<< by on March 14th, 2008
In recent days I’ve spent a great deal of time with people who work in and around online marketing for Automotive Original Equipment Manufacturers (OEMs). From executives to one of the largest search engine marketing firms in the world, to representatives of the biggest search engines and web analytics professionals who recently attended Omniture’s last Analytics Summit attended by most of the top Automotive OEMs Web Analytics Managers.
Automotive OEMs are some of the biggest spenders for Pay Per Click Advertising in the world. But the overwhelming theme of my conversations with all of the above referenced people is just because you spend a lot of money doesn’t necessarily mean you know what you are doing. And in the case of some the Search Engine Marketing Agencies who manage these huge advertising budgets with management fees based on media spend, it doesn’t necessarily mean the best interests of their clients are being served.
It’s not necessarily news that the Automotive industry is bleeding cash and quarterly losses in the billions per quarter are common place. Issues of quality or perception of quality of the products being sold put aside, marketing executives at these companies need to take a closer look at how their online marketing budgets are being spent.
Problem # 1 – No clear goal for what the purpose of the Automotive OEM’s website and online marketing campaigns are for. Too many marketing executives and marketing agencies are putting the focus in the wrong areas – Branding and Traffic. The real goal should be driving people to dealerships to buy a car.
Yes searchers need an online form of “brochure-ware” to answer all their questions about vehicles they are interested in, but the goal of selling seems to often get pushed aside. Anyone can pay to bring traffic, and often untargeted traffic, to a website. The art of converting the traffic into sales too often gets ignored in automotive.
It’s my understanding from the above referenced authorities in this industry that several of the biggest spenders in the Automotive OEM segment are still only tracking page views and online quote request leads as Key Performance Indicators or “KPIs”.
It’s no big secret what the KPIs leading to actual success on the car lot are. Inventory Search, Dealer Location Searches and Configure Your Own Vehicle Online are some of the most common desired actions that effective Automotive OEMs track as success metrics when paying for search traffic. However, one of the most effective KPI actions, Inventory Search, can’t even be found on most luxury brand OEM websites like Mercedes Benz, BMW USA and Land Rover US. What better way to get people on a car lot than to actually show the searcher that you have what they actually want?
Problem # 2 – The Fox is Guarding the Hen House. Most Search Engine Marketing Agencies are compensated based on a percentage of the online media spend. Their goal, first and foremost is to ensure the budget gets spent first and worry about the actual success generated by the spending second.
My theory as to why many OEM marketing executives don’t question this is because they are treating that online budget spend like its for TV, Radio, Print and Bill Boards and don’t realize that success and failure of Pay Per Click advertising can be tracked down to the keyword level. They are locked into the offline world of “Brand Awareness” being the goal and are either intimidated by the complexity of online marketing or the extreme high volume of keywords and ad copy being used. It’s a failure to adapt to the extreme effectiveness of online marketing vs. the harder to track offline media world.
I’ve taken over Automotive OEM accounts from agencies who have managed to spend first and have seen extreme waste of online marketing budgets first hand. In many cases, advertising spend was being wasted in large amounts on keywords for cars that the OEM didn’t even have in their vehicle line up and wasn’t planning on having. One of the prime culprits being a keyword like “Hybrid Cars” that the OEM didn’t have at the time and still has no immediate plans to have in the future even a year later.
I still have a hard time actually believing what I heard, with regard to how Search Engine Marketing Campaigns are being run by some of these gigantic players in the automotive industry and their Search Engine Marketing Agencies. But, trusted authority after trusted authority kept independently reiterating the same information.
Knowing my own OEM client’s success cost metrics down to the keyword level, I know what I’m paying per KPI action. My team bids according to the KPI cost metric. Seeing how OEM competitors oftentimes bid extremely higher on those same keywords we bid on to be in higher or top ad positions, I know that many of them are bidding with no regard as to actual return on investment on those keywords.
I can tell you from my own experience of taking over a poorly ran OEM Search Engine Marketing account, that +450% improvements in success metrics have been achieved with almost identical year over year budgets just by using the same cost per conversion action best practices utilized by much smaller spending online industries that have understood how online marketing is supposed to be done and the client is making money.