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Advertising assistance from the OEMs, commonly referred to across various manufacturers as “co-op” when it is refunded by the OEM, can be a great help to dealers to offset advertising costs and achieve market share.  I won't say that what the OEMs deem as "co-op-able" is always the best choice for a dealer:  However, in many dealers it seems that the question “is this advertising co-op-able?” has become a standard bar to measure advertising—instead of measuring sales results!!—and that is extremely dangerous.  And stupid, really.  Especially when this sales year of 2012 is shaping up to be the first really good one in quite a while!

So, how does co-op make us stupid?  For example, let’s say an OEM-approved website vendor has a co-op-able pay-per-click (PPC) program.  Let’s do it!  Can’t be bad, right?

Except it can be and likely is.

Because if the OEM-approved website vendor is using the same PPC terms across all the dealers with the same lines in the same area, not only is this ineffective it also just burns through a PPC budget in a hurry.  And produces little, if any, sales.

And this happens every day.  I’ve seen it.

Another example of “co-op making us stupid” is limiting our advertising to only those things that are co-op-able.  Let’s say some co-op money is available for direct mail, but it’s only possible to do it twice a year and co-op the money.  So all we do is direct mail twice a year and we ignore that our market actually reacts well to direct mail quarterly or more!   And we lose sales because we forgot that advertising is about “investing money to make sales”—and not about “investing money to get co-op dollars back from the OEM.”

I will reiterate that co-op, when used correctly, can be a great help to a dealer's advertising and a great competitive advantage.  However, we need to use co-op to smartly add to our business and not to just buy inept programs because they are co-op-able and/or limit our advertising to only the advertising—good or bad—that is co-op-able. 

Remember, advertising is done to gain sales, not to gain co-op money.  If we make advertising (digital and non-digital) decisions based solely, or even in larger part, on whether the advertising is co-op-able, we are dangerously letting co-op make us stupid.

Which, in a rebound year like 2012, will still put us “back-of-the-pack” in sales.  Do we want to be “#1 in co-op”?  Or “#1 in sales”?  Easy decision when put that way.

So go be smart and sell!

by Keith Shetterly, Copyright 2012
www.keithshetterly.com  All Rights Reserved
keithshetterly@gmail.com 

Views: 1025

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Comment by Tom Gorham on March 4, 2012 at 12:26pm

I really like this post.  I am forwarding it on to my dealer.

Comment by Keith Shetterly on March 4, 2012 at 11:56am

@ Manny:  Respectfully, I disagree.  I wouldn't mind the free trial, so hit me Tuesday when I'm down there, but actually we would agree at least on this part:  That any digital advertising done well is going to produce sales.  You don't have to sell to the point that PPC is a waste.  Just prove to them you can beat it, and dealers will be happy.  Come see me down there Tuesday morning, if you have time.  Thanks!

Comment by Keith Shetterly on March 4, 2012 at 11:39am

That said, I do know of at least one dealership that drives great traffic with SEO only.

Comment by Keith Shetterly on March 4, 2012 at 11:39am

I don't agree, Manny.  PPC, correctly done with conversion in mind, is very strong for buyers that are statistically much lower in the sales funnel than those who respond to SEO.  I've seen that strong SEO is just a part of the picture, not the whole answer.  Thanks!

Comment by Keith Shetterly on March 4, 2012 at 11:34am

@ Brian:  100% agree with you about decoupling the digital spend from a single vendor or set of "approved" vendors.  I proudly watched a dealer throw out the digital advertising that an "approved" company was doing--it was that example I wrote about here where a vendor was using the same PPC terms, campaigns, etc. across EIGHT DIFFERENT DEALERS IN THE SAME METRO AREA.  Disgusting.  Hey, though, it was co-op-able, right?  Sigh.  You are right on the money in this response.  Thanks!

Comment by Brian Pasch on March 4, 2012 at 11:29am

Keith

I'm still surprised how many OEM's will limit CO-OP on Google Adwords but generously reward newspaper, radio, and TV spending with ample funding.  It's time that OEM's co-op the vendor the dealer chooses to run their PPC campaign, as long as reporting can be submitted for reimbursement.  

For PCG clients, we direct bill the Google Adwords charges on their own company Credit Cards.  There is 100% transparency on the credit card statement on what they spent and directly billed by Google.  

Co-Op policies that are outdated need to be brought up at the OEM dealer advisory board meetings.  If dealers don't speak-up on what is WORKING, then co-op funding rules will continue to be misaligned with the dealer's best interests at heart.

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