J.D. Power Roundtable: Auto Dealers Discuss Online

Several auto dealers at J.D. Power’s Automotive Internet Roundtable Oct. 17-19 in Las Vegas said they were bullish on using online and expect its share of their marketing budget to climb. They also expect online to lead them deeper into new growth areas, such as services and parts.

At the same time, they thought paid search was expensive, and they hope user-generated content, via search engine optimization, will provide at least a portion of paid search’s value in leads.

Adam Simms, partner, Toyota Sunnyvale, said his dealership is spending about $140,000 in advertising every month. Of that, $70,000 is spent on print and $40,000 is spent online (including $3,500 for search). The rest of his budget is spent on community outreach.

Simms says the search budget is mainly to “keep our toe in the water.” Generally, however, he is seeing more value from (free) SEO than SEM.

As for print, it is still useful, but it is declining due to lowered community penetration. “We know that print is not a long-term solution for us,” says Simms. But he notes that his Bay Area newspapers have bought themselves some time by better serving his needs with better ad buying logistics, volume discounts, use of color printing, etc.

Stephen Stauning, e-commerce director, Asbury Automotive Group, echoed many of the same themes. Online is a big part of his marketing. But paid search is not. In fact, only four of his 34 auto dealer stores are using paid search. The top store pays $7,000 per month, but the others don’t spend more than $500. “It is too costly,” he says. The paid search that he does do goes entirely to Google — something echoed by the other dealers on the panel.

David Metter, chief marketing officer, MileOne/Atlantic Automotive, notes that his ad budget is currently 36 percent interactive. “We’ll continue to grow that.”

Newspapers’ share of his budget, however, is only 15 percent, versus the industry average of 40 percent. “We’re spending that on direct mail” and other alternative media. TV will continue to get a lion’s share of his budget, though. “TV tops the phone” or telemarketing, he says.

When it comes to paid search, Metter is especially pessimistic. “If someone types in ‘Heritage Honda,’ that’s probably where they want to go,” he says. “Most dealers are just buying their own names anyway.” With the average price now $1.90 — up from $1.26 three years ago — “I want to get out of paid search,” he says.

At the same time, Metter likes the idea of leveraging SEO. Unfortunately, “dealers have 90 percent of their inventory that is not searchable.” The solution is to generate more relevant, searchable content, especially with user-generated content such as car reviews, or syndicated content, a la Cars.com. “Social networking, if it is done well, can really drive customers,” he says.

In fact, Metter feels like UGC can be a substitute for buying leads, perhaps with better results. “That will shock the sales staff,” he says. It can also add to a dealer’s credibility for new areas of business, such as selling online parts.