By Brian Pasch
This week, Automotive News posted a story, written by David Barkholz and Amy Wilson, covering AutoNation’s decision to reduce their dependance on third party classified websites and lead providers.
This is an interesting public statement since AutoNation had previously owned AutoUSA for a number a years, which generated exclusive 3rd party leads for their dealer network. Excess leads generated by AutoUSA were sold on the wholesale market to dealers. AutoNation sold AutoUSA to Autobytel in January of 2014, according to Automotive News.
The journalists also interviewed other dealers who have decided to reduce or eliminate their dependance on third party classified websites and lead resellers. One of the dealers was Todd Caputo, owner of Sun Auto Warehouse in New York, who I know to be a very savvy online marketer.
Dealers complain about the cost of third party classified websites which has encouraged some dealers to try lead generation “on their own.” Price, however, is not the only complaint.
Dealers that I have spoken to have voiced their dissatisfaction with the advertising that appears on Vehicle Detail Pages on third party websites. Dealers also seem to be unhappy with the lack of transparency for “referral” traffic that third party website generate to their own websites.
Third Party Sites Play A Valuable Role
Despite the annoucement made by AutoNation, I believe third party classified websites have their place in the car shopping journey. My opinion is validated by the millions of shoppers that visit Autotrader.com, KBB.com, Edmunds.com, and Cars.com each month. In fact, Polk reports that consumer usage of third party websites is on the rise.
However, since dealers do not have unlimited marketing funds, their choice in inventory marketing channels is influenced by what they can “understand” and where they can see “value.” The fact that dealers don’t see value is a matter of attribution.
Historically, third party classified websites have struggled with communicating the value they deliver in a way that dealers can understand. They need better tools that show sales attribution.
Third party websites could show their “value” tomorrow if they rendered the dealer’s VDP within the third party website model. This would allow dealers to see exactly how many customers third party websites deliver to their VDPs.
Dealers can do a very good job of marketing in the “local” market, but third party classified websites can do a much better job of connecting with buyers that live 15+ miles away from a dealer. The third party classified marketing model is not going away; AutoNation is doing a little grandstanding this week.
New research is giving credence to the influence that third party websites have on the velocity of sales at the local dealership. As vehicles receive more “views” on third party websites and dealer website Vehicle Detail Pages (VDP), sales do accelerate. (See Cobalt Study)
The Dealer’s Blind Spot
The irony of operating with automotive data transparency, like I see in ROI-BOT, is that many of the dealer’s own marketing investments are more expensive than third party classifieds. They just don’t have the data tools to see that fact, but I can see it in ROI-BOT!
If dealer’s held their own marketing budget up to the same magnifying glass that they hold to third party classified websites, they might be surprised to see their overall cost per VDP view, is 3-10X higher than classified websites; no one wants to talk about that.
Large dealer groups and public companies, like AutoNation, have MBAs working the “digital” ROI numbers to avoid blunders. The average car dealer may not know how to get to the numbers they need to operate in an e-commerce world and evaluate their attempts to generate leads.
Disrupting The Automotive Lead Generation Model
Today, dealers are becoming more confident in creating their own lead generation strategies; AutoNation’s announcement came as no surprise.
OEMs are encouraging, and in some cases forcing, franchise dealers to invest in Google Adwords, retargeting, reputation management services, and social media marketing. OEMs are benchmarking lead response time, closing ratios, and even sending to dealers field trainers on improving lead handling processes.
When third party automotive classified websites began, they took the digital lead for the automotive retail community. They were the online marketing experts. They understood the importance of SEO and SEM, and they created turnkey package for dealers to “get online” quickly. The classified advertising services were billed at a premium price because dealers did not have the knowledge to become lead generators on their own.
That argument is no longer true; dealers are in the lead generation business!
Dealers today have better websites, OEM co-funded digital advertising funds, and a greater understanding of digital marketing strategy. Their websites, when merchandising properly, are the best place to convert a consumer into a lead. Dealer websites are free advertising from competing dealers and OEMs. Dealer websites guarantee that when a lead is submitted, the only recipient of the customer information is the dealer.
Reversing The Lead Generation Model
I have written about Lotlinx in the past, but I have to say that the timing of their product is amazing. Their dealer-centric marketing strategy seems to be lining up with dealer sentiment as well as decisions from AutoNation.
LotLinx is the reverse-classified advertising partner that syndicates dealership inventory to over 100 popular classified websites, but when a consumer wants to see the details about a car that is listed, the clicks are redirected back to the dealer’s website.
The consumer is directed back to the specific VDP for the vehicle they saw on a third party classified website, but on the dealer’s brand consistent website VDP.
LotLinx wins by answering the attribution question that dealers have been asking for years.
LotLinx believes in the power of inventory syndication, however, they also believe that the conversion should take place on the dealer’s website. Dealers are agreeing with this philosophy, as hundreds of large dealer groups are now LotLinx customers. In fact, LotLinx resolves one of the major complaints of dealers: the visibility of click traffic.
LotLinx traffic to the dealer’s website is completely visible in Google Analytics (read article). Dealers are only charged by LotLinx when a consumer clicks to learn more about a specific vehicle, and those shoppers are delivered to the dealer’s website.
LotLinx inventory syndication is a new strategy that was never thought possible!
A Wakeup Call To All Marketing Partners
Dealers need to have a comprehensive digital marketing strategy that connects with consumers who are shopping for a vehicle online. Google’s “Zero Moment of Truth” research indicates that the average car shopper visits over 18 different online sources before contacting a local dealer. Third party classified websites mentioned in the Automotive News article, such as Autotrader.com, Cars.com, and Edmunds.com, are consistently in the click path of online shoppers.
Dealers need to understand the value of each marketing investment, so this is a wakeup call for third party classified websites, lead providers, and marketing professionals. Third party marketing partners need to invest more resources into showing attribution as part of a dealer education program, if your products are delivering the value that you claim. Otherwise, they can read an article and cancel you in a wink of an eye!
What is changing is that dealers have greater leverage. They have more power to negotiate price. They know how to generate leads on their own; they are not in their digital infancy stage. Dealership website technology, marketing tools, and data dashboards like ROI-BOT, are giving them insights on how to manage their marketing vendors, reduce costs, and increase sales.
Training and Education Wins
The auto industry is growing up and the training wheels are coming off. As more General Managers complete Digital Marketing Management Certification, they will be empowered to make smarter choices on how to generate leads and sell more cars.
It’s time to judge every marketing decision based on attribution and performance; not fear. That will take education and training. Education will also define the new Key Performance Indicators (KPIs) for dealers to run their businesses.
Dealer’s shouldn’t cancel third party classifieds because of another dealer’s decision or the Automotive News article. On the other hand, dealer’s should not feel obligated to use third party classifieds out of fear of the negative impact they could experience if they canceled services.
Our industry wins when dealers and the vendor community to work closer together on data transparency to develop products that are a win-win for both parties. It does not have to be adversarial, which is an undertone of the Automotive News article.