ADM serves Car Dealers, Automotive Marketing Pros and Internet Sales Managers
We all know that Google is the dominant search engine on the Internet with over 66% of the market. Consumers look to Google for a myriad of reasons and Google with its voracious growth appetite continues to expand into various markets and businesses.
Marketers in the auto space seem to inundate us with posts about the latest Google gadgets, process, network, tips, tricks, and inside secrets to give dealers an edge in the all omnipotent Google-sphere.
Well, after doing some research and looking at the big picture I have to ask the question, “Are these experts we’ve been listening to looking to help auto dealers for the long term or looking to make a quick buck based on a dealer’s social media naiveté?”
I’ve just completed a detailed report that takes a close look at Google’s business practices and shows the vulnerabilities of dealers who choose to use the Google services and platform to boost their business. As we have seen recently, Google has been removing dealer’s reviews while pushing their other revenue generating services to auto dealers. Is it possible that Google is using the Trojan Horse strategy to lure in dealers before they “strike?”
If you want to see what could possibly happen to our industry, I invite you to download my report and review the facts about Google’s business strategy and the potential avenues for them to enter the auto business in a big way.
Chuck, definitely a good read. But I'm left sort of feeling like... "so what?" I think the scenarios you paint are spot on. Likely Google will do one or more of those things. But so what? I don't believe for one second that car dealers would or even could stop it even if some revolution occurred and they did try to rise up together.
Also, how is this any different than what we're seeing with the public groups now? I have personal experience with Group One where they are selling Toyota's for $1,000 net loss in a very competitive market as a means to effectively "buy" the market and they've done this by purchasing 3 strategically placed Toyota dealers. There have even been allegations made by former employee's that their intent is to drive one dealer in particular out of business so that they can buy that 4th dealer and essentially control an entire region with only 4 stores.
BUT, the same Group One in the same market with two Nissan franchises was unable to accomplish the same goal. Different buyer, different players, using different methods cleaned their clock. Now Group One has sold those 2 Nissan franchises.
I just don't see the point. I wish you landed your plane on something more valuable than "getting back to basics", waxing nostalgic and claiming that "yahoo is making a come back." MSN and AOL and Digg.com? Check out local TV station and newspaper websites, and don’t forget high school and college publications and websites? Maybe that's ok and rural Iowa, but how about Los Angeles? Miami? Boston? New York? (And if I offended any Iowan's I apologize). I dunno... You lost me there...
Is digital the only solution? No! I run a digital marketing company and I'm the first one to tell dealers there is still value in traditional media. But I also know that an Infiniti Dealer doesn't need to spend $52,000 a month on Radio spots in metro Boston to be effective.
So whats my point? How am I going to land my plane?
The information about google is interesting. So OK Chicken Little, the sky is falling. That is progress. Dealers aren't going to stop it from happening and Google IS the 800lbs gorilla in search. Scaring a dealer away from using it as an advertising tool is only going to hurt most of the dealers out there. But characterizing vendors who provide services that use google for advertising be it SEO, PPC display, Social Media or whatever as somehow colluding with Google to "bring down the poor dealer" is frankly, dishonest and irresponsible. There are enough problems in the digital world with all the snake oil thats being sold without the need to fabricate looney problems for dealers to be paranoid about. Plane landed..
Not all bad though. I thought your insights were well thought out and likely give some real insight in to what we'll see in the automotive retail space in the next 5 years. Just might go pick up some public auto stock!
Thanks for seeing the value in what I shared in the report. There is a big difference from what I see coming from the existing publicly owned auto dealer groups. These public groups formed and succeeded by combining overhead expenses, consolidating ad purchases, and negotiating volume contracts for all their stores. They are still run by car people and in most cases continue to sell, market, hire and train like every other dealer.
My paper says that Google has the "potential" to change or influence the “entire game” with a new buying process. That is totally different from a Group One or AutoNation perspective. In fact because they are large corporations, that makes these groups more risk averse to try new things.
Look at the major game changers over the last few years: Google, eBay, PayPal, Facebook, Twitter, Pinterest, Etsy, Instagram, etc. How many of them were developed by big corporations? Zero!
As for dealers continuing to use Google; they are independent and need to make up their own minds about where they want to put their dollars. It is still my belief (and many dealers I work with) that the smart ones will see the hand writing on the wall and at the very least, look for more organic and local options within the markets where their consumers live, work and make purchases. This theory obviously implies that this business still hinges upon solid Customer Relationship Development. If this component is not important to a dealer well, so be it.
Again, as the report indicated, I simply gathered up the facts as we publicly know them, presented those facts and consequently left the decision making for the reader to conclude his or her opinions.
Thanks for your post.
I look forward to seeing the full report. You're question: “Are these experts looking to help auto dealers for the long term or looking to make a quick buck based on a dealer’s social media naiveté?” Absolutely!
I'm a fan of sports movies. Two of my favorites are Coach Carter and Hoosiers. They start out by teaching the fundamentals. This is what is lacking in most dealerships. GMs know that they aren't getting results and they are grasping for straws. They are a "mark" for the snake oil salesman.
Very well said Doug!!!
Jason, after Lee Iacocca received the loan guarantees from the Carter administration, he stated, "The future of Chrysler will be determined at point of sale". I don't think you can get more basic than that. Trust me, selling K cars, from a manufacturer, that many thought was going out of business, at a buy rate of 13.9% APR was a challenge.
"If an online company makes you compete by price, you are no longer selling value." Unfortunately, that cat is already out of the bag. There are a half dozen sites that will provide customers with your new car invoices and a customer only needs to sort by price to determine the market value of a used car. Again, success is determined at point of sale.
"Marketing" is a good thing but with TrueCar, it's their marketing and not yours. Parasitic companies exist because dealerships do not know how to sell cars and make money in the internet age.
Jason, it might not take a rocket scientist to sell cars but when you are the volume internet department out of 143 stores, it takes talent, knowledge and a strong work ethic. When you aren't the number one sled dog, the view never changes. That's my basics.
What I got from Chuck's report was pretty simple. If dealers and OEMs do not work together to re-create a more consumer friendly shopping and auto buying process and rebuild trust in our industry, then someone from outside our industry (maybe Google or Walmart) will come in and develop an alternative process that will be less confrontational and more user friendly and put some dealers out of business.
The challenge is finding an OEM and dealers who are willing to break the month to month chase to the bottom to hit their numbers. If every month you take 20 baby steps, you will not notice how fast you are approaching the edge of the cliff till its too late.
Mark, with the franchise and brokerage laws in most States, this will not happen. It was about ten years ago when Ford bought a bunch of Ford dealerships in Oklahoma only to have the courts force them to dump them.
The internet levels the playing field and there are dealers with complete transparency selling a lot of cars and building repeat business. They maintain a high CSI and great reviews. They are the minority but they are growing in strength.
The race to the bottom comes from dealers that still gauge their business on average gross profit instead of departmental net. They haven't figured out how to sell cars over the internet and increase profits.
Doug, my report and Mark’s comments do not say that franchise laws will go away or be undermined in any way. What I see is Google or some other large player coming in and perhaps actually buying out dealerships or maybe acquiring a piece of successful regional dealers and implementing changes to the buying process, the marketing, the technology, analytics and compensation in those stores.
Yes, your comment about dealers knowing how to sell cars is spot on, but on a larger scale it’s knowing how to take care of the customer and look at the long term goals and plans.
Chuck, the market leaders usually don't come from the major groups. This is a very tough business with very tight margins. If Google thinks that they can do better, they need to get a double portion of this nightmare. Honestly, I would love to see it.