This points to an opportunity for digital advertising to have a far greater impact on the dealership’s
    entire business than something as limited as buying leads for $20 that are shared with multiple
    dealers and generated by a process that devalues any differences between one dealer and
    another.  It has been my experience during the past few years that if a dealer thinks that digital
    advertising is a substitute for either buying or not buying third party generated leads, that they will
    be VERY disappointed in their results.  Usually it is because when the costs of running digital ad
    campaigns are divided by the number of web forms generated, it usually nets out to a far greater
    number than $20!


    That’s why 3rd party lead providers must sell every lead several times over and “churn” one customer who
    is going to buy one vehicle into a lead on 4 to 6 different makes and models of vehicles… Just like Ross Perot
    said a few years ago “It’s all about the economics, stupid!”.  Sometimes, I imagine what it would be like to have
    the opportunity to go back in time to 1994 and meet with Pete Ellis, the founder of the first automotive lead
    provider, Autobytel.  I would ask him “where did you come up with $20 as the right price
    for a sales lead?” I suspect that the answer might be something along the lines of “That
    just seemed like a price the dealers would be willing to pay...”  While I am on my soap-
    box; let me conclude by saying that $20, $19, $18, $25 and $35 leads have little or no
    bearing on the value generated by an online Digital Advertising campaign… Or,
    perhaps they have the exact same significance on Digital Advertising as they do on
    Newspaper, Radio, Outdoor, Direct Mail, TV, Cable and other more traditional forms of
    advertising.  After all, if you put a dealership’s domain name into a local newspaper ad,
    do you evaluate that newspaper ad’s performance by how many leads come in from
    that website?  I dunno, maybe you should if you think digital advertising is about
    competing with $20 leads.

    By now, you must be wondering what Key Performance Indicators (KPI) I recommend
    that you should measure. All advertising is essentially a means of communicating a
    message, and budgets allocated to getting that message about what your dealership
    sells or offers, your 3 day return policy, lifetime oil changes and free tires for life, $25
    prepaid gas cards for taking a test drive, $400 discount coupons, free trips to Las Vegas with every purchase,
    0% APR for up to 84 months, the BIG sale, this weekend’s Slasher Event, Repo Joe being back in town, the Tent
    Sale at the Stadium, that giant blue gorilla you have out front and the GM is not coming down from the crane
    bucket 80 feet in the air until your store sells 100 vehicles, etc., etc., should be based on who and how many
    people your dealership wants to communicate the message to, and how much it is going to cost to achieve that
    objective.  That is where Digital Advertising offers superior effectiveness, the ability to reach the right people
    (targeting) with a compelling message or offer for the least amount of money per thousand people who see the
    ad.  Therein lays the first metric you should be concerned with; how much does it cost?
In-House Digital Advertising (continued)
When I worked at Courtesy Chevrolet and was responsible for the proper care
and feeding of over 5,000 leads a month it became obvious that a good portion of
the leads we received each month were not from people ready to buy a vehicle,
but rather from people who were trying to get information about whether or not
they should even begin the shopping process
.   
    During the past 4 years the J. D. Power and Associates Online Automotive
    Shopper Studies have consistently shown that out of every 100 people who visit a dealer’s web site and
    subsequently visit the dealership in “real life”, only between 19 and 21 of those 100 people will have contacted
    the dealership either by completing an online form or by phone prior to their showroom visit, and after their visit to
    the dealership’s website.  What this means is that the lead forms that dealers receive from their websites are
    actually a sample “survey” of the customers who are going to be coming into the store’s showroom facility!  
    Likewise, all the data (and there is a lot of it!) shows that the most significant and positive business impact areas
    from successful online advertising campaigns for a car dealership are the following, listed in order of the degree
    in which online advertising can be effective:

    1.        Dealership Awareness
    2.        Awareness of a Dealer’s Current Promotion
    3.        Dealership Consideration (location listed in ads)
    4.        Showroom Traffic
    5.        Website Traffic
    6.        Incoming Phone Calls
    7.        Increased Volume of Search Queries for the Dealer’s Name
    8.        Completed Web Forms
    9.        Customer Referrals
    10.      Unsolicited Emails
SUPERIOR DEALER SOLUTIONSsm
Copyright © 2008 Automotive Dealers Network. All rights reserved.
Ralph Paglia
Director – Digital Marketing / ADP Dealer Services
email:
RPaglia@AutomotiveDealersNetwork.com
Ralph has held positions such as OEM Partnership
Executive for Reynolds and Reynolds, CRM/eBusiness
Director, New Car Sales Manager, Used Car Manager, F&I
Director, General Sales Manager and General Manager. He
led the development and design of nationally implemented
CRM and eBusiness programs for Ford, Honda, Mercedes-
Benz, Toyota and other car companies. He also designed
Ford’s BDC program Mercedes-Benz StarLeads CRM
system and the Mercedes-Benz BDC.
part 3 of 3

    How Much Does It Cost – Key Performance Indicator #1: There are several ways to buy and pay for
    Digital Advertising, and a key performance indicator that can be applied to almost all forms of advertising.  There
    are several ways to track what Digital Advertising costs, some are the basis of how you make the advertising buy,
    and others can be calculated after the campaign is finished and we know what the numbers are:

    •        CPM (Cost Per Thousand Impressions) – This is where dealers pay an agreed upon price
    for exposing their message to every 1,000 people within a targeted audience. An example of a targeted
    audience would be visitors to a designated website that are physically located within a 25, 40 or 50 mile
    radius of the dealership’s address or zip code.  CPM costs are priced per thousand targeted customer
    impressions. The M in the acronym is the Roman numeral for one thousand… Why isn’t it called “CPT”?
    Because the person who invented the term “CPM” was probably Italian and wanted to honor his or her
    Roman ancestors. 

    CPM Refers to Cost per thousand impressions.  The CPM model refers to advertising bought on the basis
    of impression. This is in contrast to the various types of pay-for-performance advertising, whereby
    payment is only triggered by a mutually agreed upon activity (i.e. click-through, lead form completed, sale).

    The total price paid in a CPM advertising deal is calculated by multiplying the CPM rate by the number of
    CPM units. For example, one million impressions at a $10 CPM advertising rate equals a $10,000 total
    campaign cost.

    1,000,000 / 1,000 = 1,000 units
    1,000 units X $10 CPM = $10,000 total price

    The amount paid per impression is calculated by dividing the CPM by 1000. For example, a $10 CPM
    equals $.01 per impression.

    $10 CPM / 1000 impressions = $.01 per impression

    So, given the example above, if we want to show our ad at least 5 times (frequency) to at least 200,000
    people (reach) within our geographically defined area (geotargeting) within the month of August 2008,
    then we must find a way to place our ads on enough websites so that all combined they receive 1,000,000
    (200,000 x 5) total visitors each month.  If we have to pay a combined average of $10 CPM for 1,000 web
    sites to get 200,000 uniques that visit at least 5 of these web sites in a month, then the campaign will cost
    $10,000.00.

    •        CPV (Cost Per Visitor) – This is either how we buy an ad, where the dealer pays for the delivery of a
    Targeted Visitor to the dealership’s website, or this can be a Key Performance Indicator based on the ad
    campaign’s results.

    Total Campaign Cost = $10,000.00
    Total Campaign Impressions = 1,000,000
    Advertisements Yielded a 1% Click Through Rate (CTR) = 10,000 Clicks
    10,000 Website Visitors @ $10,000 Campaign Cost = $1 CPV

    For example, using the same campaign numbers in the CPM example, if we tracked that the ads
    generated enough “Click-Throughs” so that our of the million times the ad was seen, 10,000 visitors ended
    up coming into our dealership’s website, we would have a 1% Click Through Rate (CTR).  That 1% CTR
    has sent 10,000 people into our web site during the campaign.  Since the campaigns cost was $10,000 (I
    am making the math easy) we now know that the campaign generated a $1 Cost Per Visitor (CPV).

    •        CPC (Cost Per Click) – This is what many dealers have been sold in recent years and is also known as
    Pay per click (PPC). Dealers pay every time a user clicks on their listing and is redirected to their website.
    They do not actually pay for the listing, but only when the listing is clicked on. This system allows what
    many dealers know as “SEM providers” to refine searches and gain information about their market. Under
    the Pay per click pricing system, dealers pay for the right to be listed under a series of targeted key words
    that theoretically are used by consumers searching for information related to buying a car. The sponsored
    listings, or ads then direct click-through traffic to the dealer’s website.  You pay only when someone
    actually clicks on one of the listing which links directly to your dealership’s website, or in some cases a
    microsite or landing page set up by the SEM service provider for the dealership. CPC differs from CPV in
    that each click is paid for regardless of whether the user makes it to the dealership website.

    •        CPA (Cost Per Action) or (Cost Per Acquisition) – This type of advertising is performance
    based and is common in the affiliate marketing sector of the business. In this payment scheme, the
    publisher takes all the risk of running the ad, and the advertiser pays only for the amount of users who
    complete a form, such as a Request For Quote (RFQ), Credit Application, Contest Entry Form, Test Drive
    Appointment or sign-up for that 3 day trip to Las Vegas that the dealership is giving away. This is the best
    type of rate to pay for banner advertisements and the worst type of rate to charge for website publishers.  
    Usually, this is a advertising billing plan for the most desperate website publishers.  Similarly, CPL (Cost
    Per Lead) advertising is identical to CPA advertising and is based on the user completing a form,
    registering for a newsletter or some other action that the dealer feels will lead to a sale. Also common,
    CPO (Cost Per Order) advertising for service appointments, parts and accessory sales online is based on
    each time an order is transacted. Another good example is secured credit applications that use real-time
    integration with credit bureau systems and credit decision engines to give customer an actual approval
    while they are still completing the form.  We are seeing companies that provide this technology offering
    dealers a pricing plan that is based on the number of completed online credit applications that are
    approved, with a lesser fee charged for the declines.

    •        Cost Per Conversion (CPA variant) – This is advertising that is placed online and then
    charged to the dealership based on the cost of acquiring an opportunity to do business, typically
    calculated by dividing the total cost of an ad campaign by the number of lead forms and phone calls
    generated by a campaign specific microsite. The definition of "Conversion" varies depending on the
    situation: it is sometimes considered to be a lead, a sale, or a purchase.  

    One company that I know was offering this type of program in the past is Autotropolis.  Here’s what their
    website at http://www.Autotropolis.com/SEM says:

About Our Program:
    We build a full blown dealership website geared specific for Pay Per Click advertising. This website is 100% branded your dealership and we
    advertise it on all the top search engines.

100% Performance Based
    Here's the catch: YOU ONLY PAY PER LEAD!!! We put up 100% of the advertising dollars and you only pay on workable referrals we generate!

A Company That Works Hard For Your Dealership
    You know when you have Autotopolis.com manage your Dealer's Search Engine Marketing, that you have a company that only gets paid on production, not
    traffic that does not convert! Clicks mean nothing unless you can convert that traffic to workable leads!


    I have personally used Autotropolis in the past to buy 3rd party leads and I have met with several key
    managers at Autotropolis on several occasions.  There services were of genuine value when I used them,
    and their managers seem sincere and on the “up and up”.  However, I am not sure what they are actually
    selling with this product, after all it looks like the dealer would be buying leads, but they sell it as if you are
    buying Search Advertising… And, I am especially wary of a 3rd party lead provider making this type of
    offer look like Online Advertising… I mean, are they going to let you use the website to drive traffic into
    your showroom?  How would they get their CPA based fees then? I am certain that there are many skeptics
    of this type of deal coming from a lead provider. On the other hand, if anyone should know what it
    takes to churn out leads from website visitors, it is those clever 3rd party lead providers!
Using Other Sources for Digital Advertising:

    •        Use Pay-Per-Click Advertising Campaigns to drive traffic to your web site. Besides opening up an account
    in Google Adwords, also set up your dealership with ad campaign management accounts in MSN AdCenter and
    Yahoo! Panama.

    •        Purchase display advertising space in local company emailing lists and eNewsletters         eNewsletter for
    your dealership, or convince your regional dealer advertising association to create one for all dealers of your
    brand in your market.

    •        Place display ads and buy text based links to your dealership’s web site that are published on popular
    automotive web sites such as AutoTrader.com, Cars.com, Edmunds.com, KBB.com, dfwVehicles.com and others.

    •        Visit www.IndustryBrains.com and check out their “Premium Site-Specific Marketing Solutions for Automotive
    Advertisers. Target your pay-per-click ads to focused, site-specific categories on premium web sites like Motley
    Fool, BusinessWeek, PC Magazine, CMP TechWeb Network and more.  Dealers can use IndustryBrains.com to
    deliver display ads to premium publisher Websites on a CPM bid basis. Brand and sell to your dealership’s best
    customers.

    •        Visit www.Marchex.com to see how they provide dealers with the ability to use their Marchex Adhere solution
    to reach tens of millions of shoppers searching for products and services on sites beyond Google.

    •        Go to www.AdReady.com and see how to customize their automotive ad templates for your dealership.  As
    with creating a new Google Adwords account, the first step to running a campaign using AdReady is to customize
    an ad. You can select a template from their automotive campaign library, customize it and start your dealership’s
    campaign using a credit card and about 45 minutes.

    The Power of Craig’s List

    •        Have links to Virtual Test Drives (VTD) in multiple vehicle for sale posts on Craigslist (but use different
    presorted inventory search links so your site is not flagged as a
    spammer site).  An example of one of these links would be:
    www.SanDiegoChevyTahoe.com

    •        Place classified Ads on CraigsList.com with links to each
    vehicle inventory details page inside your website. Example:
    http://www.advantagecars.com/inventory/details.php/VIN_
    5N1ED28T14C671620/ID_group1/UI_detail_group1
Online Ad Campaign
Daily Budget
Clicks
Impressions
CTR
Avg CPC
Avg CPM
Total Cost
2008 Chevy Malibu Test Drive
$75.00
69
28,506
0.24%
$2.20
$5.33
$151.51
2008 Chevy Tahoe Hybrid
$75.00
420
99,143
0.42%
$1.83
$7.74
$767.43
0% APR 72 Mos. 4th of July 72 hr Sale
$500.00
399
452,546
0.08%
$3.32
$2.93
$1,325.11
CPC Keyword Search ADP Template #7
$100.00
722
229,748
0.31%
$2.00
$6.30
$1,446.62
We Want To Buy Your Chevy Campaign
$100.00
648
140,879
0.45%
$3.53
$16.25
$2,288.90
Get Free Gas for a Year
$100.00
910
581,781
0.15%
$2.85
$4.46
$2,592.23
CPC Site Targeted ADP Template #3,690
$100.00
1,597
13,427,690
0.01%
$1.69
$0.20
$2,701.60
CPM Site Targeted ADP Template #5
$100.00
2,372
4,144,723
0.06%
$1.37
$0.78
$3,241.90
Total - 9 Campaigns
$1150.00
7,137
19,105,016
0.04%
$2.03
$0.76
$14,515.30
    In the campaign examples shown above you can see that one campaign generated over 13 million
    advertising impressions but had a Click Through Rate (CTR) of only 0.01%.  Yet, another campaign
    for the same dealership had a CTR of 0.45% which is 450% higher!  Can you tell which campaign had
    a very targeted target audience with an objective of maximum click-throughs versus which campaign
    was about creating awareness and floor traffic?
Getting Assistance

There are several qualified sources of consulting and training
that can get you started and off in the right direction, including
Jim Bernardi who is the publisher of the Automotive Dealers
Network newsletter and publishes this site.

As most people reading this know
, I work for the ADP Digital
Marketing Group and we provide an intensive 2 day consulting package
designed to get dealers started with self-managed digital advertising campaigns. At the end of the 2 day visit, the
dealership has functioning ad campaigns running online.  The way we get it done is with a very specific agenda and a
highly focused series of action items.  If your store needs to be sold on digital advertising, this is NOT the program for
you!  But, if you are ready to get started and just want a little assistance setting it up the first time, our ADP Digital
Marketing Consulting Team is a great way to do it.  Contact Jim Jensen at jjensen@bzresults.com or by calling him at
347-678-4135. You can also get information and enroll online at http://www.adpdigitaladvertising.com/ . Jim is one of the
best consulting team leaders I have ever worked with and he will fit the right person for your dealership from the 20+
experienced pros on his team.
It is important when
considering what
percentage of a dealership’s
total advertising budget
should be allocated to digital
that we factor in certain
subtle but powerful “online
vs. offline” realities.
Open A Google Adwords Account and Learn All About Digital Advertising
Performance Metrics by Managing Your Own Campaigns.

If you and your dealership are even halfway serious about digital advertising, then you should open up a Google
Adwords Account… That means you have to find a credit card that you are authorized to use on the dealership’s
behalf!  

Go to http://Adwords.Google.com and create an Adwords account for your dealership.  You will need to follow the
steps below to get started:

    1.       You will need a destination URL, or web site address that is valid and meets Google’s various
    requirements, such as no pop-up ads or coupons, in order to create your first valid Adwords
    campaign.  You cannot open your account without creating a campaign, although you can pause the
    campaign so no money is being spent, other than the $5 registration fee.

    2.       You will need to be the authorized user of a valid credit card that your register with Google in order
    to set up your dealership’s Adwords account.

    3.       Google will charge the credit card you use a $5.00 one time registration fee.

    4.       You will need an active email account in order to create a Google Adwords account.  It is
    recommended that you create a Google email account for use by the dealership by going to www.
    GMail.com and signing up for the free service.

    5.       Create a keyword based search advertising campaign using Google Adwords that is geotargeted to
    local customers and is targeted to keywords like to be used by automotive consumers seeking your
    dealership’s products and services.

    6.       Use your Google Adwords account to buy display advertising (banner) space on popular websites
    using geotargeted placement campaigns your ads only appear to locally based web site visitors
    within the dealership’s primary market area.  Geotargeting and paying on a Cost Per Thousand
    (CPM) impressions or Cost Per Click (CPC) basis is required for a good ROI.

    7.       For detailed and expert instructions on Google Adwords, visit this web site: http://adwords.google
com/support/

After you start creating and managing your Google Adwords campaigns, you will be able to look at your dealership’
s campaign summary screen and see a snapshot of a month’s Digital Advertising Key Performance indicators
such as:

         Total Campaign Cost for Time Period (day, week, month, year, ytd, etc.)
         Average Cost Per Thousand Impressions (CPM)
         Average Cost Per Click (CPC)
         Click Through Rates (CTR)
         Total Impressions
         Total Clicks
         Daily Budget Limits that are currently in Place


The matrix shown below is an example of what a dealership’s digital advertising campaigns might look
like after getting them set up and running them for a month with a $15,000 Google Adwords
Advertising Budget:
part 1                   part 2