Are Dealers Spending Too Much On Paid Search?

[Alex.Lemoing]

My 2 cents : in a nutshell I strongly believe that dealers are paying too much money on PPC when it comes to bidding on their own name and other easily achievable organic ranking rankings.
-both of my OEM vendors told me " If you stop bidding on your dealership name, your competition will use that against you and you will loose tons of leads"
- after 2 months of not putting money in our dealership name I have noticed this trend:
1: The OEM vendor was right in saying that we are loosing "Tons of leads" through the PPC channel, especially phone calls.
2: What they don't tell you because it's harder to track, is that the same customers are calling you through your Google my business and other Organic rankings.
3: Most of the phone calls that we get through PPC are related to our fixed ops departments. (to schedule a service or general questions)
I don't know about your guys but I want at least 70% of my PPC budget to generate sales leads and right now it is not happening for any of my dealers, still trying to figure that one out....

 

[Alexander Lau]

Here are other dealer profile attributes that influence PPC strategy

post: http://forum.dealerrefresh.com/threads/what-is-your-new-car-pricing-strategy.4705/#post-41141

Dealers are like snowflakes, no two are the same"
-Uncle Joe

Here are some attributes can influence building a winning pricing strategy.
Franchise’s Influence

• OEM Pricing Persona (e.g. Audi vs Ford)
• OEM's brand position among its competition (e.g. Audi/Subaru is strong, Buick is sucking wind
• OEM's mass marketing profile (e.g. GM carpet bombs vs Suby's subtle messaging)
• OEM Incentives
• OEM's Inventory Complexity (e.g. Honda has a few models, trims & options, Chevrolet has a 100x more)

Marketplace Influences​

• • Number of In-Franchise competitors
    • Dealers share of the total in-Franchise inventory in his marketplace (i.e.. little fish or big fish?)
• Number of off-Franchise competitors that share "common customers" (e.g. Kia/hyundai/toyota/chevy have common customers)
  • Dealers share of total inventory in his "common customer" marketplace

Dealer’s Direct Influence:

• Dealers Sales Goals (passive or aggressive)
• Dealer’s Management Methods
  • A pricing strategy has to complement the current leadership's needs.
  • Management quality (leaders or fire fighters?)
  • Inventory Performance Sensitivity (rules based or reactive?)
    • Age driven?
    • Turns driven?
    • Marketplace driven?
• Dealer’s local market impact (i.e. little fish or big fish?) This includes
  • # of roofs
  • The franchise profile (a volume brand or elite?)
  • Your franchise's market share of it's brand (are they #1 or last place?)
• Dealer's Inventory Profile
  • Inventory size (width and depth)
    • e.g. Inventory Dupes creates 'door buster' pricing tactics (e.g. longo toyota has 77 Black Camry’s)
    • Inventory Scarcity (i.e. rare vehicles)
  • Inventory health
    • Product mix optimized?
    • Product merchandising
  • New/Used ratio (used inventory changes shopper demos)
  • Frequency of price changes

• Dealer's Online Reputation (review scores & volume)

Geo Profile

• Rural, Suburb, City (population density & demographics)
• Drive time to market center
• Avg distance to sale (from sales history)
• Marketing Footprint: Serve a single market or multiple markets

Advertiser Profile

All of the attributes above will be reflected in the dealer's ad profile. Some Dealers (& OEM) are big traditional ad spenders. This 'ad posture' will influence (& compliment) the pricing strategy.

Traditional Ads, is the dealer a...

• Carpet Bomber? (big spender)
• Drop in the ocean? (little spender)

A carpet bomber's "ad theme of the month" will have a big voice in the pricing strategy.
The smaller dealer with a opportunistic mindset will be like a sniper and study the weaknesses of his "carpet bombing competitor".

Digital Ad Spend

• Dealer's that rely heavily on the digital audience will entertain sophisticated (or dynamic) pricing models.

"Dealers are like snowflakes, no two are the same"
-Uncle Joe

VERY TRUE, VERY, VERY, VERY TRUE! There is no shiny red button for every dealer.

 

[ed.brooks]

....I don't know about your guys but I want at least 70% of my PPC budget to generate sales leads and right now it is not happening for any of my dealers, still trying to figure that one out....

Going back to my post on the blog, "It’s Enough to be ‘Found’, Right?", I suggest that "simply being found is not nearly enough" when you step back and really examine the Shopper Journey. Most shoppers need answers to all 5 of these questions before they are ready to move forward;

1. Which car is best?
2. Is it right for me?
3. Can I afford it?
4. Where should I buy it?
5. Am I getting a deal?

The question automotive marketers need to ask themselves, are my PPC campaigns answering all of these questions? Any of them? You want leads but customers NEED answers.

I'd also suggest checking out another great post on the blog, "Why Page Engagement Is More Important Than Lead Forms Fills" by Renold Liu

 

[joe.pistell]

My 2 cents : in a nutshell I strongly believe that dealers are paying too much money on PPC when it comes to bidding on their own name and other easily achievable organic ranking rankings.

There is no requirement to bid on your dealer's name. Bidding you your dealer name in PPC maps back to the dealer's profile. Are you a digitally aggressive or a passive marketer? And, are your competitors aggressive, are they bidding on your name? My dealer was a big fish and was hyper aggressive, so we bid on our name.

CPC for your dealer name should be very small . Any competitor bidding on your name will be paying hundreds of % more than you do

 

[joe.pistell]

...When it comes to SEM overspending though, we're mostly talking about new car advertising. A dealer could have some used car advertising in their mix, but I would guess it wouldn't exceed the new car portion of the monthly spend.

Mike's comment is another example of how the dealer's profile will influence the strategy. Dealer's new to used ratio speaks to this.

 

[Alex.Lemoing]

I understand your point @JoePistell and it is a valid one. here is how I see it in my mind, I could be wrong but this is the strategy that we are currently trying for 2 of our dealers. We chose not to bid on our own store name for a few reasons.

1. Budget: why spend tens of thousands of dollars a year on your own name, when you dominate the page with Organic results? This budget can be allocated to other campaigns or marketing efforts.

2. Competition: when it comes to our own name, most leads coming out of PPC (at least for us) are service and parts calls. Our customers already know that they want to do business with us, why would they choose our competition, which is at least 20 miles out?

3. I want my OEM vendors to work hard at getting us leads. I hate it when they tell me that because of their efforts, we got 120 calls and 25 email leads, because when you examine where those leads came from, a good chunk were simply click to call leads from local people that googled our store name. They may be good leads but why should we pay for it?

 

[Alexander Lau]

I understand your point @JoePistell and it is a valid one. here is how I see it in my mind, I could be wrong but this is the strategy that we are currently trying for 2 of our dealers. We chose not to bid on our own store name for a few reasons.

1. Budget: why spend tens of thousands of dollars a year on your own name, when you dominate the page with Organic results? This budget can be allocated to other campaigns or marketing efforts.

2. Competition: when it comes to our own name, most leads coming out of PPC (at least for us) are service and parts calls. Our customers already know that they want to do business with us, why would they choose our competition, which is at least 20 miles out?

3. I want my OEM vendors to work hard at getting us leads. I hate it when they tell me that because of their efforts, we got 120 calls and 25 email leads, because when you examine where those leads came from, a good chunk were simply click to call leads from local people that googled our store name. They may be good leads but why should we pay for it?

If I were you, I'd set up a budget for Brand vs. Non-Brand, which is quite typical. I see your reasoning, but the idea is to take up as much virtual real estate as possible, both organically and paid. Like anything else, checking your progress of both branded and generic keywords in your analytics is a very important step to tailoring the marketing strategies of your rooftops.

 

[Eric Miltsch]

In "It’s Enough to be ‘Found’, Right?" I look at the data; dealers will spend very close to 4 billion on paid search in 2016. Then I look at the analyst's prediction that the paid search spend will go DOWN by 62% in the next two years. My question to you is, do you think dealers are spending too much for very limited returns? Are there smarter places to spend the money?

Ed,

Great question. After talking with hundreds of dealers this year alone I saw firsthand many dealers who were in fact spending too much.

Many were ruining their organic results with too much branded spend, while others were left with batch & blast plain-vanilla ads inside unorganized campaigns with no attention given to negative keywords.

The end result, insanely high CPCs and unfortunately low conversions. And I mean true conversions with regards to measurable actions such as lead form submissions or phones calls - not a page destination.

The game has changed, yet dealers are left with using outdated methods which prevent them from providing highly relevant, contextual campaigns.

Dealers need to get back to following the DISC rule - does it sell cars? Many just don't know the answer to that question.

 

[mwpistell]

I'll often create a Brand terms campaign for my clients for one major reason: to punish competitors.

Run an Auction Insights report and you'll likely see other area dealerships bidding on your name. I counter this by running a Brand terms campaign for 2 reasons:

1. Forces competitor ads down the page.
2. Forces competitors to pay more per click.

AdWords is an auction, and the more people in competition for a keyword means the higher a CPC will be. If you create a brand campaign then it's like you're taxing your competitors for playing on your turf.

 

[umer.autojini]

I would always create brand term campaigns... if you are in market their is always competition ads coming up. and at under .65 cents a click... for the brand campaign why not.

Metrics to always look for Search Impression Share > minimum 45%+. I want brand to be at 78%+. I want exact search match on that to be 80% plus. I want all my keywords to be at minimum 7 quality score in brand campaign... matter in fact I want everything minimum 6 quality.

Things that screw up and cost Enhanced CPC. I have seen google take some of the bids up to $58 a click...WTF Google... always manual CPC.

Minimum goals setup in GA for tracking...
1. Hours & Directions
2. Lead Submission
3. Over 5 Page Views
5. Over 4 minutes on Site
6. VDP

Things I'm always on look for High Bounce rate. Reports always reviewing search term report. Re marketing Always. implement https://support.google.com/adwords/answer/6095883?hl=en.