MANHATTAN BEACH, CA – There are two different theories as to who is to blame when a third-party provider’s Internet lead fails to result in a sale at an auto dealership.

Theory 1: The lead stinks.

Theory 2: The dealership salesperson stinks.

Dealers tend to believe the first theory; Internet lead providers, the second.

Fingers get pointed in each direction.

“It’s almost like dealers and third-party providers are at war,” says Mike Baker, CEO of the Bob Baker Auto Group based in San Diego, CA.

The quality of Internet leads sold to dealers often becomes a topic of discussion throughout an E.N.G. automotive conference here.

Differences of opinion exist largely because the leads can be so different, both in nature and cost.

Some third-party leads originate from auto buying websites that attract serious shoppers, while others are from sites that are visited by casual consumers.

In some arrangements, one dealer gets one lead. In other setups, one lead is shotgunned out to several dealers who must fight over it. Prices of leads vary, according to scope of dissemination.

One conference participant says you get what you pay for.

“A lot of providers feel you’ve got to be at $16-$18 a lead, but if you can show a high conversion rate, I’ll pay $75 a lead,” says David Metter, chief marketing officer for the Mile One Automotive Group.

“We have this thing that $16 leads are great because they’re cheap,” he says. “But often they stink.”

While lead-referral firms have many dissatisfied customers at the dealer level, Metter isn’t one of them.

“I’m not bashing third-party leads,” he says. “They should be a good part of the mix,” which includes leads from dealerships’ and auto makers’ sites.

“We’re going to need good (outside) leads as dealers,” says Metter. “We can’t do it ourselves.”

But dealers need to systematically measure closing rates for all leads, he says. “ How many dealers say, ‘Your leads are great,’ or ‘Your leads suck,’ but can’t back it up because they have no data?”

He anticipates “a pretty quick reduction in third-party providers” due to market changes and consolidation efforts. “The model started out well, but some got greedy and messed up the market a bit.”

Steve Stauning, e-commerce director at dealership chain Asbury Automotive, says: “I’d rather have no leads than bad leads. I don’t want a bad lead provider to bring my closing rates down.”

But he adds: “A lot of third-party lead providers have cleaned up their acts and are providing pretty good leads.”

If a lead provider sends the same lead to more than one dealer, it doesn’t mean it’s a bad lead if most of those dealers didn’t close on it, says Ralph Paglia, director of digital marketing for ADP Dealer Services.

If one dealer closed on it, then it was a good lead, says Paglia, who formerly ran the Internet department at an Arizona dealership.

“One person is going to buy one vehicle,” he says. That’s the way it is when a lead is up for grabs. “It’s not because we’re getting bad at closing.”

Bountiful Mazda in Bountiful, UT, has stopped buying third-party leads.

“I don’t need any more leads,” says co-owner Paul McDonald. “We have enough of our own to handle. We don’t feel we have the process nailed down enough to handle more.”

Chad Hubler, general manager of Courtesy Chevrolet in Phoenix, AZ, says: “I’ve hard the pros and cons of third-party leads. The best thing about them is that you can measure them.

“If a lead isn’t closed, a lot of times it’s the sales person,” says Hubler, who oversees six full-time Internet sales people. “The more leads you give me, the more opportunities I have to sell cars. Flood me up.”

sfinlay@wardsauto.com