Discussion with Ed Morse Automotive Group – Part II of II
Welcome back to the conclusion of my interview with Peter Deiser, E-Commerce Director for the Ed Morse Automotive Group (ranked #34 on Ward’s MegaDealer 100 List for 2007). Last time we covered the evolution of online vendors in the retail automotive industry over the past five years. In short, internet vendors went from a welcome few five years ago to a faceless, fiercely competitive mass today. Peter pointed to long term partnership and consistency as the keys to success in today’s cluttered and competitive landscape.
We pick up the discussion as we turn a bit more operational in scope. The focus of conversation covered below lies with product and process changes over the past several years that are currently steering the online automotive retail industry as it continues to grow into maturity.
The final quote from Mr. Deiser last time, which spoke so well to the evolution of quality and service among vendors, was:
The vendor side is ever evolving, just as the dealer side. What is considered a “must” today will evolve into something completely different tomorrow.
This very same statement applies directly to the evolution of products offered and process by which these products are acquired or implemented.
NS: With change and evolution being such a consideration in your business, what do you see as the most significant product evolution of the past several years?
PD: In the late 90’s, when E-Commerce made its debut into the Dealer world, things were simple. If you bought a service, you bought their leads, end of story. Now, these vendors buy their leads mostly from lead aggregators rather than producing the leads themselves, as they did in the past. The biggest issue here is that the aggregators have already sold (and resold) the same leads multiple times to different lead vendors. Lead aggregators have changed the marketplace in such a negative way that dealers are shying away from 3rd party leads altogether. The bottom line is that there is no such thing as an exclusive lead any more, no matter what your contract says!
NS: Has this decline in lead exclusivity led you and the Ed Morse Organization to rethink your approach to online marketing strategy or budgeting practice?
PD: We try to find a good balance for online spending within the E-Commerce department. Although we do spend a portion of our budget on buying 3rd party leads directly, we are trying to minimize this expense as the aggregators that are out there have ruined the market.
As a dealer group, we have been focusing most of our recent efforts on Paid Search (SEM) with Jumpstart. We have found, as many other Dealer groups on the forefront, that driving quality traffic to your website is your best bet to increase traffic, both online and on foot. While it is obvious that this is a tough time in the industry, this may be in fact, the best time to increase your dollars in this particular medium. The ROI is second to none and Paid Search offers dealers the most control, flexibility and, most importantly, measurability when spending their online advertising dollars.
NS: You made a great point that online marketing drives traffic to your store ‘both online and on foot.’ I think a lot of dealers tend to separate ‘internet marketing’ as its own business with its own customers. You certainly seem to favor internet marketing as the best way to attract and engage prospects or customers across the board. Is that accurate?
PD: Being in the E-Commerce Department would seem to make me jaded toward Internet marketing only. However, despite what everyone thinks, we all have the same goal in mind: the complete success of our Company. Just because I concentrate my efforts on E-Commerce, does not mean that I am not interested in the success of Fixed Ops, or traditional retail floor sales. All of these branches intertwine and overlap. The success of one department can easily be overshadowed by the failure of another. It is only when the store experiences success overall, that we can all pat each other on the back.
NS: But if the overall success of the company is the goal, and internet marketing, as you said earlier, provides ROI second to none with better measurability than other mediums, do you think marketing budgets will ever line up with the 90% of auto shoppers researching online we always hear about?
PD: This seems to be THE hot topic in today’s market: “How much do we spend online?” Although more and more of every dealers’ advertising budget is slowly getting shifted to E-Commerce, we must know when to say when. It is true that most shoppers do research online and dealers must have a presence there, but I do not foresee a time when dealers will allocate 90% of their budget this way. It would be foolish to put all of your eggs in one basket. We feel it is important to constantly monitor the shopping habits of our customers, and adjust our spending accordingly.
NS: Do you think dealers will follow suit with manufacturers, like General Motors announcing a shift online for half of its budget?
PD: OEMs have started dumping big bucks into E-Commerce and this was a wake up call to many dealers that have waited until the last minute to get on board. Unfortunately, in the race to get on board, many dealers have gone overboard! You cannot go from 100% traditional media spend to 100% online media spend, sorry E-Commerce vendors! The shift must be gradual and have an end in mind. The end being that elusive “perfect” media mix: just the right amount online and in traditional media expenditures. This may vary greatly based on your market, your client base, your brand, and your experience as a dealer.
NS: With all of the General Managers you work with or know, is the transition of marketing dollars moving online being welcomed or met with resistance?
PD: This answer would vary greatly from General Manager to General Manager! I will say that the consensus among most General Managers is that online advertising is the place to expand in the current marketplace. More and more General Managers are asking to redistribute advertising dollars to online mediums – something that was not as prevalent just a few years ago.
NS: Now that dealers are starting to embrace the evolution of marketing, is there anything vendors or partners can provide to help support or speed up the process?
PD: This is a natural shift that takes time. No one wants to change the way they do business; they have to in order to follow consumer habits. If the world shifts online, then we must follow. The OEMs have helped this transition by downright insisting that dealers follow their lead into the online world. For some dealers and groups that already had their eye on the prize long ago, the response was “it’s about time”. However, not all dealers were ahead of the curve and they actually needed the OEM to force their hand.
NS: Can you shed a little more light on what you mean by OEMs forcing dealers hands to move toward online marketing?
PD: A new trend that is emerging is that vendors are starting to sign monstrous, long-term agreements with the OEMs. The OEMs are, in turn, forcing the dealers to use specific vendors whether they like it or not. At first glance, this seems like a smart play on the vendor’s part. They sign enormous contracts netting them millions of dollars; however, there is such a thing as too much new business and these vendors are starting to show signs of this weakness. From a dealer standpoint, no matter how well you run your stores, if you were to buy 10 times as many stores as you are currently running in ONE DAY, you will fail. It is too much to keep up with and the growing pains will prevent success. This is exactly what we are beginning to witness, first-hand, as vendors sign large scale agreements to encompass thousands of new stores across the country all at once. The OEMs will eventually learn from this mistake and hopefully, this trend will not repeat itself. Unfortunately, we are all forced to ride out the storm together.
NS: That practice also seems counter-intuitive to our earlier discussion around vendor’s becoming partners and providing more consistent, personal service. In an environment forced to scale up so quickly, I would think those traits could be the first casualties of the massive revenue jump. Do you have any final thoughts for both the online vendors out there (perhaps about to make their next cold call) and the dealers reading this article (perhaps instead of replying to the last cold call they received)?
PD: In the long run, it is all a learning experience for everyone. Being able to adapt to a changing market is truly the key to success.
And on that note, our conversation came to a close, and now, so must my article. I very much value Mr. Deiser’s opinion and have been fortunate to work with him as a partner for about 3 years now.
I hope that you, like me, can pull out some quality information from this conversation and turn it into a learning experience. We all work in a still young and quickly growing industry and it is up to us to guide the path it takes toward maturity.
Have fun out there and I look forward to seeing where we take this industry next.
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