3rd Party Lead Providers Cost Post-COVID

[Patrick O]

Hi All,

Long time lurker, lol. Any insights appreciated, this forum has been so helpful to me since all the way back to Cash for Clunkers (forgot my old log-in).

I'm struggling with what I should reasonably expect with 3rd party advertising costs, such CarGurus, Autotrader, cars.com, etc going forward during and after this crisis? They're all playing the 50% off game right now, but some are already toning that down to 20-30% off next month. I just can't fathom paying the same rates as we were in 2019 for the foreseeable future. Has anyone signed any new agreements since this all began? We're currently at 50% sales volume vs. pre-COVID, and leads have gone down at a similar rate. Seems fair to negotiate our rates accordingly. Am I off the mark on this?

 

[Alex Snyder]

Hi All,

Long time lurker, lol. Any insights appreciated, this forum has been so helpful to me since all the way back to Cash for Clunkers (forgot my old log-in).

I'm struggling with what I should reasonably expect with 3rd party advertising costs, such CarGurus, Autotrader, cars.com, etc going forward during and after this crisis? They're all playing the 50% off game right now, but some are already toning that down to 20-30% off next month. I just can't fathom paying the same rates as we were in 2019 for the foreseeable future. Has anyone signed any new agreements since this all began? We're currently at 50% sales volume vs. pre-COVID, and leads have gone down at a similar rate. Seems fair to negotiate our rates accordingly. Am I off the mark on this?

Welcome back Patrick. What market are you in? Results are extremely varied across the United States.

 

[Patrick O]

Welcome back Patrick. What market are you in? Results are extremely varied across the United States.

Thanks Alex, I'm in the Los Angeles market.

 

[Alex Snyder]

Thanks Alex, I'm in the Los Angeles market.

That explains it. LA is practicing the most extreme COVID response. Yes, you are in a VASTLY different situation. I look forward to the day when Los Angeles can get back to acting like the rest of the United States. My brother lives there.

 

[Patrick O]

Thanks Alex, I'm in the Los Angeles market.

That explains it. LA is practicing the most extreme COVID response. Yes, you are in a VASTLY different situation. I look forward to the day when Los Angeles can get back to acting like the rest of the United States. My brother lives there.

Yeah, it's been pretty brutal out here. Thankfully our LA location is in the county, not the city, so we're at least able to do traditional sales. Honestly, it could be worse; we can at least get people financed, as opposed to during the last recession.

 

[Zhendrix]

Great question Patrick - A couple questions to better answer yours:
1. Which providers are you currently using?
2. Is your dealership a new car franchise? If so, what brand(s)?
3. Is your goal lead volume, lead quality, or somewhere in between?

I'm in Orange County and it's not much different down here. All the beaches are closed which makes my kiddos unhappy campers. Then again, the term happy camper is a bit of an oxymoron. Don't follow me down this rabbit hole... lol.

 

[CarlAutofusion]

I'm in San Diego and CA still has the shelter-in-place order. According to the governor, we are weeks away from re-opening despite most other states that are already re-opening. He tried to close all beaches this weekend but many cities stated they won't enforce the order so he back-pedaled.

Anyhow, back to your question. You should negotiate your rates. California is probably at least a month away from re-opening. You're in a different boat that other dealers in other states. Use your data to show how they are doing and compare it to pre-covid numbers.

 

[Patrick O]

Great question Patrick - A couple questions to better answer yours:
1. Which providers are you currently using?
2. Is your dealership a new car franchise? If so, what brand(s)?
3. Is your goal lead volume, lead quality, or somewhere in between?

I'm in Orange County and it's not much different down here. All the beaches are closed which makes my kiddos unhappy campers. Then again, the term happy camper is a bit of an oxymoron. Don't follow me down this rabbit hole... lol.

We have a location in OC, I can sympathize. 1. We're using pretty much every provider, cars.com, autotrader, cargurus, you name it. 2.We're independent. 3.We prioritize lead volume.

I'm at the point where I want to renegotiate all of our agreements. I don't feel confident in this market relying on monthly impromptu discounts, especially with the providers that require 30 days notice to cancel. Some are telling me they're already planning on reducing the discounts substantially for June. Facebook seems to be one of our most transparent lead sources when it comes to market adjustments and they are about half off for us right now.

I think Carl's advice sounds reasonable, using pre-covid vs. recent performance as a basis for pricing. Any additional insights appreciated, of course!