When it comes to allocating marketing dollars, most dealers have it backwards. Newspaper, television and radio have been such an integral part of their advertising programs for so long that many dealers still place those mediums at the top of their advertising priority list, while their Internet marketing programs receive a relatively small percentage of the overall budget.

The problem with this strategy is that the majority of advertising budgets are still geared towards passive consumers. Internet marketing, however, provides dealers with the opportunity to reach active consumers (i.e., people who are already in the market and looking for information on what to buy and where).

A smart strategy today means allocating the majority of the marketing budget to reach active consumers. The advantages of deploying a targeted Internet marketing program include being able to accurately and quickly figure ROI and cost per lead, alter marketing efforts accordingly, and ultimately achieve a much lower cost-per-sale than other mediums provide. In particular, dealers should be paying very close attention to search engine marketing (SEM) and consider it as their number-one priority when it comes to allocating the budget.

The case for paid search is simple. The shift in consumers’ car buying towards the Internet has been fast and is fairly comprehensive. Search engines are ubiquitous; anyone who wants to know anything starts by going to a search engine. Although many dealers prefer to be ranked in the “free” organic search engine results, what they don’t realize is that high search engine optimization (SEO) rankings almost always result from a synergistic campaign that includes both SEO and SEM.

Additionally, paid search offers the following advantages:

• High conversion – Pay-per-click ads have higher conversion rates than both SEO and display ads.

• High close rates – More dealers are reporting that the leads that come in from their own Web site close at a much higher percentage than any other third-party or referring Web site.

• Most targeted – Paid search reaches the most targeted audience out there—consumers who are looking for vehicles with an intent to purchase. 

• Low waste – With the right match types, dealers can ensure that their ads are only shown when searchers are looking for relevant vehicle information.

• Predictability – Traffic volumes, ranking, returns and costs tend to be more stable and more predictable with paid search than SEO. 

• Speed – Paid search listings appear very quickly, anywhere from a few hours to days, while SEO requires a long time and constant maintenance to appear in the top organic rankings. This is beneficial when new sites are created or when ads need to be switched on and off for a campaign or promotion.

• Control – Unlike SEO, paid search allows dealers to direct customers to the most relevant pages on their site. With easy-to-use software solutions on the market now, dealers can also manage bids and therefore control budgets very easily, in addition to being able to adjust creative copy or experiment with new keywords on the fly. 

• Brand awareness – Even if consumers do not click through, paid search ads still contribute to dealers’ overall marketing and branding efforts.

Allocating the Marketing Budget
It’s time for dealers to embrace SEM for the incredible return on investment it can offer. Here are steps that dealers can implement to get it right:

1. Measure the entire acquisition cycle of every vehicle sale, from cost per click to cost per sale.

2. Analyze the cost per lead from the dealer Web site compared with radio, television, newspaper and direct mail campaigns. 

3. Maximize online spending within your overall marketing budget to target local customers. 

4. Build out your remaining marketing campaigns after establishing your online budget. 

5. Adjust your budgets based on performance and ROI.

6. Increase convertible traffic by making sure the Web site is built for powerful SEO performance (no flash, no site map, deep linking for inventory, etc.).

7. Ensure that ongoing SEO tasks are being completed (e.g., content changing and link building).

8. Make sure that paid search advertising is being done in a very targeted and dealer-controlled manner.

Paid search marketing is a targeted form of advertising that connects dealers directly with active consumers in their local market. The ROI, cost per lead and cost per sale are easy to figure and speak for themselves, which is why SEM should be the top priority when dealers allocate their marketing budgets.

Vol 5, Issue 10