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Ralph Kisiel Automotive News / March 20, 2006 A Honda owner in Manassas, Va., wants to buy a new Accord but doesn't have an auto dealership in mind. So he shops online with the search engine Google. He types "new Honda Accord dealer Manassas Va." in the search box, and the results pop up. Koons Honda in Manassas shows up twice on the first page of the results. "That's a home run," says Koons Honda President Ron Kody. Six months ago, Kody started experimenting with search engine marketing, a new way to get his dealership name in front of online shoppers while they are using search engines such as Google, Yahoo! and MSN. A dealership can buy its way onto a search page or get there by operating a good Web site. Koons Honda appears in the organic, or free, listings because Google determined that the dealership Web site, GrabTheWheel.com, is relevant to the online shopper searching for a new Accord in the Manassas area. Koons Honda also appears in the paid listings. The paid listings are catching on with dealers. Buying these advertisements on search engines is called search engine marketing. Bidding on keywords Search engine marketing is complex, involving bidding on thousands of words and phrases that an online shopper might use while searching for automotive Web sites. The highest bidders get their ads placed on the first page of search results. About a third of the 20,000 dealers in the United States are experimenting with search engine marketing, according to a dealer survey commissioned by the Cobalt Group, a dealership technology vendor in Seattle. Some dealers have been experimenting on their own, working directly with Google and other search engines. But most dealers are turning to companies like Cobalt to manage their search engine marketing campaigns. Other companies offering such services include ClickMotive LP, Auto Dealer Traffic Inc., Jumpstart Automotive Media and CPC Logic. Kody has dabbled in search engine marketing since October at both of his dealerships, Koons Honda and Koons of Manassas (Pontiac-GMC-Buick). His dealerships participated in a Cobalt pilot project along with 60 dealerships. Today, his dealerships are converting as much as 20 percent of the leads generated by his search engine marketing activities. That compares with a conversion rate that has dipped as low as 4 percent from the leads he buys from third-party lead referral Web sites such as Autobytel and CarsDirect, he says. Search engine marketing also is known as pay-per-click advertising because dealerships don't pay anything unless someone clicks on their small text ad. The ad is a direct link to the dealer's Web site. Paid, organic look similar Most search engine users don't realize that there is a difference between the organic listings and the paid listings on the same page. In the Koons Honda example, the Manassas dealership is one of the 10 highest bidders on the phrase "new Honda Accord dealer Manassas Va." All 10 Web sites are displayed on the first page of the Google search results. The other bidders include Honda's national brand Web site, Honda.com, and third-party lead vendors CarsDirect.com and Edmunds.com. Dealers are spending about $2,500 a month on search engine marketing, according to Cobalt's dealer survey. Cobalt CEO John Holt expects that amount to climb. The dealers surveyed are funding their search engine marketing programs by increasing their overall advertising budget or by shifting dollars from other programs, such as print advertising, Holt says. Shifting spending Because of his early success, Kody says he will shift some advertising dollars at his stores from traditional print and radio into search engine marketing. "Probably at least 20 to 25 percent of my budget, if not more, by year end will be related to Internet or search engine marketing in some form or another," Kody says. Dealers like the idea of greater control by driving traffic to their Web sites, says Denise Chudy, Google's head of automotive business. "Dealer sites are now more robust than ever. They've invested a lot more money in their Web sites, and they are seeing the value of driving traffic straight to their sites." Some aggressive, Internet-savvy dealers are doing their own campaigns on Google, but the majority prefers to turn the work over to vendors such as Cobalt, Chudy says. Dealerships that try search engine marketing will be bidding against other dealerships and third-party lead vendors like Autobytel and CarsDirect. Luring shoppers Both Autobytel and CarsDirect use search engine marketing but do not work directly with the dealers. They want to lure online shoppers to their Web sites, then sell those leads to dealers for about $20 each. "Search engine marketing could be viable for a certain segment of dealers, I don't deny that," says Chuck Hoover, CarsDirect senior vice president of marketing and business development. "I just think there's a level of sophistication that's required, and it's not a guarantee." Purchasing pre-qualified leads from a third-party site like CarsDirect is more economical and effective and has less risk, Hoover says. "Over 40 percent of the traffic we're getting to our Web site is direct, and that's a function of the content we have and the service we offer," Hoover says. "That translates into high-quality leads for the dealers." Autobytel has a similar philosophy. "We probably get about 43,000 people or so coming to our sites every single day from the search engine," says Michael Rosenberg, senior vice president of media and marketing services. "We drive them into our network of sites - Autobytel, Autoweb and Carsmart, primarily." 'Dirty little secret' That's their "dirty little secret," says Stuart Lloyd, a former Reynolds and Reynolds Co. executive who in 2005 founded ClickMotive, a search engine marketing services firm for dealers. Vendors of third-party leads use search engine marketing to draw online shoppers to their national Web sites, and then they sell those leads to dealers, Lloyd said. Now dealers can do it themselves with help from firms such as ClickMotive, Lloyd says. "You are going to see a revolution occur in the next two years where all 20,000 dealers are going to dabble in this," Lloyd says. "Less than 2,500 do it today. Most do it really poorly." At least one third-party lead vendor, Cars.com, sees value in working directly with the dealers on search engine marketing. Cars.com purchased NewCars.com and its CPC Logic division in July. CPC Logic is working with about 100 dealers on search engine marketing campaigns, says Mitch Golub, president of Cars.com. Golub says some dealers already have begun expanding their search engine marketing campaigns to promote other areas of the dealership, including parts and accessories, service, finance and insurance, trade-ins and warranties. |
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