Inescapable & Bloated OEM Co-Op Ad Budgets

[mikesayre]

I know there are a lot of DR people out there who were as extremely happy as I was about @Stauning posting this article on the blog about OEM co-op ad programs being out of control with wasteful over-spending, general inefficiency, and exorbitant management costs.

Check it out if you haven't yet, it was well-written and goes down the list in great detail explaining the issues.
https://www.dealerrefresh.com/digital-marketing-time-oems-rethink-co-op-programs/

This topic on OEM co-op has frustrated me before with KIA, the choice is to use one of their approved vendors for full co-op reimbursement, or get no reimbursement if you still want to do digital online ads in-house.

The rules are designed to be inescapable, dealers are semi-forced to comply because of the bloated size of the ad budgets. I'm like most people in this job, I can't stand being mandated, I needs options. Why couldn't there be more flexibility and options for dealers with managing advertising in-house?
https://forum.dealerrefresh.com/thr...for-in-house-ppc-advertising.4926/#post-42831

We have multiple OEM brands, and I'm starting to feel the direction by several is to implement the same inescapable & bloated budget co-op ad strategy as KIA implemented.

I can see the OEM point of view in trying to support their dealer network effectively, remain competitive as a brand online, and I realize it would be very challenging with different geographies and experience levels among their dealerships. Then deciding which vendors become certified, how it's managed? That's complicated. I get it.

It kind of feels like sometimes the OEM directive is more about saturating the market with huge ad budgets to just move more metal... regardless of effectiveness or efficiency? It's a tier two replacement strategy. That's maybe logical from their point of view, but what about the dealer? I think this strategy could be implemented even more effectively from a performance & cost standpoint if it's re-imagined & re-designed.

I'd love to hear some ideas and talk about this in more detail. There are a lot of very talented & sharp people on DR from many different roles and levels that could bring together all the multiple perspectives and reasoning behind the current programs.

How could OEM Co-op Ad Programs be improved?

 

[Alexander Lau]

I know there are a lot of DR people out there who were as extremely happy as I was about @steve.stauning posting this article on the blog about OEM co-op ad programs being out of control with wasteful over-spending, general inefficiency, and exorbitant management costs.

Check it out if you haven't yet, it was well-written and goes down the list of in great detail explaining the issues.
https://www.dealerrefresh.com/digital-marketing-time-oems-rethink-co-op-programs/

This topic on OEM co-op has frustrated me before with KIA, the choice is to use one of their approved vendors for full co-op reimbursement, or get no reimbursement if you still want to do digital online ads in-house.

The rules are designed to be inescapable, dealers are semi-forced to comply because of the bloated size of the ad budgets. I'm like most people in this job, I can't stand being mandated, I needs options. Why couldn't there be more flexibility and options for dealers with managing advertising in-house?
https://forum.dealerrefresh.com/thr...for-in-house-ppc-advertising.4926/#post-42831

We have multiple OEM brands, and I'm starting to feel the direction by several is to implement the same inescapable & bloated budget co-op ad strategy as KIA implemented.

I can see the OEM point of view in trying to support their dealer network effectively, remain competitive as a brand online, and I realize it would be very challenging with different geographies and experience levels among their dealerships. Then deciding which vendors become certified, how it's managed? That's complicated. I get it.

It kind of feels like sometimes the OEM directive is more about saturating the market with huge ad budgets to just move more metal... regardless of effectiveness or efficiency? It's a tier two replacement strategy. That's maybe logical from their point of view, but what about the dealer? I think this strategy could be implemented even more effectively from a performance & cost standpoint if it's re-imagined & re-designed.

I'd love to hear some ideas and talk about this in more detail. There are a lot of very talented & sharp people on DR from many different roles and levels that could bring together all the multiple perspectives and reasoning behind the current programs.

How could OEM Co-op Ad Programs be improved?

They could stop forcing (their "partners'") CDK and Dealer.com web provisions (and their marketing services) down dealer's throats. Obviously, there are plenty of OEM programs and they vary, but for the the large ones those are in play. You're absolutely right on the bloated costs, inefficiency and management fees. This is not a new issue or concern. We've been beating a dead horse here.

 

[TeddyJTurner]

Yeah, it's like a centralized gov't. Instead of letting supply and demand dictate the market, one body determine who can have what and when!

 

[mikesayre]

This is not a new issue or concern. We've been beating a dead horse here.

I'm with you on this, but the money could be spent or allocated elsewhere like new vehicle floor-plan or sales training.

Seems like these huge co-op ad budgets were designed for traditional media years ago and have never adjusted to digital and online media. I don't believe it's a dead horse yet, I mean Dealer Boards actually help administer these co-op programs with the OEMs, wouldn't they want more flexibility and choices with the spend per dealer?

 

[Alex Snyder]

If you “own” the Page One organic results for your name, I struggle to find any legitimate reason for wasting a dime on these search terms. If you’re an OEM marketing executive, you might argue you want to protect the brand. Okay, if I believe that, then why would you compensate (via co-op) your own dealers and the Tier 2 agencies to compete against you?

I have two admissions:

1. It took me way too long to get around to reading Steve's article in full. Finally did it today.
2. The orange koolaid I used to drink told me dealers should buy their own name.

On the latter point I am very thankful that few people listened to me when I made this argument. I'm not even sure I believed it. But I am quite sure a whole lot of revenue came from dealers buying their own name in our paid search product.

Thank you @Stauning for stating the reasons why dealers should not buy their own name in PPC and absolutely do not to spend national campaigning dollars doing it either.

 

[Alexander Lau]

I have two admissions:

1. It took me way too long to get around to reading Steve's article in full. Finally did it today.
2. The orange koolaid I used to drink told me dealers should buy their own name.

On the latter point I am very thankful that few people listened to me when I made this argument. I'm not even sure I believed it. But I am quite sure a whole lot of revenue came from dealers buying their own name in our paid search product.

Thank you @Stauning for stating the reasons why dealers should not buy their own name in PPC and absolutely do not to spend national campaigning dollars doing it either.

Well, there are some reasons why to do both and this has been documented on automotive digital forums, but for the life of me I cannot remember where.

A bit old but a bunch of this holds true...
https://www.wordstream.com/blog/ws/2013/03/19/why-bid-on-branded-terms-ppc

1. Bidding on branded queries helps you dominate your search engine results page. I think we can all agree that two is better than one, especially when it comes to your links on a SERP. In the same way that having multiple links in an email can increase click-through, giving the searcher more opportunities to click works to your advantage. In addition, by appearing in both the organic and paid ads columns, you are proving to your searcher that you are a prominent player in your space.
2. You can control your messaging. Organic listings may be free advertising, but let’s face it, they are boring. Paid ads give you an opportunity to craft a message that will grab the attention of your searchers and entice them to visit your site. To really drive this point home, remember that your organic results might not send searchers to the most ideal landing pages. Take advantage of paid ads and send your searchers to your highest converting landing pages. Use sitelinks, Product Listing Ads and other engaging ad formats.
3. Competitors may be invading your territory. If your competitors are savvy, they’re already bidding on your branded terms. So, if someone does a search for your company, they’ll find your vanilla organic listings flanked (or even preceded) by a nice shiny ad singing the praises of your competitor. This may actually cause traffic that would have been headed to your site to be diverted right over to the welcoming landing pages of your competitor.
4. Branded terms are a steal. We’re all on the hunt for cheap keywords that actually have search volume. Those “magic” keywords might be right under your nose – your own brand name! Don’t just stick with your company name, bid on your specific products or even your URL. Not only are these words likely to be easy on your wallet, they should also garner some of your highest click-through rates and Quality Scores.
5. Capture high-quality leads that are near the point of conversion. People who are searching for your branded terms are already acquainted with your company. Perhaps they’ve heard about you from a friend, researched you in the past or are even return customers. They know you have what they want and, chances are, they are further along in the buying cycle than the average Joe Shmoe who’s searching more generic terms.

Another interesting tidbit: http://forcemktg.com/can-consumers-tell-the-difference-between-paid-and-organic-search-results/

 

[Alex Snyder]

@Alexander Lau those are precisely the kind of arguments I used to make…. when I was orange, blue and then blue again.

I don't buy any of it anymore for this simple reason: I'm on a mission to find my car dealer, so I type that name into Google. I'm not on a mission to find anything else.

We are talking about car dealerships. Someone is typing a specific car dealer's name into Google. They're so far down the funnel they are not being converted. People are just clicking the first thing that is my dealer's website. Dealers are paying to give the customer, they already won, the convenience of not having to scroll a few pixels.

 

[Alexander Lau]

@Alexander Lau those are precisely the kind of arguments I used to make…. when I was orange, blue and then blue again.

I don't buy any of it anymore for this simple reason: I'm on a mission to find my car dealer, so I type that name into Google. I'm not on a mission to find anything else.

We are talking about car dealerships. Someone is typing a specific car dealer's name into Google. They're so far down the funnel they are not being converted. People are just clicking the first thing that is my dealer's website. Dealers are paying to give the customer, they already won, the convenience of not having to scroll a few pixels.

Yeah, I don't know. I'm not saying I do know. I would agree, the intent is already there upon an organic search.

I think a lot of this comes down to personal biases / preferences. Do people know the difference between the two hyperlink types? Maybe; maybe not. Do they prefer one over the other? You can measure it. Much can be argued on this point, because once on a site users tend to get extremely lost (unless it's target focused). Do abandonment rates increase or, as you said are they ready to buy a car, just looking for a phone number or text box?

1. You can control your messaging. Organic listings may be free advertising, but let’s face it, they are boring. Paid ads give you an opportunity to craft a message that will grab the attention of your searchers and entice them to visit your site. To really drive this point home, remember that your organic results might not send searchers to the most ideal landing pages. Take advantage of paid ads and send your searchers to your highest converting landing pages. Use sitelinks, Product Listing Ads and other engaging ad formats.

 

[Alexander Lau]

Oh Good! Another OEM Mandated Digital Partnership program horror Story
https://forum.dealerrefresh.com/thr...igital-partnership-program-horror-story.3824/

 

[mikesayre]

Thank you @Stauning for stating the reasons why dealers should not buy their own name in PPC and absolutely do not to spend national campaigning dollars doing it either.

I could go either way on this strategy depending on the dealer, brand, competition, location, budget, preference, etc. Generally about 70% of your SEM spend will be name + brand + location related. The dealer name should be quality score of 10, usually CPC under $2 on exact match, lower if there is limited device bid increases, and/or limited competition in the area.

When it comes to OEM co-op budgets for SEM, usually there's plenty of budget to buy your name, but this strategy get's abused sometimes with SEM management among vendors. I've seen CPC of $1 for desktop and over $5 CPC for mobile for the same dealer on their name. I've seen even higher CPCs across the board on name that the dealer simply overlooks. Sometimes this happens due to the competition in the area, the OEM bidding on the dealer name, and the vendor isn't intentionally trying to boost spend for profits.