Tier 2 dealer ad associations: who controls the money

Tier 2 dealer associations spend dealer money through agencies that often also serve the manufacturer. Here is what a board should demand in the contract.

A Tier 2 dealer advertising association is one of the strangest buyers in American advertising. It spends serious money, its money comes from dealers, its rules are shaped by the manufacturer, and the agency that spends it often reports to a volunteer board of dealer principals who meet a handful of times a year. Nobody in that chain owns the agency contract the way a CFO owns a software agreement. That is where the leakage starts.

Three tiers, three pots of money

The industry splits automotive advertising into three tiers. Tier 1 is the manufacturer's national brand work. Tier 2 is the regional dealer associations, which run market-level campaigns built around incentives, launches and sales events. Tier 3 is the individual dealer or dealer group advertising its own stores and inventory. In a 2020 piece, SalesFuel cited Borrell Associates estimates that dealer associations accounted for 4% of a $33 billion automotive ad market, against 53% for franchised dealers.

Tier 2 money usually comes from a per-vehicle assessment. TrueCar has explained that regional advertising fees are manufacturer-administered charges itemized on the vehicle invoice and paid by dealers in a regional association. Its 2011 snapshot showed ranges of $151 to $435 per vehicle for Honda and $199 to $2,133 for Toyota. Those numbers are old and the mechanics vary by brand, but the principle holds: every car a dealer buys from the factory funds the association.

Tier 3 co-op is a different pot. The manufacturer accrues funds for the dealer and reimburses a share of qualifying local advertising, subject to brand rules and prior approval. Autotrader's co-op page shows how wide the range is for its own products: up to 100% reimbursement for many OEMs, up to 75% for BMW, up to 60% for Subaru and up to 50% for Genesis, Kia and Isuzu. Cox Automotive calls co-op "use it or lose it."

The totals are large. NADA data reported by Inside Radio put new-car dealer advertising at a record $9.96 billion in 2025, with 74.9% going to digital media. The average dealership spent $586,246, or $739 per new vehicle sold.

Who controls the agency

Tier 2 agency accounts are big enough to attract the holding companies. In 2021, Ad Age reported (via Inside Radio) that as much as $550 million in Honda dealer association spending was up for review. Honda said it would assess which agencies could support its dealer associations, and each association would then pick from that list. TriHonda, a group of more than 60 Honda dealers in New York, New Jersey and Connecticut, moved a $45 million media account to Horizon Media in 2018.

That Honda structure shows the governance problem clearly. The manufacturer shapes the shortlist. The association board picks. And the agency often works for the manufacturer too. RPA, Honda's national agency, says it plans Tier 1 media and uses that work to build Tier 2 plans for dealer associations. Coordination is a real benefit. It also means the agency answering to a dealer board has a much bigger client in the room.

The boundaries also move. SalesFuel, citing Automotive News, reported in late 2020 that Mercedes-Benz would send about half of its Tier 2 funds to dealers and route the rest to its national marketing program. When the manufacturer can redraw the pots, the association's contract has to say what happens to committed media, unspent balances and the agency fee.

Where the governance gaps show up

In reviews like this we typically find some combination of the following:

• An old or missing agency agreement. Board seats rotate. The person who signed the contract left years ago, and nobody can find the latest statement of work.
• A fee on spend with no scope. Commission on media rather than a fee tied to people and deliverables. When assessments rise with volume, the fee rises with no extra work.
• No audit right, or one never used. The ANA media agency contract template, updated in June 2023, keeps unlimited audit rights and separately defines compliance and performance audits. Few associations have anything close.
• Principal media and rebates left out. The same ANA template replaced older mark-up language with a "non-transparent services" section that requires approval and channel-level reporting. In a recent ANA survey reported by Gala Law, only 61% of marketers said their contracts specifically address principal media and other non-transparent services. A volunteer dealer board is unlikely to beat professional marketers on this.
• Overlap with Tier 3. Association campaigns and dealer campaigns buying the same search terms and the same streaming audiences in the same market. RPA says it shares plans with dealers to avoid overlap, which tells you overlap is a live risk.
• Reporting on activity, not money. Impressions and clicks every month. A reconciliation of assessments collected against media billed, almost never.

What a board or dealer group should ask for

The asks are not complicated. They just need someone to make them in writing.

• The signed agreement, every SOW and every amendment, plus a clear statement of who has authority to sign for the association.
• An annual reconciliation of assessments collected by dealer, media billed by vendor, agency fees, production and the unspent balance. It should tie out to the dollar.
• Audit rights with teeth: access to vendor invoices, not just agency summaries, and the right to appoint an independent auditor at least once per term.
• Disclosure and consent before any principal-based buying, rebates, volume bonuses or agency-owned inventory touch association money.
• Ownership of ad accounts, data and creative. If the association changes agencies, the accounts, tracking and history stay with the association.
• A fee tied to scope, with a cap that does not rise automatically when assessments rise.
• Notice and renewal terms that fit the board calendar. No automatic renewal without a board vote.
• A conflicts statement listing every other client in the same brand family, including the manufacturer and member dealers' own Tier 3 work, and how plans are deconflicted.

A dealer group with rooftops in several associations should add one more: a single view, by store, of what it pays in assessments, what it recovers in co-op and what it spends locally. Our earlier piece on dealer network marketing and vendor cost covers the Tier 3 side of that picture.

The next step

Ask the association's executive director for the current agency contract and last year's reconciliation before the next board meeting. If either takes more than a week to produce, you have your answer. A Second Opinion reviews a single agency agreement in five business days, and our automotive work maps assessments, co-op and local spend across every rooftop in a group.

Sources: SalesFuel, What are your auto dealers doing with their Tier 2 ad money?, TrueCar, Regional advertising fees on new cars, Autotrader, Co-op advertising programs, Cox Automotive, Stop leaving money on the table: make the most of your co-op dollars, Inside Radio, Auto dealer ad spend nears $10B (NADA data), Inside Radio, Turning data into dollars: key insights from 2025 NADA Data, Inside Radio, Honda puts $550M dealer association agency account up for review, Adweek, TriHonda sends $45 million U.S. media account to Horizon, RPA, Honda DAAs are our DNA, ANA, ANA releases updated media buying contract template, Gala Law, Principal media and media agency contracts: lessons from the recent ANA survey.