entire business than something as limited as buying leads for $20 that are shared with multiple
dealers and generated by a process that devalues any differences between one dealer and
another. It has been my experience during the past few years that if a dealer thinks that digital
advertising is a substitute for either buying or not buying third party generated leads, that they will
be VERY disappointed in their results. Usually it is because when the costs of running digital ad
campaigns are divided by the number of web forms generated, it usually nets out to a far greater
number than $20!
is going to buy one vehicle into a lead on 4 to 6 different makes and models of vehicles… Just like Ross Perot
said a few years ago “It’s all about the economics, stupid!”. Sometimes, I imagine what it would be like to have
the opportunity to go back in time to 1994 and meet with Pete Ellis, the founder of the first automotive lead
provider, Autobytel. I would ask him “where did you come up with $20 as the right price
for a sales lead?” I suspect that the answer might be something along the lines of “That
just seemed like a price the dealers would be willing to pay...” While I am on my soap-
box; let me conclude by saying that $20, $19, $18, $25 and $35 leads have little or no
bearing on the value generated by an online Digital Advertising campaign… Or,
perhaps they have the exact same significance on Digital Advertising as they do on
Newspaper, Radio, Outdoor, Direct Mail, TV, Cable and other more traditional forms of
advertising. After all, if you put a dealership’s domain name into a local newspaper ad,
do you evaluate that newspaper ad’s performance by how many leads come in from
that website? I dunno, maybe you should if you think digital advertising is about
competing with $20 leads.
By now, you must be wondering what Key Performance Indicators (KPI) I recommend
that you should measure. All advertising is essentially a means of communicating a
message, and budgets allocated to getting that message about what your dealership
sells or offers, your 3 day return policy, lifetime oil changes and free tires for life, $25
prepaid gas cards for taking a test drive, $400 discount coupons, free trips to Las Vegas with every purchase,
0% APR for up to 84 months, the BIG sale, this weekend’s Slasher Event, Repo Joe being back in town, the Tent
Sale at the Stadium, that giant blue gorilla you have out front and the GM is not coming down from the crane
bucket 80 feet in the air until your store sells 100 vehicles, etc., etc., should be based on who and how many
people your dealership wants to communicate the message to, and how much it is going to cost to achieve that
objective. That is where Digital Advertising offers superior effectiveness, the ability to reach the right people
(targeting) with a compelling message or offer for the least amount of money per thousand people who see the
ad. Therein lays the first metric you should be concerned with; how much does it cost?
|In-House Digital Advertising (continued)
|When I worked at Courtesy Chevrolet and was responsible for the proper care
and feeding of over 5,000 leads a month it became obvious that a good portion of
the leads we received each month were not from people ready to buy a vehicle,
but rather from people who were trying to get information about whether or not
they should even begin the shopping process.
Shopper Studies have consistently shown that out of every 100 people who visit a dealer’s web site and
subsequently visit the dealership in “real life”, only between 19 and 21 of those 100 people will have contacted
the dealership either by completing an online form or by phone prior to their showroom visit, and after their visit to
the dealership’s website. What this means is that the lead forms that dealers receive from their websites are
actually a sample “survey” of the customers who are going to be coming into the store’s showroom facility!
Likewise, all the data (and there is a lot of it!) shows that the most significant and positive business impact areas
from successful online advertising campaigns for a car dealership are the following, listed in order of the degree
in which online advertising can be effective:
2. Awareness of a Dealer’s Current Promotion
3. Dealership Consideration (location listed in ads)
4. Showroom Traffic
5. Website Traffic
6. Incoming Phone Calls
7. Increased Volume of Search Queries for the Dealer’s Name
8. Completed Web Forms
9. Customer Referrals
10. Unsolicited Emails
|SUPERIOR DEALER SOLUTIONSsm
|part 3 of 3
How Much Does It Cost – Key Performance Indicator #1: There are several ways to buy and pay for
Digital Advertising, and a key performance indicator that can be applied to almost all forms of advertising. There
are several ways to track what Digital Advertising costs, some are the basis of how you make the advertising buy,
and others can be calculated after the campaign is finished and we know what the numbers are:
• CPM (Cost Per Thousand Impressions) – This is where dealers pay an agreed upon price
audience would be visitors to a designated website that are physically located within a 25, 40 or 50 mile
radius of the dealership’s address or zip code. CPM costs are priced per thousand targeted customer
impressions. The M in the acronym is the Roman numeral for one thousand… Why isn’t it called “CPT”?
Because the person who invented the term “CPM” was probably Italian and wanted to honor his or her
of impression. This is in contrast to the various types of pay-for-performance advertising, whereby
payment is only triggered by a mutually agreed upon activity (i.e. click-through, lead form completed, sale).
The total price paid in a CPM advertising deal is calculated by multiplying the CPM rate by the number of
CPM units. For example, one million impressions at a $10 CPM advertising rate equals a $10,000 total
1,000,000 / 1,000 = 1,000 units
1,000 units X $10 CPM = $10,000 total price
The amount paid per impression is calculated by dividing the CPM by 1000. For example, a $10 CPM
equals $.01 per impression.
$10 CPM / 1000 impressions = $.01 per impression
people (reach) within our geographically defined area (geotargeting) within the month of August 2008,
then we must find a way to place our ads on enough websites so that all combined they receive 1,000,000
(200,000 x 5) total visitors each month. If we have to pay a combined average of $10 CPM for 1,000 web
sites to get 200,000 uniques that visit at least 5 of these web sites in a month, then the campaign will cost
Total Campaign Impressions = 1,000,000
Advertisements Yielded a 1% Click Through Rate (CTR) = 10,000 Clicks
10,000 Website Visitors @ $10,000 Campaign Cost = $1 CPV
generated enough “Click-Throughs” so that our of the million times the ad was seen, 10,000 visitors ended
up coming into our dealership’s website, we would have a 1% Click Through Rate (CTR). That 1% CTR
has sent 10,000 people into our web site during the campaign. Since the campaigns cost was $10,000 (I
am making the math easy) we now know that the campaign generated a $1 Cost Per Visitor (CPV).
They do not actually pay for the listing, but only when the listing is clicked on. This system allows what
many dealers know as “SEM providers” to refine searches and gain information about their market. Under
the Pay per click pricing system, dealers pay for the right to be listed under a series of targeted key words
that theoretically are used by consumers searching for information related to buying a car. The sponsored
listings, or ads then direct click-through traffic to the dealer’s website. You pay only when someone
actually clicks on one of the listing which links directly to your dealership’s website, or in some cases a
microsite or landing page set up by the SEM service provider for the dealership. CPC differs from CPV in
that each click is paid for regardless of whether the user makes it to the dealership website.
publisher takes all the risk of running the ad, and the advertiser pays only for the amount of users who
complete a form, such as a Request For Quote (RFQ), Credit Application, Contest Entry Form, Test Drive
Appointment or sign-up for that 3 day trip to Las Vegas that the dealership is giving away. This is the best
type of rate to pay for banner advertisements and the worst type of rate to charge for website publishers.
Usually, this is a advertising billing plan for the most desperate website publishers. Similarly, CPL (Cost
Per Lead) advertising is identical to CPA advertising and is based on the user completing a form,
registering for a newsletter or some other action that the dealer feels will lead to a sale. Also common,
CPO (Cost Per Order) advertising for service appointments, parts and accessory sales online is based on
each time an order is transacted. Another good example is secured credit applications that use real-time
integration with credit bureau systems and credit decision engines to give customer an actual approval
while they are still completing the form. We are seeing companies that provide this technology offering
dealers a pricing plan that is based on the number of completed online credit applications that are
approved, with a lesser fee charged for the declines.
calculated by dividing the total cost of an ad campaign by the number of lead forms and phone calls
generated by a campaign specific microsite. The definition of "Conversion" varies depending on the
situation: it is sometimes considered to be a lead, a sale, or a purchase.
website at http://www.Autotropolis.com/SEM says:
advertise it on all the top search engines.
traffic that does not convert! Clicks mean nothing unless you can convert that traffic to workable leads!
managers at Autotropolis on several occasions. There services were of genuine value when I used them,
and their managers seem sincere and on the “up and up”. However, I am not sure what they are actually
selling with this product, after all it looks like the dealer would be buying leads, but they sell it as if you are
buying Search Advertising… And, I am especially wary of a 3rd party lead provider making this type of
offer look like Online Advertising… I mean, are they going to let you use the website to drive traffic into
your showroom? How would they get their CPA based fees then? I am certain that there are many skeptics
of this type of deal coming from a lead provider. On the other hand, if anyone should know what it
takes to churn out leads from website visitors, it is those clever 3rd party lead providers!
advertising impressions but had a Click Through Rate (CTR) of only 0.01%. Yet, another campaign
for the same dealership had a CTR of 0.45% which is 450% higher! Can you tell which campaign had
a very targeted target audience with an objective of maximum click-throughs versus which campaign
was about creating awareness and floor traffic?
There are several qualified sources of consulting and training
that can get you started and off in the right direction, including
Jim Bernardi who is the publisher of the Automotive Dealers
Network newsletter and publishes this site.
As most people reading this know, I work for the ADP Digital
Marketing Group and we provide an intensive 2 day consulting package
designed to get dealers started with self-managed digital advertising campaigns. At the end of the 2 day visit, the
dealership has functioning ad campaigns running online. The way we get it done is with a very specific agenda and a
highly focused series of action items. If your store needs to be sold on digital advertising, this is NOT the program for
you! But, if you are ready to get started and just want a little assistance setting it up the first time, our ADP Digital
Marketing Consulting Team is a great way to do it. Contact Jim Jensen at firstname.lastname@example.org or by calling him at
347-678-4135. You can also get information and enroll online at http://www.adpdigitaladvertising.com/ . Jim is one of the
best consulting team leaders I have ever worked with and he will fit the right person for your dealership from the 20+
experienced pros on his team.
|It is important when
percentage of a dealership’s
total advertising budget
should be allocated to digital
that we factor in certain
subtle but powerful “online
vs. offline” realities.