As I prepare my keynote address for an upcoming conference it became clear to me that unless I simplify my slides, I may lose the audience.
Dealership managers know that something is wrong with their marketing strategy.
The answers I will present are somewhat complex and involve a change in mindset. I pray that I will be able to reframe the problem (a broken marketing strategy) in a way that attendees can walk away from my presentation with a clear plan of action to improve their Return on Ad Spend (ROAS).
Dealers have been increasing digital marketing investments for years but more recently the online marketing machine is running out of gas. Dealers are spending more on marketing and selling less vehicles. Net profit margins are down as healthcare, insurance, and financing costs increase.
One dealer shared with me this week that their YOY new/used car sales, for the first 9 months of this year, were up only 1% yet their marketing budget had increased by 21%. Does this sound like your dealership? This cannot continue. What will dealership managers do?
I would hope it is not a 20% cut in expenses across the board from their marketing budget. However, in many cases, without a clear understanding of how their marketing is working, and no actionable data, mandated cuts occur. This type of knee-jerk reaction often makes matters worse because investments that are working to generate showroom traffic are reduced too.
Dealers Are Asking Better Questions
Dealers are asking better questions of their marketing agencies but in many cases the answers they receive are not sufficient. David Boice, CEO of Team Velocity shared with me recurring questions that come up with dealership managers:
- Can you tell me how much money we made from transactions directly related to our marketing?
- Can you share their names and their journey from shopping to signing?
- Can you distinguish our results between our existing customers and new customers?
- How did we know the marketing impacted incremental transactions versus transactions we might not have done anyways?
- Which strategies worked best to generate transactions?
Dealership managers are looking for answers that can illustrate how marketing investments relate to actual sales. They do not care about impressions, clicks, time on site, or VDP views. They have to sell more cars at a lower cost of they will be out of a job.
David has invested in the technology and processes that can address the real concerns of dealers.
Managers need better “levers” to increase the opportunities for new and used car sales.
General Managers Never Had the Data
After my presentation, I hope dealership managers will come to realize that they were set up to fail. Their frustrations with marketing results are rooted in the fact that they never had the data to inspect the effectiveness of their marketing investments.
Once managers learn what they need to do, to get the right data, they will be on a path for greater success. Equipped with a solid data strategy, managers will build the necessary confidence to lead their business to higher sales and profits.
General Managers can inspect the performance of their F&I team or their Fixed Operations department in minutes. They know exactly where to look on their P&L statement. They have that important data. However, when it comes to their $50,000-$100,000 a month marketing budget, they just scratched their heads and hope that it is working.
Dealership managers run their business “by the numbers” and it is time to get the data they need to increase Return on Ad Spend (ROAS).
Dealers Don’t Have Quality Metrics and Outcome Reporting
Another realization that I hope manager grasp at AAAS is that most of the metrics they look at each month focus only on quantity and not quality. Dealers get reports that show website activity such as monthly visits, pages per session, time on site, and bounce rate but none of these metrics help a manager improve traffic quality.
Dealers want to know how their marketing budget created incremental sales
Dealers get reports on how many “conversions” their marketing investments generated but there is no standard definition for this word. For some vendors, a conversion is a defined opportunity (lead form, call, text, or chat) and for others it could be a visit to a website page. It gets worse, like the agency call my team was on this week. The marketing vendor was glowing at the 600% conversion rate for an AdWords campaign.
Now, if the dealer asks their agency to break out the “conversions” by opportunity (sales, service, parts, or just a business call) they will tell the dealer that the data is not available. That is partially true. You see, dealers can track true conversions and can inspect outcomes if they have the right guidance and data strategy. Dealership managers need clear instructions on how to collect the data they need to inspect the quality and outcomes of their marketing budget.
Angry with The Wrong People
Dealership Managers are often looking in the wrong place to increase ROAS because of the lack of data, metrics, and transparency of their vendor partners. It is very common for a General Manager to complain about the cost of third-party portals (i.e. Cars.com, Autotrader, CarGurus) and many believe that they could do away with all of these platforms. That flawed idea is based on ignorance and not data.
Imagine if realtors said that they didn’t need Realtor.com, Zillow, Trulia.com, etc. and that they could drive in-market house buyers to their local real estate website better than these portals. You would laugh at them, or you should. Consumers will shop where the find transparency, validation, selection, and tools to make a proper fit for their needs. The ecosystem of dealer websites and third-party websites is the world in which we live.
Managers need to stop bitching about it and get serious about obtaining the data they need to run their business more effectively. I will share that path at the AAAS but our industry vendors have to be willing to change as well.
I am working with third-party portals to support more transparent quality metrics and independent validation of cross-shopping behaviors.
Google Gets a Pass
The odd thing is that after analyzing thousands of Google AdWords campaigns, there is often more waste (easily identified) than the full cost of an average monthly portal subscription on Cars.com or Autotrader. Why are Google investments (via an agency partner) getting a pass? Do dealers understand that 70-90% of all conversions from AdWords come from simply buying the dealer’s name and OEM/city-name keywords and sending the click to the home page?
In fact, dealers have been increasing their Google spend in blind faith. Why? Because I know that dealership managers don’t have the data and reporting to see which AdWords campaigns are working best to drive sales. I will continue to write and share about ways dealership managers can optimize their AdWords investments to eliminate waste.
Google advertising is a required investment for dealers but the blind romance has to end. It doesn’t matter what “playbook” is presented to dealers. If Google doesn’t enforce conversion standardization, support traffic quality metrics, and help agencies tie marketing investments to sales, the YOY increase in Google investments will start to decline.
Dealer Groups Will Act Faster and Benefit More
Dealer groups are spending millions of dollars in marketing per year so identifying 20% waste ends up becoming a big number. Money often motivates change, and that is why I am urging marketing managers from dealer groups to invest in next-generation marketing training.
In November, I will be releasing my new book “Who Sold IT?” The book is a discussion on automotive marketing and sales attribution. This book is perfectly timed to help dealership managers who are unwilling to keep the status quo. Readers will find tangible ways to increase their Return on Ad Spend (ROAS) and gain a competitive edge for their marketing strategies.
Dealers can save 50% off the cover price if they order by October 15th by visiting http://whosolditbook.com/.
About the Author
Brian Pasch is the founder of PCG Companies and is a popular author, conference speaker, and educator. Brian wrote the book on automotive digital marketing called “Mastering Automotive Digital Marketing” and is the host of Auto Marketing Now, a popular weekly show on automotive marketing.
Author: Contributing Writer
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