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Marketing Experts Outline Success Strategies In ‘08
Written by Marketing Experts Outline Success Strategies In ‘08
01/04/08
2008 Panel of Experts
Dean Evans
Ralph Paglia
Scott Toland
Alexi Venneri
Charlie Vogelheim
Editor’s Note: With the prospect of flat new car sales this year and an uncertain economy, auto dealers should be placing their
operations “under a microscope” seeking ways to increase sales and reduce advertising and marketing costs. Because
advertising and marketing are such significant investments for retailers, we felt it would be helpful to ask some of the industry’s
leaders for their advice on what it will take to successfully advertise and market your dealership in 2008. We have attempted to
secure as diverse a set of perspectives as possible from experts who may recommend more of a traditional branding approach to
those who feel success lies with an integrated plan harnessing the advertising and marketing reach of the Internet. Our goal,
irrespective of opinion, is to provide you with a comprehensive overview from marketing experts of what it will take you to achieve
sales success and profitability this year. Cheers!
Q: What are the major marketing challenges auto dealers face in today’s retail market and what are your solutions?
Dean Evans - Dealers continue to face increased financial pressure to decrease customer acquisition costs. They also continue
to face confusion about the true benefits and pitfalls of Internet marketing with organic and paid search. Today, however, the key
is to reduce the cost-per-lead and dramatically increase advertising ROI and sales.
Ralph Paglia - In addition to making the switch to online advertising in order to remain competitive, dealers must also make the
right decisions about what messages will be most effective and which media within the Internet will provide the most
cost-effective means of delivering that message.
Alexi Venneri - Sales have been down in most markets, and some traditional advertising mediums have been less effective.
Consumers are more educated and many are less loyal due to the increase in use of online mediums for comparison shopping.
The most successful solutions include targeted online and search engine marketing paired with dimensional direct mail. Dealers
need to use their own databases and CRM to market to prospects and customers with an integrated approach that combines
both sales and service messaging.
Scott Toland - The major challenges are internal and stem from dealers’ egos. With markets, models, media, and margins
changing rapidly around them, they still do the same old advertising. Dealers need to acquire the training and tools necessary to
understand the difference between advertising and marketing. If they keep repeating the same actions, they will keep getting the
same results. To understand which actions to change and when to change them, they need more knowledge than they have right
now.
Charlie Vogelheim - Meeting the demands of consumers’ customer service expectations in a competitive marketplace and
knowing how to effectively work Internet customers are the two major challenges facing dealers. Lead conversions are dropping
and our data shows that poor lead handling has stalled the growth of online request for quotes. Consumers can now get
transaction prices online, yet dealers are confused about whether to provide prices to email or phone-ins generated by the
Internet. We believe the solution is to re-engage with the customer on their terms. Additionally, dealers need to learn how to
develop and improve their Internet sales operations.
Q: With the prospect of another year of flat new car sales, what are the most effective ways for dealers to market their used-car
inventory and increase sales in the current market?
Dean Evans - Make sure as a dealer you are focused on three core strategies:
1. Your inventory needs to be everywhere on the Internet, but lean on your own Website provider to make sure they send your
inventory to the search engines and other third-party sites.
2. Your inventory must have high-quality pictures and excellent merchandising (like custom copy).
3. In addition to effectively marketing your inventory online, your used car manager must have technology/data and Internet
marketing skills.
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Ralph Paglia - The Internet is where the customers are. With that said, the dealers who discover how to buy conventional media
such as TV, radio, and newspaper using some of the far more efficient, lower-cost online buying services such as Google Audio,
Ebay Media Market, Google Print, BID4SPOTS, and some of the other emerging media buying channels, will enjoy a distinct
competitive advantage, because they can buy the same conventional media as their competitors at less than half the cost.
Alexi Venneri - In a tough market, dealerships need to differentiate themselves with value-added elements. We have had
success working with our dealers to create unique loyalty programs, service incentives, and even a concierge service that they
can pair with new and pre-owned vehicles. Marketing your unique offers on your Website and at the point of purchase is very
important.
Keep your Website updated weekly, send out emails to your prospects, and put your benefits on hangtags, brochures, and
in-store signage. Do not only rely on your staff to communicate all the unique benefits you offer, and maximize up-sell
opportunities to generate higher gross on each sale.
Scott Toland - To market used cars, dealers must provide their sales force with more and better information about each
pre-owned vehicle on the lot. This will not come through training. The best resource for increased sales, new or used, is a
dealer’s internal database, which when expanded with the addition of other vehicles in the household, friends, neighbors,
relatives, and co-workers, will multiply six times over. One thousand prospects now becomes six thousand—all connected to the
original customer by referral.
Charlie Vogelheim - A large portion of consumers shop new and used vehicles against each other. Dealers do a good job at
helping consumers choose between similar priced new and used vehicles, but they could do a better job at marketing their used
vehicle inventory to new vehicle-shoppers. Dealers should initiate a strong online marketing program for their entire used car
inventory. This is because the used car customer is now using the Internet more than ever. According to our study, 61 percent of
used car buyers shopped for their purchase on the Internet in 2007.
Q: With consumers turning to the Internet in greater numbers to buy cars, should dealers continue to support traditional media
(TV, newspaper, radio, direct mail, etc.) as an effective method of generating customers or should they be looking at newer
technologies like streaming video and social networks to generate leads?
Dean Evans - There is no media mix that is optimal across the board. You have to measure consistently and spend to achieve
the best ROI. Traditional media for most markets has been losing its effectiveness rapidly over the last few years because the
automobile vehicle purchase (due to its price and complexity) is one of the most highly researched product categories on the
Internet. There is exciting work being done around customer acquisition on social network sites too, so I always tell dealers to
make sure your sales people use these...these are pure salesperson strategies. Having your dealership profile on certain social
networks is good as well.
Another important aspect of online marketing is steaming video (rich media). Today the cost for quality content development is
low and there are a myriad of potential places to use videos, like owner introduction, sales people bios, used and new car walk a
rounds, video of Internet sales process, and many others.
Ralph Paglia - You will get a variety of opinions on this, but the most effective dealer marketing I see today—the biggest bang
for the buck—is with integrated campaigns that use both online and offline media to communicate an effective message to
achieve both branding and lead generation objectives. We have all seen situations where a TV commercial combined with radio
spots serve to create an awareness so that the consumer is far more likely to click on that dealer’s online advertising or
sponsored link.
Alexi Venneri - Assuming dealers have the budget, an integrated campaign that includes both traditional media as well as the
newer digital and interactive tactics is always a good strategy. Our agency works with quite a few stores to integrate their
television and radio spots into their Websites. We also make sure that their traditional media campaigns include a call-to-action
to drive traffic to their Websites. The more creative and unique you can make your traditional media spots, the better they cut
through the clutter. Monitor the use of DVRs/TiVo in your region closely, along with satellite radio use, to determine how much
market share may be moving away from traditional mediums. Search engine marketing, Website enhancements (video, virtual
test-drives etc.), and targeted emails all show a high ROI. We haven’t seen high traffic from social networking sites, yet, but
they’re an interesting medium to watch.
Scott Toland - Concentrate on internal efforts first. Expand your database (as previously described), and communicate with
prospects personally via email, texting, phone calls, and direct mail. Not in mass, but one at a time and with valuable information
pertaining to them and their vehicle needs. Then look to the service drive for opportunities to convert service customers into new
or used vehicle buyers. Dealerships see over five times as many RO’s each day as they see ups. Take advantage of this.
Charlie Vogelheim - Dealers should be cautioned not to “put all their eggs in one basket.” The best marketers are those that
understand how to use new and traditional media together to build those relationships. Dealers should make the Internet their
priority and employ traditional media in a secondary role to support their Website and Internet marketing. While our studies show
continuing declines in the customer use of traditional media in auto shopping, this varies widely by brand. Dealers should tailor
their media mix to their brands target audience.
Q: Do dealerships really understand today’s diverse and complicated vehicle buyer enough to reach them and secure their
business, or do you believe that dealers are better served by outsourcing their marketing and advertising?
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Ralph Paglia - Some do and some don’t. The really good dealers have people working for them who are dedicated to
maximizing the daily marketing effectiveness of the store’s advertising investments. The worst ones rely on vendors and
suppliers to do all the work for them. Those are the stores being fleeced by every charlatan that walks in with a digital
“whatchamacallit” for sale! Today’s retail environment requires thinking, planning, and involvement by dealership managers and
owners. Simply outsourcing everything digital is a recipe for disaster.
Alexi Venneri - Dealers know car buyers extremely well, but that does not mean they know all the new interactive ways to reach
them. Working with an agency that truly knows both traditional and interactive mediums will help them reach an increasingly
educated buyer. An agency should also be able to negotiate lower rates and better placement, especially when it is a new online
medium. The same rules that apply to traditional media still apply to new media. Agencies need to know all the ways to reach
buyers, negotiate the best rates and, of course, come up with the most innovative and compelling creative to drive more traffic to
the stores.
Scott Toland - The rules have not changed; this is a completely new game! The true impact today’s diverse market has on
dealers’ business is completely foreign to them. These car buyers don’t read your papers, watch your TV shows, listen to your
music, wear your clothes, or talk your talk. How can you possibly connect with them? Dealers need to either get educated or seek
outside help. Diversified marketing is an expertise that most dealers do not have.
Charlie Vogelheim - Different dealerships’ understandings of the marketplace are as varied as the marketplace itself. Dealers
cannot outsource their understanding of their customer or they will lose that customer. Once that understanding is achieved, then
the dealer can decide what expert help he or she needs in specific areas. Even if he chooses to hire a “full service” shop, he
should look at this as establishing a partnership, in which he maintains the role of monitoring his business, learning about the
customer and setting objectives, and measuring performance. Outsourcing marketing and blindly expecting customers to just
show up is naive.
Q: If you were a dealer in today’s marketplace with a limited ad budget, what media would you consider using and why?
Dean Evans - I would divert my first allocation towards buying the best Website with regards to conversion. Dealers need to
remember this is the most important investment they can make for marketing their dealership today. Don’t get caught up in
design vs. performance. Just ask what converts the best. I would then invest in SEO optimization services their Website
providers offer them. I never recommend having a different vendor do your Website and your (organic/free) search optimization. I
would also invest in paid search and buy key markets around your dealership and buy deep until the price-per-lead and sale goes
over what a third-party lead provider can deliver to you in cost-per-lead and sale.
Ralph Paglia - I would use Google’s AdWords tools to make all my online, radio, and newspaper advertising buys. Google
AdWords is easy to use and far more cost effective than any other supplier or means of buying advertising. I would partner with
an experienced and reputable vendor who knows the market and, most importantly, knows how to sell cars.
Alexi Venneri - It would depend on the brand, the location, and the size of my database. If I have an Acura dealership in a major
market with a monthly marketing budget of $50,000 and a solid database, I would invest in targeted email with compelling offers
for both sales and service along with relevant and helpful articles. I would utilize pay per click search engine marketing as well as
optimizing my Website for organic search. I would also ensure that my Website was frequently updated with specials and
content. I would test high-end, dimensional targeted direct mail. I would also test regional online display mediums paired with
selective traditional media buys for special events one week per month, and use these mediums due to the lower cost and
measurement abilities.
Scott Toland - I’d have a great customer friendly Website, an unmatched internal database, a professional call center, a visual
merchandising expert, a sales-writer in my service drive, a professional greeter and up rotation, video suites with compelling
vehicle comparison DVD’s, a staff that dresses the same, and a sales compensation and incentive plan based on logging,
demos, and write-ups (not sales). All costs would come out of my ad budget, and whatever I had left, I would invest in cable TV.
Charlie Vogelheim - In today’s media environment, budget allocations should be based on how the target for the dealer’s
brand uses media. For almost every brand, that means first establishing a strong online marketing program with
third-party sites, search, and targeted display advertising on Websites, which target customers and cost much less out of
pocket. If budget remains, the priority shifts to TV and radio, but not the broad reach, expensive channels. Instead, use
tightly targeted cable TV networks and radio stations. Print can be useful for special events if budget allows.
Q: What are the best methods of managing and measuring advertising effectiveness and ROI?
Ralph Paglia - Advertising funds must be tracked to gauge how much money is invested and where that money goes, and then
matched up with what the dealer received for that investment. Cost-per-thousand impressions (CPM), cost-per-click (CPC),
cost-per-action (CPA), tied in with the use of campaign assigned URL’s and phone numbers is a great place to start to set
up dealership advertising accountability.
Alexi Venneri - Aside from the lower cost and higher ROI, online marketing mediums provide exceptional measurement
capabilities. With our dealer clients, we test new creative campaigns and offers in their online media buys first to gauge
response. We always use phone numbers that are unique and measurable to track calls from traditional media. We also
measure media preferences through a survey that we load into our dealers’ CRM systems. It is printed out with ancillary
documents during the F&I process and then entered into an online reporting tool. It has provided us with excellent media,
demographic, and psychological information that has proved invaluable.
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Scott Toland - Dealers should survey customers that do business with any department in your dealership. No, not the
same old worthless survey you are using now. Instead use a tested, tried, and true automotive marketing survey
designed to transfer data into a Web-based processor to generate reports about your customers, your market, your
media, your competitors, and your sale opportunities. It is necessary for dealers who would rather know than guess. It is
available today—but you have never heard of it? Ask yourself why.
Charlie Vogelheim - The single most important metric is advertising cost-per-sale. Every other metric is an intermediate measure,
so start with the total spend vs. sales, then measure each medium. If it has a lower cost-per-sale, invest more. Continuously
measure each medium and test investments in new media. Intermediate metrics like click-through, cost-per-lead, and
cost-per-visitor are tools to refine buys in particular media, choosing between media brands. The cost-per-sale, however, must be
the end goal. Certainly, not all media can be measured directly to that point, but by varying levels of investment, dealers will be
better informed.
Dean Evans is the chief marketing officer for Dealer.com, one of the premier automotive Website marketing companies. He can
be reached at dean.evans@dealer.com or call 888-894-8989.
Ralph Paglia is the director of digital marketing of ADP’s Dealer Division, He is a respected expert on CRM implementation,
Internet marketing, and Internet lead management and can be reached at rpaglia@bzresults.com.
Alexi Venneri is president and managing partner at Blue Flame 6, one of the nation’s fastest growing advertising agencies
specializing in automotive marketing. She can be reached at avenneri@blueflame6.com or by calling 602-200-7594.
Scott Toland began The Marketing Academy, a one-of-a-kind hands-on marketing workshop specifically designed to educate
dealers, general managers, and marketing managers. He can be reached at stoland@TheTolandGroup.com or visit
www.themarketingacademy.com for more information.
Charlie Vogelheim is vice president of automotive development at J.D. Power and Associates. He is responsible for the
International Automotive Roundtable, the premier forum for industry leaders and executives to share and discuss market forces
affecting the automotive industry worldwide. He can be reached at 714-621-6263 or email charlie.vogelheim@jdpa.com.
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