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I had an interesting conversation with a consultant this last week at NADA that I'd like to share with the rest of you and get your feedback.

His take was 3rd party providers are on their way out and SEO/SEM will replace them entirely. While I agree SEO/SEM plays a vital role in an internet department's marketing plan, I don't believe it should be the whole plan. Neither should the entire budget go to the 3rd parties. Rather it's a combined effort with both aspects to return an adequate ROI. It all goes back to good process and management.

Further, I would say a store with poor process will continue to struggle to ROI their spend with SEO/SEM as the source of the leads is not the problem. The problem lies in a dealership who doesn't know how to handle an internet customer. In my mind, this is what will spell the difference between the winners and losers over the next 5 years.

So what do you think? Are 3rd Party Providers a relic of our past?

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OK, when it comes to dealers getting into the business of using online advertising to generate leads and reduce their dependency on 3rd party lead providers, you have got to check out what my friend Alvin Newton has going on this weekend in San Diego. The following link is tied to various direct email campaigns and paid advertising in Google for both keyword and display ads on web sites:
I find it interesting to read Steve's posting because his summary is so acutely accurate of exactly what many experts in the automotive lead generation and distribution business are describing. Our friends at ALE, who Steve mentions in his post, visited with ADM members during the reception we had at NADA and had a lot to say about these changes in the lead business. From a conceptual and strategic perspective, ALE offers a similar model to dealers as Google AdWords provides. Dealers are able to select very specific lead characteristics, such as geography, make, model, type of financing indicated by the consumer, and other specifications, and then bid a dollar amount that they are willing to pay for leads meeting the specified criteria. Just as in AdWords, a dealer can bid for clicks when Google Search users in a specified area search using specific words and phrases. This type of model where the buyers determine market value seems to be getting more prevalent all the time as the efficiencies of the web in gathering multiple prospective buyers of a commodity, whether it be leads, search listings, TV ad space, radio spots during prime drive time, newspaper advertising space, or even used cars on ebay motors... What I am seeing is that the dealers who leverage and capitalize on these emerging marketing acquisition models get a competitive advantage in their local markets for a variable length of time... Sometimes 6 months, sometimes 3 or more years. For example, the dealers who have jumped on the AdWords auction model ahead of other dealers in a given market have been able to acquire self-generated leads at a very attractive cost per sale, or PVR basis because of a lack of competition in some markets... That situation has become ever more scarce as more and more dealers come on board to compete in that space... Meanwhile, I am finding that Google AdWords Placement Targeting campaigns are now outperforming Keyword campaigns because of a lack of competition for placements in that advertising distribution model. Of course, this will change as more dealers figure out how to access the Placement channel. No doubt, this will be a marketing space characterized by ever constant evolution and change, especially as billions of dollars move into digital advertising and away from more conventional non-digital media channels.
Every time I hear this, I laugh.

Actually, if you do the analysis (from an OEM's perspective, and dealer's perspective) the 3rd party leads are harder to close for one simple reason...they are more likely to be cross shoppers. The easiest "lead" to close is one that already wants to buy your product...the question you have to ask yourself is...why aren't you already talking to these people in your service drive and follow up calls to funnel them back to you...instead of spending $ on google to get them to click on your ad? The #s look great of course..."my web site leads close more easily for lower $" but I can't make an argument that more expensive 3rd party leads should be excluded...if you only close your own leads, your business will have to have some conquests so both need to be in the mix.

I would invest heavily in follow up with my own customer base...on a personal basis...ahead of the internet/email. I'd use 3rd party leads to get cross shopppers (OEMs should support dealers here) because the only way you grow your pool of customers is by 1. stealing them from another same make dealer or 2. winning them from another OEM. Support your own customer base directly with personal invites to see new products and appealing service follow up. Use impersonal internet/SEM/SEO/email as a back up only.

So, will 3rd party sites go away?'s the only way to reach cross shoppers. What about the consumer? I'm shopping for a car right i think I'll get a fair comparison at an OEM or dealer site? No way. Are the leads harder to close? yes. Should this matter? No....because a conquest customer will always cost more but it is plus plus business.

Who should pay for supplementing 3rd party leads because they are harder to close? OEMs...dealers shouldn't have to carry that water alone - it is the OEMs job to get consumers to consider the brand.

No, 3rd party sites/leads are not going away...they are critical to every dealer/OEMs marketing mix.
I don't think anyone disagrees that organic leads close at a higher ratio, but can you generate enough lead volume on your own without the assistance of the 3rd party players?

Out of curiosity, what price range are you talking? $10-15?
I agree with Ralph that you need to find a balance from a variety of of the things lost in all of this are the true costs associated with 3rd party vs. in house/SEO/SEM...every dealership must have a strong web presence but once you roll up the cost of sites, SEM and SEO the true cost/lead starts to rise.

Having said all of that, I still think the most successful strategy is to promote your own site and supplement with 3rd party and then dedupe (don't pay, i.e.) leads from the 3rd party provider that you've already generated directly. All of the 3rd party folks will take back duplicates because consumers do indeed go to multiple sites.

Last but not least, let us not forget that most consumers do not submit personal information to find out, "what is it going to cost me." Most consumers prefer to remain anonymous as they price shop. They want to be in control of the process until they are ready to purchase.

On a personal note, I'm currently in the market for a car/truck and have found that the majority of dealers I've contacted have terrible follow up...despite lots of fancy CRM tools. I guess business must be really good? (not) I give full marks to a local lady at a Saturn store here...she's sent me a written note, an email and a fax outlining my options. Very impressed. A close second is the Jeep salesman who sent me an email showing the specific lease/down incl. tax, title, etc. Several other dealers who had my name and cell # never bothered to call me back.

I did not submit a blind lead for any of these, preferring to call the store and engage directly with someone on the showroom after I did my research on a variety of 3rd party sites to narrow down my product choices and, of course, figuring out who was advertising new car "deals" using our Best Deals application on AOL Autos (shameless plug). I found that Best Deals showed better out the door prices than Edmunds TMV or KBB. And the dealers were happy to accommodate friends and family discounts without any need to negotiate.
This is a hot topic today, was a hot topic yesterday and will continue to be a hot topic in the future... Every time we look for absolutes in this business, we are going to be sorely disappointed... Of course independant web sites not directly affiliated with car companies or dealers will survive, and of course there will be a market for consumer inquiries coming from these sites. The reality is that an individual dealer's best approach will be one that takes a finite monthly budget and achieves a balance of self-generated (what I call Organic Leads) and supplier provided leads. Included in those self-generated leads will be those that come from inventory listing sites, such as and, and included in those self-generated leads will be thosefrom visitors attracted by paid SEM advertising and web site placement display advertising... Along with all of that comes the leads from places like, and various social networks that the dealer's management team assigns resources to develop, or outsources from suppliers that are just now emerging. This whole landscape then gets even more interesting when you start to factor in the increased levels of engagement that come from transactional dealer web site capabilities like ADP's new Business Online suite and's shopping cart technology. What I believe is disrupting a lot of people in our segment of the car business is that from 1995 to 2006 the only way we had available for consumers to engage is with various online forms, and the 3rd party lead providers used those 11 years to get REALLY GOOD at generating leads... In the past 18 to 24 months dealers have gotten incredibly more skilled at generating their own leads, and have become competitors to the very same 3rd party lead providers that many ISM's have depended on for a living for so many years. Blend all that in with the emergence of SEM providers such as ClickMotive and ReachLocal and we have a recipe for disruption in the marketplace... Hey, so a few dealers stop buying leads, that has been going on for quite some time. The fact is that the most successful dealers will seek out a balanced approach that blends leads coming in from multiple sources and marketing efforts to achieve an ideal balance of money invested and sales results. The best Internet Managers will make adjustments along the way so they stay in sync with consumer demand and online shopping activities.
To David's point, let's also consider the following factors... When a dealer develops a strategy around generating their own leads, their are several inevitable consequences. For example, many people will simply call the dealership rather than fill out a lead form. J. D. Power has been telling us for years that more people call the dealership after visiting the store's web sitte than those that complate an online form. In addition to the phone traffic, the vast majority of people who visit a dealership in person after visiting the store's web site do not either call or complete an online form before going to the store. It stands to reason and I can attest from personal experience that the right kind of online marketing and advertising campaigns are just as successful, if not more so, than non-digital campaigns at driving showroom traffic in addition to leads and phone calls. After all, anyone on this site knows that the majority of car buyers use the Internet to get the information they need to decide what vehicle to buy and which dealership to buy it from. The problem with 3rd party lead purchases eating up a dealership's advertising budget is that the strategy of buying leads does not address the 80% of people who will not fill out an online lead form!

As I mentioned in my personal example, I have not filled out a single form...and I did place a couple of phone calls on vehicles. One was promptly returned by a sales person...I gave him my cell # for follow up. The other one never returned my call...neither dealer used a WhosCalling/Tracking # to log me.
I will step out on a limb here and say that I believe paid 3rd party lead sites are on their way out and here is why. I see more and more of them gathering leads away from their sites, which to me is a sign of struggleing times.

We help dealers list their inventory on a multitude of FREE websites and everyday there seems to be more vehicles listed on some of these sites by the big name lead generators. If a dealer can list his inventory on there for FREE or pay a company a few hundred dollars to do it for them automatically why would they want to pay top dollar for someone to pass on a lead as theirs when it really came from a No Cost website?

Craigslist is a great case study. We have dealers selling 20+ units a month (new and used) on this site and in some areas tell me that they do better on the FREE sites then the big two combined. WOW!

Customers don't feel as threatened or force feed on the free sites as they do on paid sites either.

I will say this. I would maximize the Free sites and SEO/SEM before spending big dollars on paid leads. However, once this was maximized and the ability to handle more leads is there then I would add paid leads as they still offer a solid ROI.

I couldn't agree more with your point...get the inventory into as many places as possible...but don't underestimate the value of "territory" leads...that is...a customer identifying what they are looking for...I don't want to spend hours and hours scouring through inventory looking for a car...find it for me!

Any opportunity to reduce customer fear is a good thing...we changed our approach as well from "leads" was our lead generation site...but we, like consumers and dealers, didn't like the blind lead so we've gone to a different approach...we advertise the dealers specials...because consumers like shopping for "deals." Both gets to show what they need to sell/is on sale and consumers have a simple way to view aggregated inventory specials. And they pick up the phone and call. Now we aggregate all this info for dealers and push it to as m any other places as we can...e.g. AOL Autos, one of the largest portals in the world.

So, I'd recommend that a dealer do what Terry recommends...get your inventory/deals out to as many places as possible and then fill in with paid stuff/listings/leads where it makes sense.
That may be true...however, most 3rd party lead sites do one important thing that the free sites don't...they advertise in traditional media to drive traffic to their sites, free hosts do not. What good does listing on a free site do if nobody knows about it.
Lead lists can be costly...and a bit more difficult to work efficiently.

SEM is a good alternative - only if set-up & managed properly. (Great way to get on the 1st page quickly)

However, PPC ads only get 30% of the clicks; Organic listings are the best performing. An SEO strategy will drive more qualified traffic, improve conversions & increase ROI.


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