Don't Spend Too Much on SEM

Having built and sold dealer Web sites for over 10 years, I saw the birth of search engine marketing and watched as it grew exponentially and matured to comprise a huge segment of automotive marketing. Once dealers realized you could actually out-bid your competitor and show up ahead of him in search engine results, the race was on.

As dealer Web sites grew in number, popularity and robustness, Web space got crowded—especially on search engines. The solution for more visibility amidst the crowd was to buy your way in front of competitors to position yourself closest to the shopping audience.

It’s the ultimate auction with no ceiling on pricing, and the more you spend the higher your site will show up, but where or when does it stop? Do the costs of spending more on SEM equate to increased benefits or increased sales?

In the case of the Internet, literally billions of people are online everyday, with only a small fraction looking for cars. If these people are in your direct market, and you have advertised your Web site well, they should find you easily by typing your name in a search engine or by going directly to your home page. If they type your dealership name in a search engine, you should be at the top of the results.

The fact is, of all the shoppers who sent a lead and actually bought a car*, almost 40 percent knew the dealer’s Web site address, 25 percent came from the OEM site and 14 percent came from independent sites like and Only 13 percent of people who submitted a lead and bought a car started with keyword searches on a search engine, so does it make sense to spend more money on buying keyword placement than advertising your own site? Too often these numbers are inverted, and dealers spend more money buying search engine placement and don’t understand why their sales numbers don’t go up accordingly.

Now, I’m not saying SEM is unimportant. It certainly is important, but it’s most effective when used properly. SEM is very effective for marketing outside of your immediate market in areas where your traditional marketing doesn’t reach. These are the people who do not already know your dealership or Web site address. SEM helps target competitive model searches and promote special sales events or new vehicle launches.
But it’s not cost-effective for the sole purpose of being at the top of 300 keyword searches. Most serious buyers are going to use one of probably 20 to 30 most popular searches. If you want to be at the top of the keyword search for “dealers that give away free hot dogs and hamburgers,” you can be, and you might have two extra people come in for free hot dogs and hamburgers.

No matter how much you spend on SEM, it’s only going to equate to about 13 percent of your overall lead volume. You don’t want to lose 13 percent of your leads for sure, but you don’t want to devote 80 percent of your Internet ad expense toward it either.

So look closely at your SEM budget, make sure your money is going to the most effective places and don’t ever neglect to advertise your own Web site.

* Stats are from 2007 J.D. Power Automotive Internet Shopper Study.

Vol. 6, Issue 4