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Automotive advertising on the Internet tied to online transactions will change the role of the "brick and mortar" auto dealership forever.

What do technology, the Internet and online transactional tools like Ai Dealer's "self serve" desking application, NeoSynergy's "Buy Direct" and DealMaker.Com's real time bidding system that allows auto dealers to compete for the deal in an open forum have to do with automotive advertising and the evolution of the brick and mortar dealership? Everything!

DealMaker, for example, stores vast databases of every variation of every vehicle available; plus a nationwide database of dealer inventory. The data is continuously uploaded to major search engines. Buyers searching the Internet can then find the exact specification they require, and in just 3 clicks they can place an order, or bid the market with complete anonynimity.

DealMaker provides a Real-time Trading Platform where Buyers and Sellers can buy and sell immediately with no loss of momentum. All bids and offers can be seen by the whole market, so the best deals close first. All terms can be negotiated in the same transaction process, so there are no loose ends. Parties communicate directly to implement delivery, so there are no misunderstandings. The bottom line is that sales can be negotiated and consummated in real time on a virtual showroom with no high pressure sales tactics or misunderstandings to prevent a mutually acceptable transaction.

The low cost and extensive reach of the Internet can create a unique and compelling opportunity to slash the cost of sales which will go directly to the bottom line for auto dealers. Online marketing by manufacturers, dealers, and sales prospecting websites have grown exponentially over the past few years because consumers are looking for a more convenient way to shop for an automobile. Auto dealers have more aged inventory to sell than ever but matching available inventory to consumer demand is still a difficult and time consuming process. DealMaker is the real-time matching engine that turns search results into sales and the ability to accommodate an online transaction can finally be achieved.

Statistically, 80% of new car buyers now use the Internet as their primary source of information when shopping for a new automobile. Additionally, 20% of these buyers declare that they are likely or very likely to buy their next new car online. A further 51% indicate varying degrees of the same. Only 29% say they are not yet ready to buy online. These are reliable conclusions consistent with a number of comprehensive surveys conducted over the past 10 years by some of the world’s largest and most respected automobile industry advisors. It takes very special technology to negotiate sales of automobiles over the Internet, and DealMaker invented it.

Another extremely progressive application, Ai Dealer, allows an online customer to "desk their own deal" after reviewing all of the information they need to make a buying decision. Once the vehicle, price, downpayment, trade value, financing terms and payments are established the customer can make their offer online. If it is accepted by the dealer, they can take delivery at the dealership with little or no need for a salesperson.

NeoSynergy allows a customer to pick a car, make an offer and submit a deposit to hold the vehicle. Linked applications like LeadConverter can establish a dialogue on the virtual showroom that escalates the negotiations, if needed, to a delivery in the real world showroom.

Internet shopping patterns coupled with applications like those above - and many more in development - will allow an online transaction that places the future of the “brick and mortar” dealership at risk. At the very least, its role in the selling process must change as Internet technologies and applied automotive advertising applications mature. Huge investments in real estate, facilities and support staff are hard to justify when a virtual showroom can provide all of the information that a car shopper needs to make a decision for a fraction of the fixed expenses and variable operating costs of a real world auto dealership.

Established wisdoms shared in the auto industry support the need for a real world service center and even a staging area for test drives but the initial shopping experience has already moved online with 85% plus of today’s car shoppers using the internet to first select a vehicle and then select an auto dealer to buy and service it from.

DealMaker.Com, Ai Dealer, Neosynergy and applications like them - present and pending - are introducing cutting edge automotive advertising applications that will allow a virtual showroom to accommodate an online transaction with efficiencies superior to the real world selling process for both the buyer and the seller. The Internet has changed the automotive advertising industry and it is preparing to change the retail auto industry with the ability to replicate proven selling processes online that integrate seamlessly into established real world processes.

The search for an online transaction tool has reached critical mass due to shrinking margins in new and used car sales with increasing costs for auto dealers that are struggling to survive in a down market. Online transaction tools are positioned to take advantage of a clearly defined need in the retail auto industry.

No need to quit your day job as a salesperson or auto dealer just yet, as long as you join the internet and technology revolution as a willing participant. The only constant in the auto industry is change, so get ready to change or get out of the buisiness!

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Some questions I ask myself:

What role does shopping cart ecommerce play as a new monetization means for digital advertising?

These new means (shopping carts, arbitrage systems, price automation response services), aren't going to change the number of vehicles sold. Do you think they will advantage those with them over those without them?

Dealers want consumers in their stores. Consumers want online self-serve control. Actually they want to understand their purchase, their financing and other deal terms, and to not be taken advantage of. Is there a way to reconcile the two beyond "send an email via our website form?" What is happy medium where consumers get what they want AND dealers get what they want (consumers who buy cars from them)?

Online, how do you generate trust? (Other industries do it... Insurance - www.esurance.com, Mortgages - www.ditech.com). These are products every bit as complicated + high value as an automobile.

Aren't dealer websites designed to show basic (but not specific) vehicle data then requiring a web-form lead, the modern day equivalent of "proposing marriage on the first date?" "Hi! You don't know me, but as a first step, tell me who you are and what you want then talk to me when I call you."

Aren't dealership "best" practices to respond with emails + phone calls to set the appointment + get the consumer into the store, just more of the "hostage-taking" / leveraging of real purchasing information that has always driven consumers crazy about car dealers?

What is the role of car dealers in all of this?

Should third parties like AutoTrader, Cars.com, ZAG and CarsDirect transform to be more like online TV stations (bring us the eyeballs), but leave the "online shopping" to services subscribed for by dealers? Do these other companies belong in the relationship with consumers as lead providers to dealers?

Phil, you are asking all of the right questions.

Brian E. Hoecht
CEO and President
www.ai-dealer.com
Everyone has very valid points on this issue and it seems as though there is no end in sight for this burning question. One thing that I really try to do, is satisfy every customer type that I can through our Website and the Technologies that are available. The majority of the Consumers that we deal with on a daily basis are easily converted into visiting the Dealership at one point or another. Well I shouldn't say easily, but you know what I mean. What I want to be able to do, is capture every type of Customer and have something in place that will make these type of Customers comfortable in dealing with us.

I like to cover all bases, really strive to get every deal I can (Just like everyone here), so this is the dilemma. Finding a system that will not take too much of the Human element out of it, so trust can be built, but making it as easy as possible for the Consumer that just won't budge and wants to be able to do everything through the Internet.

As it is right now, if a Customer tells us that everything has to be done before they come in and they won't budge on this... Our BDC Manager can desk the whole deal and we can do everything except for delivering the vehicle. But we do not advertise this of course, we only do it when it is totally necessary. Probably the same with everyone here.
Did you know; a couple of years ago Maserati claimed their Quattroporto had over one million options! (variable combinations of features and colours actually) DealMaker can handle that plus another 10 different such cars all in the same order, and then match them with the closest dealer inventory in a couple of seconds.

Selling DealMaker sometimes feels a bit like explaining to someone with a slide ruler that they really ought try the new device known as a "calculator"

But allow me to digress for a moment: Do you know what buyers really hate the most about some dealerships? The teamwork. First they get wound up by the sales person. Then he has to consult his manager (the T/O or take-over guy in my day). Apparently he doesn't have enough authority to make a deal. Then they get nailed to the floor by the F&I guy who needs to sell every possible gizmo to avoid losing money. Buyers just simply detest standing around twidling their thumbs waiting for the next guy to "process" them. So its no surprise that 2/3 of AutoNations customers say they would prefer to make a deal online.
Hey Paul,

Just to remind you, I started this forum to discuss the importance of online transactions and their impact on the future of the brick and mortar dealership. AdAgencyOnline.Net is reviewing DealMaker.Com for our FREE automotive advertising portal for our affiliated automotive advertising agencies, auto dealer clients and site visitors - exactly as we reviewed Ai Dealer, NeoSynergy and even ADP before them - and so far they have passed our EXTREMELY comprehensive vendor review with flying colors.

Their CEO, Spencer Sterling, is a previous executive with Ford Motor Company and we have spent many hours reviewing the application, his ongoing negotiations with several O.E.M's and reviewing the results of their succesful beta test with Google in Europe. Ai Dealer and NeoSynergy were also new applications that passed our initial reviews which have gone on to prove themselves in the market. Franklly, we only review new applications because they represent the cutting edge technologies and solutions that are required to stay competitive in a challenging auto industry that DEMANDS efficiencies in advertising and operational expenses.

Rather than challenge DealMaker's history I suggest that you evaluate their future - which so far seems very bright! Of course, I could be wrong so perhaps you should call me on Monday so we can review the application together in case I missed something. I don't think so - but I am always looking for problems as well as solutions and so far DealMaker seems able to solve more than most.

Just as an after thought, his customers ARE HERE because the ground floor applications that we eventually feature on www.adagencyonline.net usually present shared opportunities for O.E.M's and other Internet applications to establish strategic partnerships and shared platforms that link together online solutions where 2+2=5. The auto industry is very well represented on both ADM and AdAgencyOnline.Net and I for one am always looking for new leveraged relationships. After all, what are firends for!
Hey Paul. Thanks for playin devil's advocate with this - a forum is a great venue to hash these things out, ask questions and express opinions.

Have you had experience with Dealmaker, ADP's Buy Online or heard feedback from either my dealers or customers who have shopped and/or bought online using my company's shopping cart?

I obviously haven't had experience with the former two as I own Ai-Dealer, but I'll share some of our dealer customers' experience.

Here's a link where you can listen to and view how a real customer felt after using the shopping cart that is hooked up to one of my dealers' websites.

http://digg.com/autos/Love_To_Buy_Just_Hate_To_Be_Sold_Buy_A_Car_Th...

Since this is a new and emerging area, I'll share some real world experience and ask for feedback.

Long ago I stopped thinking in terms of absolutes. How many consumers will buy online as the capability becomes available? CapGemini said in their July 2007 consumer research that 1 in 5 would buy online once the capability existed. We don't see that many. More like 1 in 20 or 1 in 30 depending upon the franchise.... but (again it varies by dealer and by brand), but we see total close rates of 20-30% on all shopping cart consumers... the difference being that those who don't buy 100% online, start out that way, then come in and finish that way. Partially because of the quality of the dealers' follow up efforts, partially because (as you'll hear Ashley Marshall tell you), they now feel they can trust the dealership who gave them the explanatory process which is inherent in the shopping cart.

Maybe it is because there is a gap between what consumers say they will do and what they actually do and it takes a while for the expectation / comfort to catch up with the capability. eBay Motors went through that, but now sells a car online every 60 seconds. Maybe it is because the shopping cart is still new and hardly at what I consider to be its "maximum efficiency." Who knows, but it is not zero either.

What we have learned is that when you offer "Shop" as well as "Buy" you get more leads if they have to tell you who they are in order to shop. And you get the added bonus that they arrive in your store trusting you, as Ashley Marshall (the customer in the video) did. She shopped online for 6 weeks on 13 different vehicles before she would return a phone call or email... only after she was comfortable with her understanding of the process would she engage. Then she came in and bought the car.

I'm sure you run in to consumers who are reluctant to engage (as do all Internet Managers) all day long. A 3-5% response ratio should be telling you something. Our best customer gets 60-70% of his shopping cart consumers to engage (take a phone call, respond to email or come in).

It is anecdotal since I don't think there is a scientic way to survey consumers who won't engage, however consumers who feel poorly served by the "come on in to get your answers on the vehicle you are considering" never get their needs met with their shopping and buying choices for a vehicle today. You may do a really nice job with them when they do get there, but it doesn't mean that they want to shop and buy that way... it probably means they just didn't have any other choice.

Is there a problem letting them "self-serve" what they are looking for if they aren't going to talk to you anyway? Do you want to expend your energy on them? Our engagement rates are high enough that we know at least some of them engage vs. regular leads, but it is impossible to know how many.

How many will buy online? More than zero, less than all.

I'm also sure the number will increase as the technology matures.

How many find it useful to shop online (i.e. desk their own deal including f+i) vs. just send in an email lead? Some dealers using our system get 2-3 times more leads as a result, others less, e
Hey Brian,

Now I know whay I chose to select Ai Dealer to represent the opportunities presented by an online shopping cart on www.adagencyonline.net - YOU GET IT!

The solution isn't as important as the need of consumers to trust the source of the information that they need to make a buying decision. The Internet and applications that enhance that process will win their business in either the virtual or the real world and frankly I don't care which - as long as it is at one of my dealer's showrooms!

Paul is a strong supporter of the Internet and I am confident that his questions are only guided by his concerns that we don't throw the baby out with the bath water. The only confidence that I can pass on regarding Ai Dealer, ADP, NeoSynergy and DealMaker.Com is that they are focused on the same goal. To make the Internet more transparent for consumers to trust and use it so our dealers can use the efficiencies that it presents to lower our marketing costs and streamline our selling processes to pass on some of the savings to our customers and keep the rest for our bottom line.

Please ad my experience in reviewing Ai Dealer to your reference list and join me in reviewing DealerMaker.Com and all of the other applications striving to improve the online shopping experience. To quote a trusted fellow auto industry networking portal - www.drivingsales.com - "A rising tide floats all boats". The sooner we raise the level of trust on the Internet the sooner we can all start selling more cars and service!
Thanks, as always, for raising the same questions that I had - and that Ai Dealer, ADP, DealMaker.Com and NeosyNergy had to address while solving the problems that the Internet posed for car buyers and dealers alike. The short answer is - the current day solutions are not mutually exclusive with the one's being developed!

Multiple applications, resources and contacts over time will still be involved in the buying decision - especially the "emotions" that drive human behavior on both sides of the negotiating table. DealMaker.Com can only consumate a deal after all questions are asked and answered and price is only one of many - it is simply that they have devised a way of arriving at it in a "many to many" formula.
No worries Paul. Frankly, I think that contrary opinions surface solutions more valued than agreements so thanks for your input!

Like I said - feel free to join me in my due dilligence review of all of our preferred vendors for www.adagencyonline.net ! So far DealMaker.Com has proven that they provide a missing element to other online transaction tools that we feature - such as Ai Dealer, ADP and NeoSynergy - in that they allow a universal transparency of the price through "many to many" negotiations, but what do I know! Also, ADP, Ai Dealer and NeoSynergy have solutions that are more robust than DealMaker.Com so the answer lies in picking the shoe that fits!

I joined ADM to listen, learn and then teach so I am always open to new ideas. After all, what are firends for!
"more robust" what's that supposed to mean? 99.9% of the world's stock markets trade over 2 TRILLION DOLLARS every day choosing essentially the same tried and proven technology. But hey, they don't care if it misfires every now and then and throws a couple of billion dollars into my trading account instead of yours. I don't think so.
Accept a qulaified explantion of "robust." For example, the shopping cart mechanism of Ai Dealer allows a "warm and fuzzy" interaction with the customer to build confidence before negotiations while the multi-layered and integrated application offered by ADP ties into other verticals in the selling process. The true value of them all is that they are not mutually exclusive so again - "pick the shoe that fits" - and don't limit the solutions - only the problems!
Lets try "user friendly". I think there is no doubt that the shopping cart concept is much easier to get your arms around if you are not a Wall street trader; and many smaller dealers who don't quite trust the free market yet will prefer to dip their toes in with the likes of AiDealer. Quite frankly, in many cases I would recommend that. I think AiDealer is a great way to get them into the game.

Although I haven't yet been invited to try the ADP product I have absolute faith in ADP to build a very robust product and I'm sure it does exactly what it says on the can.

However as you have already indicated these various products are far more likely to be complimentary to DealMaker than competitors.

DealMaker is designed to be a universal free market trading exchange for commercial commodities. Within this concept is intended to have all kinds of complimentary tools and services, provided not by us but by other dedicated specialists, such as some of the companies you have already mentioned, and many others.
Reply to Paul Rushings comments, "And the big winner day in and day out is the market maker, not the users. Just like bookies they don't care if you win or lose they just want the action. Also you drive home a point I have been trying to make during this discussion. Ask brokers what $7 dollar trades have done for them? Your product is well conceptualized, not a unique idea and would already be in place today if the cars were pure commodities. OEM's would not need dealers. No matter how you care to define it they are not."

Paul you really need more information in order for this to be a constructive debate:

First of all DealMaker has no need for "market-makers". When I previously referred to "technology" I meant "technology" not "business model".

A stock market uses technology known as a CDA (continuous double auction). A CDA cannot be used to trade new cars because cars are heterogeneous commodities (mass produced identical items but with too many variables).

DealMaker uses its own proprietary variation of the CDA technology known as a MACDAX (multi attribute CDA). It is specifically designed to deal with all the variables and in this respect it is entirely unique. Can DealMaker compare apples with oranges and come up with a fare comparison of relative market value? Yes it can)

As for securities brokers making less money since buyers started trading online, we are not here to excuse the Internet for making markets more efficient.

I don't want to perpetuate the debate as to whether mass produced new cars are capable of being commoditized or not. Anyone can simply look it up on Wikipedia or any dictionary and make up their own minds. You are free to use whatever terms you choose.

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