The used-car brand has had to cut back on its ad budget in order to stave off losses.
Carvana, the used-car retailer famous for its vehicle vending machines, said Thursday it is launching a national advertising campaign in August starring celebrity couple Kristen Bell and Dax Shepard. But don’t take this as a sign that the brand has fully healed from a brutal 2022.
After achieving significant success during the height of the pandemic, Carvana began losing its momentum in the latter half of 2021. Throughout the following year, it succumbed to increasing inflation and a cooled used-vehicle market, resulting in a 98 percent drop in its stock price and the erasure of $37 billion of market capitalization.
As a way to cut costs, Carvana slashed its advertising by 64 percent last quarter as compared to the year-earlier period. This conservative approach is still at play, despite several marketing efforts in May as well as its upcoming campaign in August.
The focus for Carvana remains returning to growth, not revitalizing advertising, said Ryan Keeton, co-founder and chief brand officer of Carvana.
“How are we being as efficient as we can be?” he told Ad Age, an affiliate of Automotive News.
The last two quarters have been solid for Carvana, especially this year’s second quarter. Earlier this week, Carvana reported a second-quarter net loss of $105 million—far better than the $439 million loss it reported a year ago. Plus, it struck a deal to cut its debt by $1.2 billion—a burden that has been hampering the company’s performance.
Carvana’s strategy for the new campaign is to drive brand awareness by emphasizing the simplicity of its process for buying and selling a car. Bell and Shepard will star in a series of spots that depict different scenarios of them buying a used car. These spots, which Carvana declined to share, will air nationally on TV, as well as run on digital and social platforms. The creative was done in-house, though production was outsourced to a third-party studio.
Online marketing is particularly important for Carvana given its online sales presence. Meta’s new Threads app—a competitor to Twitter—will be included as part of the new campaign’s media strategy, Keeton said.
The new effort follows a marketing stunt in May in which Carvana gifted its customers unique, AI-generated videos of their vehicles. Later that month, the brand launched a national ad campaign around five-star reviews from customers.
Meanwhile, rival Cars.com is enjoying its relatively secure position in the used-vehicle market. The 25-year-old company last month unveiled a new logo and campaign to support updated functionality on its website. Cars.com saw 18.4 million unique visitors in April, according to Comscore data shared with Ad Age. Carvana saw 5.5 million.
After surging 40 percent on Wednesday, Carvana shares retreated 16 percent to close at $46.73 on Thursday.
