A couple months ago, I read an article entitled, “Paid Search Drives $6 In Local Sales For Every $1 In Online Sales — Study,” on one of my favorite digital marketing websites, SearchEngineLand.com. The basic point was this: brick-and-mortar stores that have e-commerce websites (so that they can conduct actual click-to-sale transactions online from their paid search advertising) receive $6 worth of offline, in-store sales from their paid search spending for every $1 they receive in click-to-sale revenue online.
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That is a truly startling statistic. If a brick-and-mortar business that sells online is only looking at click-to-sale ROI, they are under-counting the return on their paid search by a factor of 600 percent! The ramifications for car dealers are tremendous. If you are only evaluating your PPC from the website leads and subsequent sales that your ad budget is generating, you may be dramatically misevaluating your program and misallocating your marketing budget.
One of my customers who has been hesitant to move too much of his marketing budget to paid search was reviewing some of his analytics with our client results team last month. He spent around $3,500 per month on paid search and generated over 150 phone calls and roughly 60 website leads from his campaign. We consider a campaign that’s generating first-party leads for under $20 to be fairly successful, but my customer wanted to understand how many vehicles he sold specifically to these customers because he has been reluctant to invest too heavily in digital advertising.
When we matched our dealer’s website leads to his DMS, he found that he could definitively account for seven incremental vehicles from his website leads alone. However, this didn’t account for the 150 phone calls he’d generated from his campaign, nor did it account for the consumers he’d driven to his website who hadn’t submitted a lead, but had come into his showroom.
If dealers are actually generating six showroom visits (like other brick-and-mortar retail outlets are doing) for every website lead they generate, then my reluctant dealer is spending less than $100 in paid search advertising for each vehicle he sells from this campaign, and his alternative to this paid search advertising is to continue to spend his ad budget on media for which he has absolutely no tracking of any kind.
My cautious customer isn’t alone. According to NADA Data 2011, only 24 percent of the average franchise dealer’s 2010 marketing budget was Internet-related spending. The average dealer spent $6,600 per month in online advertising in 2010. Here’s a quick breakdown of dealer spending by marketing channel in 2010.
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As you can see, while online spending is higher than any other single channel, it is still not even a quarter of a typical dealer’s total spend. I wonder if dealers aren’t spending more online because they are under-valuing the return on their paid search budgets by only tracking form submissions. I always recommend to our customers that if you are doing paid search advertising, you should absolutely use call tracking so that you can account for the phone calls you’re driving with your ad spend.
It is incredible that it has taken until 2010 for Internet ad spending to finally pass newspaper spending in the average car dealer’s marketing mix. Here are the changes that have taken place over the past decade in Internet versus newspaper:
While the Internet has passed newspaper in car dealers’ ad budgets, dealers are still spending over 20 percent of their advertising dollars on print. I know many dealers who have turned their marketing mix upside down and are now 70 to 90 percent online versus traditional, and every one of them who has done this has dramatically increased their sales during the process.
Generally, dealers need to be doing paid search. If you’ve had a bad experience with paid search in the past, there may be a myriad of reasons:
1. Wrong vendor
2. Poor tracking/reporting
3. Too expensive
4. Too much time
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None of these should be a barrier for a dealership at this point. There are a number of agencies and website companies that can effectively manage paid search on a dealer’s behalf. You should be able to get call tracking as well as website lead tracking for your paid search spend, so you can see exactly how many and which leads came from your PPC campaigns.
If you have Google Analytics on your website, you should be able to get any vendor to provide URL tracking so that you can see visits, bounce rate, time on site and leads at the keyword level. Remember that for every website lead you are able to track via your form submission reporting (whether it is from your website company or your CRM), you may not even be accounting for six more, so be sure to adjust for that when you’re calculating the relative benefit you’re receiving from the PPC portion of your marketing budget. You will get more showroom traffic, and you’ll definitely sell more cars.
*Amir Amirrezvani, co-founder executive vice president of DealerOn, contributed to this article.
