offer or it will not. Making an "invoice plus" offer only puts you in the position where if there are any surprises, they are going to be negative. I've yet to read anyone say that they were positively surprised when the dealer's invoice proved to be LESS than what they looked up on their own.

I don't think this ultimately contradicts or is different from what anyone else has said in this thread, but arguing the point gets no one any closer to buying or selling a car.

CWJ

cfg1 · November 2001

Good point.

eharri3 · November 2001

NOT a good point... as consumers we not only have the right to a dirt cheap price but we should also have every right to decide what is a fair profit for a car dealer and to leave him with the smallest profit margin possible. IT is wrong for the car dealer to lie, but it is perfectly fine to look him in the eye when he asks if we have a trade and say 'no' even when we really do. IT is our right to demand top dollar for tired, high mileage trade-ins and rock bottum prices for the new car. We should be able to demand that he absorb all the costs of doing business even ones he has no control over into his profit margin so that we the consumers can get an even better price.

(disclaimer for the sarcasm impaired: the preceeding remarks were in no way representative of my true views of the car-buying process.)

cwjacobsen · November 2001

Insert cute smiley face here. CWJ

claywaterfill · November 2001

In all seriousness, folks...Why can't the manufacturer (in this case, Chevrolet) take a national average for advertising and include it in the "invoice" of every car (Prism) sold in the country, regardless of where it is sold? I know this is not the same, but like Kelloggs does with Froot Loops. I'm sure the MSRP of Froot Loops includes an advertising fee for the national ad campaign for Froot Loops. It is not right that dealers have to eat this fee, but is certainly wrong to pass along the fee to customers. Think about it, you want us to pay you back for Chevrolet's ad campaign as a separate line item on the bill of sale. If manufacturers can not include it in the invoice, then why don't you take into consideration the fee when setting your "rock-bottom" selling price? I think the problem arises when we say "I'll give you $13,000 for that Prism." You say "Fine, your total is $13,200."When we ask where the $200 came from, you say it's the ad fee. Then it looks bad. Just tell the customer, "The least I can take is $13,200." Then if the customer agrees, there are no surprises in the finance office. I'm asking these questions seriously. I'm not looking to argue with the car salesmen here.

vwguild · November 2001

One more time...If you concentrate on your price
for the car...DISCOUNT from MSRP; this is not an issue...The Accounting procedures used by Automobile Manufacturers should not matter.

If your Local dealer, on the other hand is trying
to add HIS LOCAL Advertising Costs to the Window
like an ADDENDUM(Read: Added Dealer Mark-UP); you
are ABSOLUTELY CORRECT...Not applicable!!!!

And if you knew what a box of *Fruit Loops* Cost
vs. what you pay; they would make you puke...

cupholder1 · November 2001

A local dealer in LA runs cable TV ads saying "I'LL DO *ANYTHING* TO SELL YOU A CAR OR TRUCK!!! ANYTHING!!!" It then shows the dealer guy jumping off the roof of a building to his death just to sell a car.

Wonder how he'd react if I told him to knock off the ad fee from the price of the car

vwguild · November 2001

That is simply a Dealership that you do not want
to patronize...It tells you that because he is
prepared to go these extremes; he has an incompetent Sales Force...One that knows less about the products they sell than you do as a
customer...This is a Store that has *closers*
and all of the other things that we have grown to despise...

im_brentwood · November 2001

It would be easier I suppose...

But, its a way for them to charge more for cars (Lets face it.. the Manufacturer isnt selling you squat. They're selling the dealer the cars) and get away with it.

Also, it wouldnt be fair to charge everyone the same... The guy in Miami gets a lot more advertising support from the factory than the guy in Tallahassee...And it costs more for the Mfr to do biz there...

Bill

cupholder1 · November 2001

But they charge the same for destination to Grand Forks, ND as they do to Los Angeles, CA.

johnnymo · November 2001

Concerning add fees - Try this to get around them. If youre unable to negoiate out the advertising fees with the dealer turn around and demand the same advertising fees from the dealer for driving a car around with the dealer tag on the bumper(or wherever they put it). Youre advertising for the dealer and should be compensated. If you really want the car and cant get rid of the add fees DEMAND that they remove the dealer tag and repair any damage involed in doing so. At least youll get some satisfaction in knowing they had to spend money to remove it. You should see the looks on the salespeople and managers faces. Like are you serious? Its really funny when they find out you are. Its not like they can tell you youre wrong. Hey turnabout is fair play. Ive had 4 cars over the last 12 years and never paid the add fees.

rroyce10 · November 2001

...... All do respect here ...But.

Bill has showed the actual invoices that the dealers are charged for, from the Advertising campaigns from the Manufacturers .....

These have NOTHING to do with the dealers .... Zero, Na da, Zippity do-dah.. I mean as in, one giant Goose egg --0-- ...

Sometimes it just kills me that a consumer.. in this day and age, doesn't get it..!

If the price of a power window goes up .... does the dealer eat that ..? aaah, No! If sunroofs go up in price, does the dealer eat that .? aaah, I don't think so..! If you select an option paint that has gone up by $50, does the dealer eat that too ....? Not in this lifetime ! -----

All manufacturers cost to the dealer.. is on the invoices, (all do respect) not in Edmunds, Carpoint, Car n driver, Motor trend or Better Homes and Garden ......

I hate to break your bubble here ..... But, I will guarantee that of all the 4 vehicles you have bought --- You have paid ALL of the Manufacturers Cost -- every dime of it- ...Period! ---- I have bought Thousands ... And I pay it ..!

That's because it's a COST --- not a FEE .... Get it..?

So instead of "pounding your chest" .. and giving people im-proper information ... Why don't you quite blaming the dealers for what they are charged ....?

I will bet the last time you bought a home, you didn't mind paying that xtra $4,000 in closing costs
..... or paying $2,500 for a couch, that cost that furniture Dealer $1,100 ....... Please, give it break ---- or spend a little time, getting some correct information, instead of glogging up the forum, with a bunch of long winded rhetoric on something you obviously haven't taken the time ..or effort, to do any quality research on ....

Thanks for stoppin' by ...

Terry.

mney6 · November 2001

Does Nike pay you to advertise for their shoes or Tommy Hilfiger ? How about those Hanes boxers your wearing

claywaterfill · November 2001

What I was saying was why doesn't the manufacturer include the ad fee in the invoice in all cars in America? Why don't they show it on the window sticker (the dealer addendum, the one from the manufacturer)? That way we see it when we look at the sticker for the first time. If they can show a $495 destination charge on a car made in Tennessee and sold anywhere in the continental US--whether it was sold in Nashville or Seattle--why can't they show an ad fee? Just pick an average figure and go with it. Sure they'll lose money in Dallas, but they'll make money in Bismark. I do agree about the dealer tag on my car. My current car is the only car I have ever kept it on--I keep it because I actually had a pleasant experience buying my last car. All others came right off--usually the day I brought them home. It is only fair since they did not pay me an ad fee!

claywaterfill · November 2001

We buy the Nike shoes and the Hilfiger shirts because that is the image we want to display. The same holds true for Chevrolet cars. But, if Macy's were to start slapping their name on the back of my Hilfiger shirt, I would remove it as well.

landru2 · November 2001

>>Why don't they show it on the window sticker<<

LOL. Since when does anyone here pay any attention to the prices on the window sticker?

claywaterfill · November 2001

But, we would be negotiating down from a price that includes the fee. We would not negotiate a price and then add money to that figure to pay the imaginary fee.

cwjacobsen · November 2001

Who's adding this "fee?" If as you said (and I advocate by the way) you've negotiated a price; i.e; "I will buy this car for $XX,XXX," then where's this advertising fee coming from? If the dealer is adding it on afterward, then you have every right to say "That's not the deal. I thought you had agreed to sell me this car for $XX,XXX. Obviously, we've not yet reached an agreement." At that point you can walk, or reopen negotiations.

BUT if by price you mean, you negotiated something like "$XXX over invoice" then don't be surprised when the Dealer's invoice includes an Advertising Charge bacause that is indeed a part of his invoice.

CWJ

P.S. Don't fool yourself. The advertising charge is in the MSRP already. It's not in addition to MSRP.

claywaterfill · November 2001

As I have been saying all along, I'm talking about a final negotiated price. I think others have been talking about X over invoice.

claywaterfill · November 2001

The advertising being in MSRP has been my point all along! Like other products you buy, the manufacturer figures this into the price tag.

landru2 · November 2001

Well, since when does anybody here negotiate down from MSRP? I thought it was all up from invoice.

Seriously, I think you'll find that if you do in fact negotiate a number down from MSRP you will rarely run into any mention of ad fees. And if you do, as has already been said a few times, the dealer is playing dirty pool.

abtseller · November 2001

figures never have all the information. If you go to the "fine print" on any of the internet sites, they will tell you that. It would be impossible for the web sites to track all the different advertising for the different manufacturers and keep on top of it 100% of the time. We get 5-10 people a week griping because of a couple of hundred dollars difference in the on line invoice vs. the "real" invoice. These people can be the most difficult to sell because of the implied dishonesty right off of the bat. Funny, when I show them on the Edmunds site that Edmunds feels that 5% over invoice is a fair profit for a dealer that they don't feel that Edmunds is correct anymore. Sheesh. I agree with most here, don't nickel and dime every line on the invoice. Pick a number that you feel is "fair" and make an offer. Don't take it personally, though, if you're turned down.

Ed

cupholder1 · November 2001

I think the biggest objection has to do with dealers who will do the following:

Customer, salesman, "manager", "closer", spend 3 hours haggling. Closer yells at customer until she is in tears and agrees to MSRP of $23,000 and 15% interest (even though she has a 700+ FICO score). Then she walks into the F&I office and finds that in addition to the agreed $23,000, the dealer has also added a $500 advertising fee, along a $300 documentation fee, etc...

landru2 · November 2001

You find all that objectionable do you? You are expecting someone to defend that behaviour?

What about when the salesman is delivering the car to you and they ask you to look closely at the paint and then bash your head with the car door? No doubt you object to that as well.

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