Dealers Love Leads, Hate Costs

Special Coverage

Ward’s Automotive Spring Training

TAMPA – Dealers love Internet leads. They just don’t like to pay for inferior ones that go nowhere.

“It’s all about quality,” says Kent Bozarth, general manager of Ed Bozarth #1 Park Meadows Chevrolet in Denver.

But some dealers focus too much on the cost of leads, rather than their effectiveness, he says at Ward’s Automotive Spring Training Conference presented by Autobytel here.

“Shame on us if we are not determining the true return on investment,” Bozarth says during a panel discussion on the rising cost of leads.

Still, for some dealers, “there is something about surrounding yourself with lots of leads,” says David Kain, president of KainAutomotive.com and a partner in a family-owned dealership group in Kentucky.

Dealers get leads from various sources, including their own websites, auto makers’ sites and third-party lead aggregators that sell them. Quality varies, with some low-level leads coming from people who turn out not to be particularly serious buyers.

“A lot of third-party leads are from people researching vehicles,” says Larry Bruce, founder and head of AIMData, a new-age marketing firm. “They are looking at trucks, not at a truck. That’s why those leads are hard to close. A true lead to me is someone who is going to buy now.”

It is important for dealerships to track leads to see which ones result in sales, Bozarth says. “Otherwise, you’re kidding yourself.”

By now, online marketing should not be a novelty to dealerships, says David Wassmann, CEO of NeoSynergy Inc., a firm that aids dealers in leveraging the Internet.

“We talk of online marketing as being special,” he says. “It isn’t. It’s been around for a while. It is not unique anymore.”

Yet, some dealerships are more web-savvy than others.

For instance, the Bergstrom Automotive Group consisting of 23 Wisconsin stores, has a separate budget for search-engine marketing, a tool that promotes websites by increasing their likelihood of appearing high on search results.

“We really value search-engine marketing because it has given us a strong presence,” says Ted Gessler, Bergstrom’s corporate Internet sales director.

Other dealerships, such as Bozarth’s, are playing catch up when it comes to paying for search-engine clicks and keywords.

“We are not as sophisticated as the Bergstrom group in that area,” he says. “We know we need to be there.”

But don’t rush into it, Mike Gargano, vice president and general manager of Autobytel’s finance-lead program, warns dealers.

“If you go into search-engine optimization and search-engine marketing locally, go slowly, because otherwise you can quickly become upside down on your costs,” he says.

Search terms go to the highest bidder, and “it’s a free for all, really,” Wassmann says.

He adds: “When ad agencies bid on search terms, the price escalates. It is impossible for consumers to know who is bidding for search attention; whether it is auto makers, dealers, dealer associations or ad agencies.”

He predicts a shake out in months to come “as to who is bidding and what they should pay.”

To keep search-engine marketing costs down, Bruce recommends a dealership limit its per-pay click ad agreements to the store’s top-3 selling areas by zip codes.

“Tell Yahoo or Google, ‘I’ll pay $15 a click for these zip codes,’” he says.

Dealers need a process for handling “the electronic traffic” that results from

Internet marketing and lead generation, Gessler says. “Pick a process and hold people accountable.”

Dealers can’t blame lead providers if dealership personnel bobble online leads, says Rick Fuss, Internet sales consultant for Coggin Honda of Ft. Pierce (FL).

“If we drop the ball, it’s our fault,” he says. “If someone emails me: ‘Thanks for not getting back with me; I bought a car somewhere else,’ I get mad at me.”

[email protected]