WARD'S e-Dealer 100

Special Report

Ward’s
e-Dealer 100

Transparent Marketing

Two Web-based firms, Cars.com and Dealer.com, recently launched tools that help dealers determine the effectiveness of their marketing efforts.

Cars.com's OnlineAdReports consists of five reports that provide information on the dealer's local market, effectiveness of merchandising, sold vehicles and inventory summary. Cars.com says the reports will help dealers make better decisions on where to spend their marketing money along with pricing, inventory and merchandising.

Meanwhile, web site vendor Dealer.com says its newly-launched Sales360 product will provide dealers with a more transparent view of their online and offline marketing initiatives.

Similar to Cars.com's product, Sales360 tracks customer responses from the time they are first exposed to the dealership to when they buy a vehicle, and then calculates the cost-per-lead, cost-per-sale along with the performance of other online and offline efforts. According to Dealer.com, the tool removes the guesswork from decision making about where and when to invest in lead-generating activities, and when to cancel those that don't deliver. It measures a dealer's search-engine marketing optimization programs, e-mail newsletters, third-party leads and web sites.

Overstocked?

Dealers can now list new and used vehicles on the popular web site Overstock.com. The initiative is part of a bigger program called Cars, in which Overstock.com Inc. lists for sale vehicles for rental firm Enterprise Rent-A-Car.

Overstock's program allows consumers to send instant text messages directly to car dealers.

The program includes dealer-controlled automatic pricing, which will allow the dealers to adjust pricing automatically on the Overstock site as inventory ages.

Overstock.com receives 15 million visitors per month.

Online Spend Rises

Almost two-thirds of car dealers plan to increase their online advertising budget in 2007, according to an unscientific poll conducted by Cars.com in its monthly newsletter.

More than 20% of the dealers say they plan to maintain their current spending levels while 18 % expect to spend less.

Meanwhile, other studies indicate an increase in online spending this year. eMarketer claims online spending for the automotive industry will nearly double for auto companies in two years, going from $1.4 billion in 2005 to $2.7 billion in total online advertising in 2007.

For dealers, the message is, if you're not focusing some of your efforts online, your competitor probably is.

Dealers Want Sub Prime

Third-party vendor AutoUSA has joined Autobytel Inc. as one of the few companies providing special finance leads to dealers. As profitability from dealership new-car sales continues to decline, dealers are turning to other departments to increase profitability. Although difficult to do and sometimes risky, the sub prime market historically tends to provide dealers who play in that space with higher profit margins.

“Dealers are clamoring for sub prime leads,” Jay Andres, president of AutoUSA says. “We do have to be careful with where we buy those leads from, though.”

“With more dealerships looking for ways to remain profitable in 2007, many realize that the higher margins in the sub-prime market can give them a competitive edge,” says Phil DuPree, general manager of AutoUSA. “Many dealers have separate departments to handle these customers effectively. It's all about matching the right inventory to the particular customer, and AutoUSA believes they can get dealers more exposure to these customers.”

Dealers See Value in 3rd Party Leads

Years ago, dealers perceived third-party lead providers as an enemy threatening to take over the automotive retail business. While some dealers still harbor some animosity from those days, other dealers recognize the value lead providers create.

According to a recent survey of 632 dealers, 29% say the ability to capture new markets is the number 1 benefit they get from using lead providers. Other benefits include increased sales and higher closing ratios and more leads and increased traffic. The dealers surveyed buy leads from an average of 4.4 lead providers.

The study, commissioned by lead provider AutoUSA, also shows the majority of dealers say quality leads include valid contact information and are customers ready to purchase.

In addition to buying leads from third-party vendors, dealers are looking at other Web-based channels to drive traffic with 70% of the dealers saying they are interested in search-engine optimization and pay-per-click advertising.