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Cobalt’s “Breakfast of Champions” Building an Online Marketing Strategy

Association of Automotive Internet Sales ProfessionalsAAISP National Conference – Nashville, TN

March 13 – 15, 2007 Dean Evans

Vice President Field Marketing The Cobalt Group, Inc.

Breakfast of ChampionsWhy are you here?

To Learn:

• Why it is critical as a general manager to modify your advertising spend to create additional, lower cost “opportunities” for your dealership

• Why it is critical as an Internet director or manager to understand how to secure more advertising budget for Internet marketing activities

• Leverage Internet marketing areas to drive more vehicle sales from the industry’s top dealers

• Discover ways to close more leads

Breakfast of ChampionsToday’s Topics

• Are You Off-Target? Your Customers Are Online. Why isn’t Your Advertising?

- Dramatic changes taking place in automotive advertising and marketing

- Implications for dealers

• Ingredients to a Successful Online Marketing Strategy

• Putting it all Together: Lead Management that Drives Success

Are You Off-Target?Your Customers Are Online. Why Isn’t Your Advertising?

Newspaper

Radio

Television

Yellow Pages

Online Marketing

Consumers spend more time online than just about anywhere else ...

Weekly Consumer Media Consumption

• Going Online, 14 hours

• Watching TV, 14 hours

• Listening to Radio, 5 hours

• Reading Books, 3 hours

• Reading Newspapers, 2 hours

• Reading Magazines, 1 hours

Average Dealership Media Spend

• 33.0% Newspaper & Yellow Pages

• 19.5% Television

• 17.7% Radio

• 10.0% Direct Response

• 9.9% Internet

• 9.9% Other

Source: Jupiter Research (January 2006), NADA 2006 Industry Analysis Division

CPVR = $457

Yet dealers spend <10% of their budget on online advertising!

How Much are YOU Spending on Online Advertising?

Average Dealership Spends $64,000 per Month in Advertising

► $21K – Newspaper

► $12K – TV

► $11K – Radio

• What’s YOUR Advertising Spend & Mix?

► $12K – Direct Mail / Other

► $6K – Online

Source: IAB, NADA 2006 Industry Analysis Division

• How Do You Know It’s Working?

Dealer Website

3rd Party Website

OEM Website

The Internet Is the Starting-Point for Most Vehicle Buyers

► 67% of auto buyers research online*.

► 89% use search engines for research**.

► 70% start at a search engine***.

* JD Power 2005 Autoshopper.com Study**JD Power 2005 Autoshopper.com Study***Yahoo! Compete 2005 auto study

Auto Buyers

Dealer

You Need to Rethink Your Entire Advertising Strategy…

Dealer Website

TelevisionDirect Mail

Billboard Newspaper

RadioInternet Search

Breakfast of ChampionsToday’s Topics

• Are You Off-Target? Your Customers are Online. Why isn’t your Advertising?

• Ingredients to a Successful Online Marketing Strategy

- Creating the cornerstone of your marketing strategy

- Spend less, make more. An introduction to Internet search

- Creating opportunities through effective 3rd party lead sources

- Increasing customer retention and dealership profits through Owner Marketing

• Putting it All Together: Lead Management that Drives Success

How Does Your Advertising Strategy Compare to Top-Performing Dealers?

Today’s Top Performers …

Make the website the focal point of their advertising.

Align online advertising with print / radio / TV.

Continually tune their website for higher organic Internet search engine ranking.

Drive more leads through Internet search advertising.

Acquire valuable customers via high performing 3rd-party leads.

Build long term, profitable relationships with existing customers via owner marketing.

Dealership WebsiteThe Cornerstone of your Marketing Strategy

Elements of a Top-Performing Website

• Ever increasing visitor-to-“customer action” ratio

• Generates first page SEO placement / flexible to handle paid search campaigns

• Integrates with your OEM’s advertising and merchandizing

• Synchronizes your offline and online advertising - fast!

• Is consumer-tested NOT “what the dealer likes visually”

• Answers the consumers’ question FAST: “Why should I buy from your dealership?”

Breakfast of ChampionsToday’s Topics

• Are You Off-Target? Your Customers are Online. Why isn’t your Advertising?

• Ingredients to a Successful Online Marketing Strategy

- Creating the cornerstone of your marketing strategy

- Spend less, make more. An introduction to Internet search

- Creating opportunities through effective 3rd party lead sources

- Increasing customer retention and dealership profits through Owner Marketing

• Putting it All Together: Lead Management that Drives Success

Internet Search Is Like Buying a Home It’s about Location, Location, Location

=Organic Search

=Paid Search

• Original Search Page• Algorithmic

• 12 – 14 Links• Advertising• Pay Per Click

Top Things to Know about Organic Search (a.k.a. search engine optimization (SEO), natural & free listings)

1. All search engines “crawl” the Web to establish organic rankings of websites based on their content and links.

2. Page one, “above the fold” is the best real estate.3. Organic search is like “PR” (not advertising) – influence, not control.4. Organic Search is Step 1 in a smart search strategy.

Top Things to Know about Paid Search a.k.a. pay-per-click, search engine marketing (SEM) & paid placement

1. Paid search is advertising, and it’s how search engines make money.

2. Paid search success is based on > Keywords / bidding strategy

> Ad copy and campaign quality

> Dealer website quality / ability to convert traffic into leads

3. Google, Yahoo!, & MSN’s networks account for 95% of all Internet search traffic. (Source: CNN / Money.com 5/06.)

Smart Dealers Already Profiting from Internet Search

Leading Acura Dealer (WA)Email / Phone Lead Volume

Before Internet Search

With Internet Search

>550

200

Before Internet Search

With Internet Search

70+

~30

Leading Hyundai Dealer (NJ)

Internet Sales / Month

30

~5

Leading Subaru Dealer (OR)Internet Suzuki Sales / Month

Before Internet Search

With Internet Search

The “Magic” of Search

Key Benefits

• Measurable ROI for search advertising

• It’s where your customers are.

• It’s targeted: you connect with

- The right buyers

- The right ads & offers

- The right time

Key Success Factors

• Integrate with your overall ad budget

- Best leverage of your spending

• Organic + paid search delivers best results.

• Integrate with conversion-oriented website

• Work with a trusted provider

- It’s too complex to do it yourself

Breakfast of ChampionsToday’s Topics

• Are You Off-Target? Your Customers are Online. Why isn’t your Advertising?

• Ingredients to a Successful Online Marketing Strategy

- Creating the cornerstone of your marketing strategy

- Spend less, make more. An introduction to Internet search

- Creating opportunities through effective 3rd-party lead sources

- Increasing customer retention and dealership profits through Owner Marketing

• Putting it All Together: Lead Management that Drives Success

Search and 3rd Party Leads

• While Internet search is exploding, the proportion of consumers visiting 3rd-party sites is actually increasing.

• Don’t get caught up in the “you can drive all your customers to your site” mentality.

• Nationally, we see lead to close rates decline on dealer site leads when search campaigns are started.

• Smartest Internet lead strategy includes a mix of

- Internet search marketing

- 3rd party leads

- OEM leads

Dealer Sites34%

OEM Sites10%

Third Party Sites56%

Source: Ward’s Dealer Business, April 2006.

3rd Party Leads and Classified Ads An Efficient and Effective Lead Source

• New Car

• Aggregators today are not all alike. Some specialize in selling. Others specialize in helping you sell more vehicles.

• Can fine tune your sales DMA alignment to source the best customer for your business … and do it as often as you like to test and re-test.

• Used Car

• Know that there are both subscription-based and pay-for-performance models. Know your cost per customer action.

• Video, professional photos, pricing data/knowledge and copy expertise are needed today to top performing ad units.

3rd-Party Sites Are Becoming More Specialized 20 in1999 250+ in 2007

Breakfast of ChampionsToday’s Topics

• Are You Off-Target? Your Customers are Online. Why isn’t your Advertising?

• Ingredients to a Successful Online Marketing Strategy

- Creating the cornerstone of your marketing strategy

- Spend less, make more. An introduction to Internet search

- Creating opportunities through effective 3rd-party lead sources

- Increasing customer retention and dealership profits through Owner Marketing

• Putting it All Together: Lead Management that Drives Success

Your Customers Don’t Need to See you as Frequently…

Yesterday’s Average Service

Interval

The Widening Awareness Gap

3 Months

Today’sAverage Service Interval

Six Months, a Year, More?

BMW’s oil changes: 15,000 miles

Acura’s 1st service: ~ 100,000 miles

GM vehicles: oil changes at varying intervals

Are you letting them forget you?

Owner Marketing Success Story: Dave Gill Pontiac GMC

OwnerMarketing Solution

OwnerMarketing Solution

Challenges► Improve customer retention► Increase service revenue► Drive vehicle sales

Results

► Proactive, targeted customer campaigns to match service & sales business needs

► 6x increase in sales to customers in the email database

► 40% of repair orders driven by Ownership marketing provider

► 81% of CSI/SSI survey responses completed within 72 hours

DealershipConsumer

Ensures You Communicate to Your Customers at the Right Time with the Right Message

Continuous Email Collection fromNine National Databases!

OnStation

Automated Sales &Service Promotions

Service Reminders

Customer Surveys

Online Appointments

On-demand Campaigns

Service Sales

To make sure they return to you!

Owner Marketing Takeaways

• Most effective direct mail is really Direct Email

• Owner marketing is hard to do yourself.

- FTC / Compliance issues

- Hassles of collecting customer emails

• Find a trusted provider to do it for you.

- “Outsource” marketing department

- Rapid response

- Success, expertise, agility

Breakfast of ChampionsToday’s Topics

• Are You Off-Target? Your Customers are Online. Why isn’t your Advertising?

• Ingredients to a Successful Online Marketing Strategy

• Putting it all together: Lead Management that Drives Success

- eBusiness Performance Study

• Best Practices of High-Performing Dealers

- People and process. Developing the skills for success

Industry and Dealership eBusiness Performance Study

12 months of leads, from 1,329 dealerships12 months of leads, from 1,329 dealerships

► > 1.1 million leads, matched to actual vehicle sales by R.L. Polk► Average close rates, sales cycle, brand defection, cross-shopping

Telephone survey: >4,000 customers who submitted leadsTelephone survey: >4,000 customers who submitted leads

► Evaluate consumer perceptions of dealership lead handling

Industry-wide eMystery Shop: >4,000 dealers, 22 brandsIndustry-wide eMystery Shop: >4,000 dealers, 22 brands

► Responsiveness, response times, quality of response

20 on-site evaluations of high-performing dealers20 on-site evaluations of high-performing dealers

► Evaluate common best practices leading to higher conversions

Dealership responsiveness to leads is improving Quality is diminishing

   

Industry eMystery Shop Metrics       

               

        2004* 2005*  

  Overall Responsiveness 60.0%   69.7%  

  Response Time Average (hrs) 9.5   6.5  

               

  Quality of Responses:        

               

  Answered the Shoppers Questions 38.2%   25.9%  

  Used Brand or Product Highlights NA   23.9%  

               

High Performers Provide Price

Of the high performers interviewed:

• 87% state they always answer the customer’s primary question(s)

• 77% provide price to customers without hesitation

Of the high performers interviewed:

• 87% state they always answer the customer’s primary question(s)

• 77% provide price to customers without hesitation

“If I don’t provide price, I am the highest price”

--Michael Waldrop, Coggin Honda

55.4%

20.4%

14.4%

3.7%

3.3%

1.5%

1.1%

0.2%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%

Trade-In (poor trade-in value offered)

Other

Existing Relationship (none with this dealership)

Proximity (dealership in distant proximity)

Inventory (inadequate)

Price (price was not competitive)

Dealership Response (poor, slow)

Other Brand (customer decided to buy a different brand new vehicle)

Brand Defection is High

What is the primary reason you bought a vehicle from another dealership?

Other Brand (customer decided to buy a different brand new vehicle)Other Brand (customer decided to buy a different brand new vehicle)

Dealership Response (poor)Dealership Response (poor)

Price (too high)Price (too high)

Putting it all TogetherPeople & Process: Developing the Skills for Success

Hi [Customer Name], Why Me? Why Make? Why Model?

Hyundai Sonata Dethrones Camry and Accord

Thank you for your request for additional information on the exciting new 2006 Hyundai Sonata. My name is Tony Bell, I am the Internet Director and it is my job to ensure that you get all of the information you need to make a good buying decision. We are extremely pleased with the new 2006 Sonata as well as all of our customers that already have a new Sonata in their driveway. When you look at the long list of standard features and read what the “experts” have written about this car, you will understand why Toyota and Honda Dealers are worried. I, or one of my staff will be contacting you to gather some additional information, answer any questions, schedule a test drive or arrange a home delivery.

I have included in this email links to various sources for reviews, comparisons, and pricing guidelines. I have included a link to Edmunds.com, they have a very accurate pricing guide to follow. They publish a TMV price to give the customer a figure that they should expect to pay for a vehicle. Edmunds.com is constantly surveying dealers as well as customers to arrive at these prices. Please keep in mind that every car deal is as unique as every customer and you may qualify for additional rebates and incentives.

Reviews for the Sonata

Hyundai Sonata Dethrones Camry and Accord

http://www.autoblog.com/entry/1234000897051169/

http://cars.about.com/od/hyundai/fr/bk_06sonata.htm

http://money.cnn.com/2005/08/03/Autos/carreviews/hyundai_sonata/

http://www.caranddriver.com/article.asp?section_id=3&article_id=9741

Customers Have a Short Purchase Timeframe

0-30 31-60 61-90 91+

68% of leads closed to a sale within 90 days

Elapsed time between the date of lead submission and date of lead closure

Based on registration information supplied by R.L. Polk & Co.

Sales/leases have been adjusted for matching efficiency by a factor of 1.36, which represents a 73% historical match rate

273,886

103,130

63,455

204,486

Days to Close

42%42%

16%16%

10%10%

32%32%

Number of Closed Leads

Research Summary and Implications

More dealers are responding to leads, and doing so more rapidly – what’s your dealership average?

Quality of lead response matters – do you use ‘auto responses’ or do you try to

answer the consumer’s question?

Avoiding price / skirting questions may cost dealers business – do you provide price responses in your emails?

Customers are buying sooner, Internet leads are hot!

eBusiness Performance StudyBest Practices of High-Performing Dealers

Similarities from the Top-Performing Dealerships

• Internet director sits at the head management table and are become tomorrows (and today’s) general managers

• Treat Internet customers just like walk-in’s, because most of them are today.

• Make the website the focal point of their advertising strategy.

• Synchronize Internet advertising with print / radio and TV advertising.

• 3rd-party leads from top lead providers (used and new).

• Drive additional leads through Internet search marketing.

• Continually optimize the dealership website for higher organic search engine placement.

eBusiness Performance StudyBest Practices of High-Performing Dealers

Similarities from the Top-Performing Dealerships

• Continually fine-tune their website for maximum visitor-to-customer action conversion.

• Offer – even in initial response emails – price, alternative vehicles and timely initial responses to leads.

• Utilize for email responses new ways to stand out from your competition : Branding and Video for example on vehicle requested.

• Enhance their follow-up processes with high-performance templates that are automated for increase sales person performance.

• Invest in Internet training : AAISP national convention.

Breakfast of ChampionsAAISP National Convention

• Congrats to everyone who has come to the AAISP conference.

• You are smart to be investing in training and networking venues like AAISP!

• Dean.evans@dealix.com