Stop Barking up the Wrong Tree—Paid Search Delivers the Best ROI
Last year I offered dealers a free Excel spreadsheet tool that allowed them to easily categorize their marketing investments into buckets aligned with the concepts introduced in the book Winning The Zero Moment of Truth.
The Zero Moment of Truth (ZMOT) spreadsheet has been used by hundreds of dealers who wanted greater insights into their marketing budgets. The spreadsheet also estimates the cost to drive a consumer to a dealership website and compares those costs across media strategies: newspaper, radio, cable TV, direct mail, and paid search.
One of the most common realizations from dealers using the ZMOT spreadsheet is that they had the wrong impression about the ROI of paid search. Many dealers have limited their paid search budget to around $2,500-$4,000 per month, per store, because they think it is expensive. Yet these same dealers continue to spend $10,000 to $50,000 a month on traditional media because “it’s what I understand.
Clarifying paid search
When I talk about paid search, I am talking about paid advertising on Google, Bing, Yahoo, and private advertising networks. The ad formats include text ads, display ads, and strategies that include retargeting, promoted videos, and video pre-roll. Advertising costs are either charged on a “pay per click” (PPC) model or “cost per thousand” (CPM) impressions for ads.
Some dealers have their paid search managed by OEM reimbursed programs like the Cobalt Digital Ad Package (DAP) for GM dealers (www.cobalt.com/pdf/LesStanford_SuccessStory_f1_062310.pdf) or the Chrysler Promotional Allowance Program (PAP) package (www.haystakchryslerpap.com/program.html) that includes Haystak paid search management. Whether you manage paid search internally, through a boutique agency, or an OEM approved vendor, you most likely are not spending enough on paid search.
Comparing costs to drive traffic
You might be surprised to know that traditional media is at least five times more expensive to drive a local, in-market consumer to a dealership website, when compared to paid search. In some cases, it can be 10 times more expensive. So the real question is, how is your marketing strategy working to increase traffic to your website?
An average per-click cost to car dealers using Google Adwords is reasonable at $1.80 per click, which can drive a qualified consumer to their website to view their inventory. My analysis of hundreds of dealer budgets revealed that it costs between $10-$20 to drive a consumer to a dealer’s website using radio, TV, or cable TV. In that light, is paid search really expensive? Have you been critical of the wrong marketing partner?
The more local consumers dealers can get to view their in-stock inventory, the more sales opportunities will be generated. This strategy requires that dealers are pricing their inventory competitively and that they are merchandising their cars effectively with ample photos, descriptions, and third-party documentation.
Let me be clear. I am not against dealers investing in traditional media. I believe in a balanced approach that achieves the marketing objectives and readiness of the dealership. My beef is that paid search budgets are often limited, when the data screams that the budget should be increased.
Paid search as a requirement
In addition to cost considerations, paid search is becoming a required strategy due to changes in search engine algorithms and how consumers use the search engines.
If you haven’t done a search on a smart phone recently, take a minute to search for “Ford Dealers.” You will notice that on a smaller screen size, the two paid ads have a significant advantage over organic listings. In fact, mobile ads are converting 300 percent better than traditional SEM ads on full size computers. The “click to call” feature on mobile ads in campaigns that we manage have generated as many calls as the actual clicks to the dealer’s mobile website.
For mobile devices, the 10 paid search ads normally found on desktop computer search results are no longer presented, which means that the dealers’ bidding strategy must be to get in the top two placements for mobile devices.
Using paid search to intercept video
Over 173 million U.S. residents watch video online at least once a month. That represents 73 percent of all online consumers. Consumers are digesting their news, sports, music, and financial updates using video. Any doubts? Visit CNN.com to see just how many of their front page stories are videos.
Dealers can reach this very large, local audience just like they once did using cable and broadcast TV. Video pre-roll advertising allows dealers to create 15 second and 30 second video commercials that play before the consumer selected video starts. The ROI of video pre-roll, when implemented properly, is outstanding.
Dealers using video pre-roll accomplish their goal to present their personality and call to action to local consumers, similar to cable TV, but with an added benefit, thousands of direct clicks to their website. When you do the math, video pre-roll delivers hundreds of thousands of messages for free. The consumers that do click the pre-roll video and are directed to the dealer’s website, and it costs the dealer no more than what he/she would pay for a display advertisement.
For dealers that think SEO trumps paid search
Search Engine Optimization (SEO) investments are still relevant, important, and deliver increased online visibility. External links from blogs, relevant websites, and videos are still part of Google’s ranking algorithm. With recent changes in Google’s marketing strategy, however, it is clear that paid search will have the most “reach” across more device types and media formats.
The recently documented BETA test of the Google Advisor product in the San Francisco Bay area for new car advertising is a warning shot over the bow. The Google classified ad unit, showing new car thumbnail photos and pricing from local dealers, is positioned right under the paid search area on page one. The goal of the program is to generate “low funnel” sales leads to dealers.
This means that the “above the fold” area for paid search products on page one has practically doubled. The introduction of this new paid per lead ad format will push down organic search results for “low funnel keyword” searches. With a strong paid search strategy in place, dealers’ organic results will not be able to pick up the slack.
It would be naive for dealers to think that they only have to focus on SEO and not paid search. As I mentioned earlier, paid search is not the most costly investment to drive qualified consumers to view the dealers’ inventory and research their unique selling proposition.
If dealers need to cut expenses, it should not be SEO or paid search. Unfortunately, this is not the case. Dealers, when facing slowing unit sales, most often embrace traditional media as the solution. This decision throws more money into their most expensive strategy to drive consumers to their website.
Setting an effective paid search strategy
If you have been guilty of thinking paid search was expensive, or you believe in the ROI of paid search but need a stronger strategy, I have some advice to hone your marketing budget. I will be conducting a three part workshop series at AutoCon 2012 with Anita Avram who is part of the Google Adwords team that supports car dealers.
The paid workshop series will cover all the latest strategies for using paid search to drive more qualified sales leads and sell more cars. We will cover mobile search, retargeting, display advertising, video pre-roll, and promoted video on YouTube.
The three classes will deliver outstanding insights and case studies of dealers who are using paid search to dominate their markets. Attendees will walk away empowered.
Dealers who are ready to take their paid search strategy to the next level should register their team for AutoCon 2012 by visiting: www.AutoCon2012.com
If you would like to receive a free copy of my ZMOT planning spreadsheet you can request one by sending your contact information to: email@example.com
The final word on paid search
Paid search is not expensive. When you look at the numbers, paid search is your most effective tactic to reach online consumers in the Zero Moment of Truth. If your paid search budget is not maximized or your strategy is not using all the advertising placement opportunities, you are leaving local car buyers in the hands of your competitors.
Brian Pasch is the CEO of PCG Digital Marketing. For more information, please call 732-450-8200 or visit www.pcgdigitalmarketing.com.