What Is Tier 3 Advertising?

by | Oct 4, 2020

In Advertising, Tier 3 Relates To Local Advertising Efforts, Generally Around Local Branding and Purchasing.

Tier 3 advertising refers to the type of advertising that exists at a local level, for a specific national brand. This is seen with larger, national brands that have a local retailer or services provider. The goal of a Tier 3 advertising would be for a person to choose their local service or sales of the national brand, over their competitors’ sales of the same national brand. This happens in the heating and cooling industry, when a local business (i.e. JohnsonsHeating.com) advertises their services of a national heating product (i.e. Trane) to push usage over other Trane dealers and service providers in the area. This relationship is also widely used within industry verticals including automotive, Powersports, small engine, tires, and more.

Tier 3 Local Advertising

Tier 3 advertising is not just local advertising, but rather local advertising by a specific entity for a larger, national brand. The goal of Tier 3 advertising is to support the local entities’ sales of a national product or service. Because of the duality of Tier 3 advertising, there is generally support that comes from the national brand in terms of Coop Advertising Money, creative directions & sales/rebates, and also requirements like co-branding, advertising platforms and tactics, which generally need pre-approvals.

Tier 3 Advertising outlets generally include local publications, direct mailers, local TV spots, and more. Digital Advertising focused on driving people to the local entity’s website is one of the more prominent examples of Tier 3 advertising.

Tier 3 Advertising in the Automotive Industry

Automotive advertising at the local level is dominated by Tier 3 activities and supported by coop funds provided by the manufacturers. Automotive dealers are among one of the largest spenders in a local media market and coop supports the majority of this spend. Coop dollars are left to a dealership to spend in the best way possible at the local level, while following certain coop guidelines, like a MAP Policy.

For Tier 3 paid search advertising, this is focused on targeting longer tail, purchase intent keywords. Tier 3 paid search ads generally emphasize monthly payments and discounts as ways to get attention.

There are often restrictions around certain items for Tier 3 advertising, like predatory SEM strategies like a Chevy dealer buying other Chevy dealership’s names.

In about 2016, Ford introduced new Tier 3 search requirements that pushed local dealers to spend a certain portion of their budget on Ford related paid search ads. This requirement and related overlap of search terms drove Tier 3 local dealers in support of the Tier 1 paid search strategy by making it more expensive for non-Ford related companies to bid on keywords in these search queries. This was a great initiative for support Tier 1 advertising, but deflected from the Tier 3 focus of buying a Ford from a specific dealership page.

The forced overlap of Tier 1, Tier 2 and Tier 3 advertising often causes issues, like the Tier 3 advertising funds being allocated by Manufacturer Preferred Vendors, that operate under Tier 1 or Tier 2 ad creative.

This is further complicated and diluted by the short-list of preferred vendors and limits on advertising. It is increasingly difficult to perform the Tier 3 duty of making a person choose your dealership over your competitors when you have the same website or digital advertising vendor (likely bidding on the exact same keywords, with very similar ads).

For more, see Tier 1 or Tier 2 advertising.

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