There have been monumental waves of technologies and techniques in the automotive digital marketing space particularly over the last 24 months. These waves have been as quick as they are unpredictable in direction. Most come across as dazzling ideas necessary for a successful Internet department. However, we should always try to gauge value in terms of cost. In today's market, efficiencies are key to your Return on Investment.
The easiest and most common old-school way of determining the ROI of an "Ad Tool" is to do your Bronx "Guzintas" (basic division), so to speak.
"Sold 10 cars and that guzinta $2,000 spent. $200 per car sold. Great!"
It's what we know and how we've measured these things for years. Folks selling programs tend to suggest this crude matrix to justify an incremental increase in budget for the perceived or real incremental increase in sales. It's just not that simple. Whether it's a lead program or software to manage your inventory listings, the collective sales effect of these investments needs to be factored into the entire budget to calculate the ROI. Only then can an addition or deletion of a program and its effect on the sales needle be properly related to its individual costs for ROI calculations.
We must also take into account the current environment. The following all dovetail around the economic downturn of the last two years:
- Credit crunch — Most people point to the credit market as the first and longest lasting component of the downturn that has most affected automotive sales.
- Overall sales downturn — Automotive sales are just starting to recover from an unprecedented drop in annualized sales, a downturn which was triggered by high consumer spending due to the federal stimulus package. Jeremy Anwyl, CEO of Edmunds.com, says when this occurs, many news sources will then report that the Seasonally Adjusted Annual Rate (SAAR) has fallen without noting the actual buying behavior that caused the sales decline. Unseasonably high incentive offerings and other unusual offerings that shift consumer psychology also undermine the accuracy of the SAAR, but reporters tend to cover SAAR as a simple black and white picture of industry health — a practice that is often misleading and potentially damaging to consumer confidence. Consequently, people are holding on to their cars from a former average of 46 months to the current length of almost 72 months.
- Dealership budgets are taxed — In earlier days, Internet budgets we're quickly opened up to try new products and ideas. Today's budgets warrant much more scrutiny into ROI for any proposed product or service.
- Manpower curtailed — Along with the above, many dealerships are either freezing or reducing headcount in almost all areas of the store. We need to optimize our procedures and work with more quality than quantity.
These are parts of the untold story, or subsequently, the proper analysis for your store. There's the human element and the element of time. Assuming we hire well, we can say the human element plus time equals effort, which we don't want to squander on programs and techniques that will not be justified in incremental sales.
Now let's focus our attention on these aspects in concert with some of the programs and tools that have deeply penetrated Internet department mindsets. With all dealership dynamics being different as they relate to almost everything, my goal is to offer some basis of analysis into examining the true costs involved, enabling you to better evaluate and maximize your own budgets more efficiently.
- Dealership Web sites — Today's Web sites offer a wide array of applications and tools to make for a very snazzy customer experience. Chat, Flash, Mobile, Text Apps and the like, however, are not cheap and take manpower and time to implement. How much is it really costing and how much is it being engaged with? Recent reports have shown that consumers searching for a local dealer have already chosen the car they'd like to buy and some of the jazzy stuff actually deters them from the inventory and call-to-action information they want.
- Third-party leads — 10 years ago almost any GM would say "This is great! Internet customers contacting ME! I'll take as many as I can get". Well we all know those days are long over. Many in the automotive Internet community continue to preach slashing these budgets. Consumer activity on third-party sites on the other hand is UP although lead submissions are DOWN. Therefore, the question becomes, "Where do my leads come from and what benefits are garnered from being listed on that site beyond the lead?" Some sites generate the lead straight from a search page and give no real inherent indication to whether the car chosen or time frame is accurate. Some sites "firewall" a customer and require them to basically submit their info before accessing the information they were looking for. Remember, most factory lead programs also aggregate leads from other sites. You need to ask where leads come from and make yourself familiar with the sites. How are the leads generated? Is it an automotive site? Is the audience in-market? What are the demographics? What is the credibility of the site? At what point of the shopping process is my store displayed? To how many people is my store displayed? If my dealership is being listed in front of shoppers in my area, regardless of lead flow, there might be a big unrecognized value there. I need to be sure my people are working on quality leads from in-market customers with the ability to buy a car.
- SEO/SEM — One of the most important areas when formulating your Internet presence is the SEO/SEM strategy. Some of the human element needed to be successful with some SEO/SEM programs can be heavy. Also be aware of time spent on social networking sites solely for the purpose of SEO rankings. Google's latest algorithms and new Google Search Bar, adding relevance and prompting more shopping sites, have made getting command of search a difficult and time-consuming task for a local dealer. The value of being properly listed on an authoritative site like Edmunds.com can do most of the heavy lifting for your SEO. Google gives great weight to your name and links when they reside on a relevant authoritative site. J.D. Power and Associates recently wrote on this effect here.
- Inventory merchandising tools — As mentioned earlier, the average amount of time people are keeping cars now continues to increase. Also, many rental companies, traditionally as good resource to replenish used car inventories, have ramped up their retail sales efforts. Consequently, the quality of cars coming in for trade and at auction pushes the limits in terms of miles and condition. This is another area we need to evaluate in terms of the effort our folks exert taking pictures, writing descriptions etc. to move the needle online. Closely look at these facts with your folks when analyzing where your cars are listed.
- Social Networking — Early results are in on the effort/result ratios for the social media craze relating to incremental sales. Those who concentrate their efforts on their sales force's profiles on social networking sites have seen some success, but in general, it seems these sites are more akin to broadcasting. Yes, they can help with SEO and maybe push the needle a bit in sales and service, however most network audiences are out of market and messages can quickly be lost in the tornado of information integrated into these sites. I know of many people who have spent countless man hours setting up numerous sites just to find out there are no magic bullets out there.
You can find merit in all that's available today. You just have to dig deeper to be sure they make TOTAL sense for YOUR STORE.
John Giamalvo, Director, Strategic Marketing