Co-Authored by Danielle Reyes, Senior Director of Project Management
Thinking about using your ad agency to manage your automotive SEM?
Why it could be a huge mistake and the questions you should be asking before wasting your valuable advertising dollars.
The other day a dealer told me she was considering switching her dealership’s SEM to their ad agency. It seemed like a good idea in their mind (consolidate vendors, simplify processes, etc.) and the agency had the dealer convinced they could handle it.
I started asking the dealer questions and her confidence quickly began to fade as she realized she was making a huge mistake. Well, she’s not alone. Dealers across the country are making the same mistake, which compelled me to put together a comprehensive list of questions (and ideal answers, as well as points of consideration) as a reference for dealers.
Dealers: I urge you to ask your agency these important questions before you commit a significant part of your advertising budget to them.
The Agency Conundrum
It’s no surprise that many agencies these days are claiming to be experts on Google and it all comes down to one thing: money, mula, cash, whatever you want to call it – they want yours. Agencies are behind in the paid search arena. They’ve finally woken up and understand that paid search is a high-performing advertising channel that is drawing a lot of budget away from the more inefficient channels they traditionally represent. They’re now trying to play catch up. The problem is many of them do not possess the expertise to deliver optimal results when it comes to paid search marketing.
Don’t get me wrong, they may understand your business, but do they have the technology, resources, transparency or time to execute and deliver comparable or better/optimal results? And after all, your bottom line is what matters most, right?
Historically, agencies have survived (and thrived) on retainer fees and by taking a percentage of media buy from newspaper, TV and Radio. But as advertising is quickly shifting to digital, these agencies have to find new ways to retain revenues. One of these ways is to take a portion, or percentage, of your digital ad spend for themselves. And they sometimes do it in a way that’s hidden from you. In other words, they lack transparency and in this case, what you don’t know can hurt you.
Digital Ad Spend On The Rise
According to eMarketer.com, digital ad spend will nearly double between 2014 and 2020, while TV, print and radio will slowly decline over time. This shift is in the billions of dollars (reaching $187B on digital alone in 2015, according to TechCrunch).
This trend will no doubt continue well beyond 2020. With that increase in digital ad spending, agencies are working hard to make sure they get a good portion of that pie. And there is nothing wrong with this. Dealers have done the same thing over time by adding new profit centers to their dealerships in the form of service, parts, F&I etc. But, in many cases, ad agencies are doing it at the expense of your advertising budget, by taking a larger percentage of it for themselves than you may even be aware of.
And to top it all off, much of the time, they’re delivering sub-par SEM services because they lack the technology, data, expertise and time needed to run your campaigns most effectively. They provide the lure of being “one stop shops” that can “do everything” (and I can certainly understand the appeal of having everything “under one roof”), but the reality is often that while dealers do get a wide variety of products and services from a single vendor, the quality and results from each of those services can be lacking. And in some cases, dealers may not even be aware of what they’re missing out on, or how much more ROI they could be getting from their digital advertising investment.
I recently met with a dealer who was selling 60 cars a month and when they asked their agency how they could push more inventory, the agency told them the $36K they were spending on paid search wasn’t enough? Ummm…Really?!? How much is this ad agency making off of that budget?
Did you know that according to a Search Engine Journal audit, 76% of AdWords budget is wasted? I don’t even want to try to do the calculations on how much that actually amounts to each year, but it makes my head hurt just thinking about it.
Weed Out The Bad Apples to Find the Good Eggs
Now, you might be thinking I’ve been a bit harsh towards ad agencies. And you might be a bit right, but in this slowing market, with increasing competition, it’s important to know you’re spending your advertising budget as wisely and effectively as possible. Don’t get me wrong, there are a lot of great agencies out there. We work with quite a few! These agencies understand that they’ll be able to provide better SEM results to their clients using advanced, auto-specific technology rather than doing it themselves. We’re always looking to partner with agencies so they can provide the best digital advertising services to their clients.
Which brings me to “The Questions”… Before you sign the dotted line, I would strongly encourage you to ask the agency/ies you’re considering the following questions (and listen very carefully to their answers) so you can feel fully confident in your choice. I’ve organized the questions into the following categories to make them easier to ask, consider their answers, and see the bigger picture:
- Strategy and Expertise
Ask Your Agency (SEM Provider) These Critical Questions Before Making The Switch
- Are you transparent?
Transparency means more than just having access to your SEM accounts. Account ownership, billing structure and reporting are 3 additional factors to consider when evaluating if your agency is being (truly) transparent with you.
- Will I have ownership of my accounts?
One of the biggest mistakes I see is when dealers don’t own their digital marketing accounts, including: Google AdWords, Google Analytics, & Bing. If you ever switch providers, keeping this data matters. Why? Imagine if you lost your customer database and had to build it from scratch before you could market to that base again. Similarly, your retargeting and digital marketing audiences, quality scores, historical paid search data and more, are all gone when you start over in a new account. Don’t make the mistake of losing what you’ve already gained when switching companies.For the reasons above I personally would not accept anything less than total ownership of my accounts. But if the answer is “No” (and you’re okay with that), their answer to question 3 MUST be a “Yes”
- Can I have access and login to the AdWords/Bing accounts?
If you can’t own the accounts, you ABSOLUTELY MUST MAKE SURE YOU CAN HAVE ACCESS. Period, end of story. If you ask this question and they even hesitate before saying yes: ‘Run, Forrest, run…’ This means they will be making more money from your SEM than they want you to know about – and can’t be trusted. Unfortunately, I see this often with ad agencies. They’re used to making a percentage off media spend and often feel it should also apply to paid search
- Do you charge a percentage of the ad budget? Or a flat fee? Or both?
While I would say it’s okay for some dealers with smaller budgets to pay a percentage of spend, for the most part you want to avoid it. Some agencies even charge a flat fee PLUS a percentage of spend, which is really double dipping. This goes back to having access & visibility into your accounts. They should be more than happy to show you exactly what (and how) they’re charging you. And again, if they can’t – say it with me – ‘Run, Forrest, run…
- Do you use Google Analytics to track performance (and as the single source of truth)?
Many agencies will send reporting to dealers that is not necessarily aligned with Google Analytics. The data sent by agencies is akin to an old four square sheet at a dealership. In other words, they can be (and often are) easily manipulated to create the illusion of success.There is very little consistency in the industry on reporting of data. For example, I’ve seen these scenarios (and others):
A.) A Dealer’s website provider was not counting visitors that bounced in the first 15 seconds. They did this to show a MUCH longer average time on site by removing the the visitors that did not stay for at least 15 seconds.
B.) One website/paid search provider recently started tracking conversion rate based on unique visitors instead of total visitors. While it is okay to look at data in different ways, it makes it hard for a dealer to compare providers when they are not using the same measurements. This is why Google Analytics should be your single source of truth and your provider should be working with you on setting up goals. Which brings me to my next example:
C.) Inside Google Analytics you can set up goal conversions. A goal can be many things, including time on site, # of vdp views, clicking on hours and directions etc… I recently saw an agency that was counting these as conversions and showed more conversions than visitors. This is clearly a manipulation of the data (Google Analytics only counts one conversion event per visitor session) to give the appearance to the dealer that the campaign is stronger. Think of it like a four square where the agency can manipulate the data to create an illusion of success.Bottom line on data is that Google Analytics should be considered the single source of truth. I could write a whole other blog on that topic (and maybe I will!), but I digress… Dealers need to learn how to create goals in analytics and begin using this feature to hold agencies and vendors accountable. If you need help with this, we can get a Market Share Strategist to help you out (even if you aren’t doing business with us).
STRATEGY AND EXPERTISE
- How long have you been managing auto dealer SEM accounts?
Many agencies hire an SEM expert to come in, but rarely do they have experience specific to auto dealers. And this creates some serious issues. As you know, automotive retail is different than any other business. While we may be moving in the direction of online auto sales, we aren’t completely there yet. Most other internet retail is purchased through the website, but your customers need to drive their purchase off your lot, so you need to get them there and that’s where having a deep understanding of automotive SEM will be critical to your success. We spend months training our employees (who already have SEM experience) the differences between typical campaigns and automotive campaigns.
- Why are you only a Certified Partner and not a Google Premier and/or Bing Elite SMB Partner? (if applicable)
As you might suspect, Google and Microsoft don’t hand out top-tier partnerships like candy. They are only bestowed upon providers that have earned them through meeting a strict and exceptional level of criteria, experience and expertise. You’ll need to ask yourself ‘Why would I settle for an agency without these top-tier partnerships when I could work with one that does?’ Besides the fancy title, there are many benefits to working with a Premier or Elite Partner. Google & Bing provide extensive ongoing training to our team, valuable industry insights, dedicated support to quickly address any issues that may arise, and even first looks into new products, features and BETAs to keep us ahead of the curve. All of this adds value to your business & strategy.
- Which networks will you be advertising on (is your SEM spending diversified)?
Most agencies will only advertise on Google and this means you are missing out on the 41% of automotive paid clicks that come from Bing. Whoa, what??! Not convinced Bing is important? Read my recent blog: ‘A Bing Story’. You’ll be kicking yourself for not advertising on Bing sooner.Besides the big players though, what about smaller networks for highly-targeted automotive shoppers? Sure, they may not have the same volume, but it’s still a place you want to be. For example, Autoweb allows for a much more cost-effective conquest strategy than Google & Bing (cross OEM conquest). Is your agency privy to these opportunities and the strengths and weaknesses of each? Networks diversification means you reach more in-market shoppers.
- How does display fit in your overall strategy and is your display vehicle-specific (especially for certified cars)?
Display should be a part of your overall digital advertising strategy, but I say that with one caveat: it needs to be display done right. To really get the most out of display, you’ll want dynamic, inventory-based display that pulls from your real-time inventory. Technology is an important factor here as well. Having the right vehicle-specific technology, with advanced targeting capabilities, is more cost-effective than traditional display advertising through 3rd party providers.
- What is your Used car strategy?
For most dealers, 30-50% of their sales are used cars and typically they make more gross profit per used vehicle sold than new vehicles sold. This often means 40-60% of their gross profit comes from used cars. Yet, most agency’s strategy for used cars on Google and Bing is typically limited because they don’t have the technology that can pull a dealer’s inventory and dynamically generate highly-relevant ads targeted to the right in-market buyers, and automatically turn off ads once those vehicles have been sold and removed from the inventory feed, to reduce wasted spend.
- Are you using a marketing platform with bid management software to communicate with Google & Bing through their API?
If YES, is the platform proprietary to your agency and/or designed for automotive?It will be critical to the success of your SEM campaigns to understand *exactly* what technology the agency is using, it’s full list of capabilities and if it’s automotive-specific. For example, will it easily allow you to segment inventory by body style, price, days on the lot, and more to quickly adapt your campaign strategies?If NO, which 3rd party platform are you using and why did you choose that platform?Platforms like Kenshoo (Haystak/VINSolutions), Marin (Cobalt, L2T), or Acquisio are phenomenal platforms, but they are used by doctors, lawyers, restaurants, insurance, travel, etc… Automotive is a completely different shopping experience and these platforms cannot deliver the technology required. We assessed all of these, and chose in the end to build our own platform with bid management and budget allocation. Why? These other platforms could not handle the requirements we had to ensure the most effective use of ad dollars.Additionally, the use of these platforms costs money and the agency would have to pass that on to the dealer.
- Are you able to leverage market and registration data to drive campaign strategy that includes developing a robust zip code and model-level bid modification strategy?
Make sure you are using registration data and market share data at the model and zip code level to drive your strategy. You simply can no longer afford to not use data to drive your digital advertising strategy. It’s out there and you need it. I’m gonna say it one more time. If their answer is no, or they’re not sure, ‘Run, Forrest, run…’This really starts with technology; it is nearly impossible without THE RIGHT technology. The right technology gives easy access to actionable registration data to quickly create a highly-targeted strategy and it allows you to turn that data into precision driven campaigns at the make, model and zip code levels.
Phew! Did you get all that? For your convenience, we created a PDF with the above questions for you to download [PDF, 155 KB], print, share, fly a paper airplane with, use as wallpaper, etc. The possibilities are endless! But seriously, we hope these questions will help you make an informed choice about exactly who to trust with your SEM dollars.
If the agency’s answers to these questions leave you feeling at all apprehensive, we would welcome the opportunity to meet with you and/or your agency to discuss your needs and their capabilities in more detail. We work with agencies across the country, and there’s a chance you can continue to leverage many of the benefits your agency provides, as well as our best-in-class technology and expertise.
Over the years, quite a few dealers have left us to work with other agencies, only to come back because it turned out their agency did not have the technology, resources, transparency or time to deliver the same level of results.
More than ever, it is imperative that your digital strategy is firing on all cylinders, especially considering the many challenges dealers are facing right now, including:
- Decreasing profit margins
- Increasing advertising costs on a cost per sales basis
- New car incentives at an all time high
- Wave of used cars from record number of lease returns
- Weakening consumer demand
- Softening sales
- Interest rates rising
We can help your agency leverage our Google Innovator Award winning technology so they can keep your digital strategy ahead of the curve. If you want your agency to handle or help with your SEM, please call (800) 683-7940 or email us at email@example.com to set something up.
Cheers to your SEM!