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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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A couple of comments I would like to make... First of all, the Google exec's that I speak to "claim" that the total search results clicks they monitor run about 50/50 between their sponsored listings and the organic (free) listings... I am not saying that I believe everything people at Google tell me, but I have not seen them be wrong or make misstatements very often. Secondly, the problem I have with organic is that it is for the most part not geotargeted (other than the use of geo-indicated keywords) and it is very difficult to control because nobody operates in a vacuum with SEO, there are always other dealers, 3rd party lead providers and OEM's trying to out-SEO the dealers and everybody else. What I like about paid SEM is the ability to targete an exact and specific message from the dealership to each search query by a consumer sitting in a specific geographic location... For example, I work with a dealer in Wst Texas that runs paid SEM campaigns geotargeted to very specific communities just on the other side of the Texas-New Mexico border. He is able to use his sponsored listings to communicate a message to the residents of New Mexico that are searching for his brand of cars or trucks that they can save a lot of money by working with his Texas dealership. It works for him.... I have seen many examples of using capabilities in SEM that simply don't exist with SEO practices.
Ralph, I think each business has to decide what works for them...again, if giving advice, I'd make sure I had a strong "internet" brand with my website, inventory and tools on my website that let consumers find and connect to my business and buy from me 24/7/365. The amount of time saved by salespeople, business managers and accounting folks can be huge. This is often underestimated.

Once you have established yourself in Google, I think you start competing for cross shoppers....50% of an OEMs business comes from their current customer base the rest are conquests (varies by OEM/brand)...the #s for a dealer are slightly smaller, typically more like 25% come from the ownerbase that bought/service their car at the store. So...where is the other 50% to 75% coming from? Competition...whether it is a same make neighboring dealer, out of state customer or a competitive owner. The best way to get these folks is via 3rd party sites, Online ad spend and other ways to get in the way of cross shoppers to prove you a.) have the better car and/or b.) have a better price/selection/service than your same make competitor.
Here's an article w/some add'l facts - a little older now, still good nonetheless.

I thought the same about geotargeting - but a quick analysis of total clicks and cost, once a page 1 organic listing is achieved on the three main SE's, was all it took for me to know that I didn't need to waste any more money on PPC.

It took time to develop, but after dropping PPC completely and spending 30% less on SEO, it improved time spent on the site, total page views & conversions significantly.
Excellent question Chris,

The lines between what money you spend for SEO/SEM/PPC versus 3rd party provider leads will continue to blur. They're all destinations / portals where you allocate precious budget and time in order to get 'pre-qualified' leads.

Today we tend to distinguish between these buckets based on their size and focus of the directory listing - meaning that 'big / not focused on auto industry' like Google, Yahoo! & MSN constitute your SEO/SEM spend, and 'small / focused on auto industry' like KBB, Dealix & constitute your 3rd party provider spend. But these two buckets blur when you get sub-search specialty places like Yahoo! Autos (is this SEM or 3rd party?).

There are perceptions that neither bucket of lead generation ‘pre-qualify’ your leads well enough to be cost effective, and yet the ROI has been proven by many.

You are absolutely correct that a store with poor process will continue to struggle with ROI from their lead sources if they don’t handle those Internet leads effectively. I recall clearly the early days of the commercial Web (~1994), and how perceptions have changed with today’s savvy shoppers. The importance of this channel will continue to increase over the next 10 years as our shopper demographic changes.

I suggest two phases – learning to walk before you run:
Phase I – don’t go crazy with SEO/SEM or 3rd party providers. Only spend enough to generate flow with which you can establish and refine your internal process & tools, and ROI baseline.
Phase II – after you have effective process & tools, ramp up and refine your SEO/SEM and 3rd party provider spend based on improvements to that ROI baseline. Don’t spend the dollar if it doesn’t achieve your ROI hurdle rate – but every dollar spent that effectively achieves that goal generates you incremental profit.

These two buckets of SEO/SEM & 3rd party providers will blur over time to where only those destinations / portals who provide you ROI-worthy pre-qualified leads will survive.
Not a chance. The problem with most dealers is that they have no process, or accountability for their I-net Departments on the leads they recieve. You really need a daily meeting with the I-net Sales People and you will find most of the 3rd party leads are actually your best leads, if they are handled correctly and answered w\in 20 minutes.

I'd say more dealers are putting those processes in place, judging by the slowdown in Newspaper ad sales and the increase in internet spending.

What is interesting to me is that we judge the internet business by a different barometer than the other "buckets." To this very day, huge amounts of budget are spent in areas with little to no tracking...and not just by dealers...also Dealer Associations and Car Companies. Most dealer associations still purchase based on media "tonnage." On TV and radio it is household rating points and in newspapers it is readership/eyeballs.

Per GM announcement with Cobalt, $ are moving into SEM, however, it remains to be seen how this will be tracked and accounted for. Adding 8,000 more bidders for GM and competitive search terms should have an interesting impact on search well as ROI on clicks.
I dont think they are going anywhere soon either and agree with dave these are cross shoppers. Without plugging my own company I think dealers can do a better job of engaging customers that do make it to their site. I have said the unique visitor to the stores website if engaged and brought in is more likely to do service etc and isn't just shopping to save a couple hundred dollars. We are seeing more people than ever visiting the stores site in addition to 3rd parties and OEM's yet conversion is at an all time low. As far as profit leaks thats the one to put your finger in first................


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