What We Believe About Automotive Dealership Marketing on the Eve of NADA 2020

  Aharon Horwitz

(Post by Aharon Horwitz, AutoLeadStar CEO)

At AutoLeadStar, we’ve quietly built the automotive industry’s most advanced platform for dealer-driven marketing. On the eve of NADA 2020, I wanted to share a bit about the “why” that is driving our company, and what that’s lead us to create.

First, we’re pretty convinced that the following will become true between NADA 2020 and NADA 2030:

  • 3rd Parties are Fading, Dealer Direct to Media Will Dominate: For the past few years we’ve been operating under the assumption that the party is over for the 3rd party providers. In our minds there is simply no way, considering today’s and tomorrow’s tools and capabilities, that dealers will spend money and brand equity on 3rd party aggregators. Rather, they’ll just acquire traffic (and eventually leads/purchases) directly from the major search engines and social networks, bringing these car buyers to their own digital properties.
  • “Tier 3” Agency Fees Will Undergo a Correction: We believe that the agency fee structure as we know it is on its last legs. For a dealer, no matter how large, to spend 7K for someone to, manually for the most part, run their Google Ads and FB account, doesn’t add up. Agencies will make up for this by using tech to handle more accounts, or focus on high-premium creative plays. There will be a huge migration of direct marketing–Google, FB, Twitter, etc.–to dealer in-house teams and software tools; surviving agencies will evolve into an entirely different role. Smaller agencies that serve as trusted advisors/consultants will best weather this storm and emerge.
  • Personnel Shuffle: Every dealer will continue to have a marketing/internet director of course, but the makeup of the team will come to resemble other $60 million+ revenue clicks-to-bricks enterprises. Software will drive change: less menial updating of marketing platforms for in-house teams, but instead monitoring, guiding and curating. The in-house staff will focus on creative, one-off demand-gen campaigns, and other complements. Data and business intelligence analysts will become universal. Agency savings will go to personnel like this, and software.
  • Vendor Consolidation is Beginning When it comes to functions on the dealership’s website and data analytics, there will be a consolidation. To create a unified customer-centric experience for shoppers, there needs to be a single brain behind the website optimization and the marketing automation. We believe this consolidation will be very good for some vendors, and ultimately save the dealers hassle and expense.
  • OEM Programs Become More Accessible to Innovation: Innovation is being stifled by opaque OEM programs, high-fees, slow approval, and coop restrictions. This hurts dealers, and will change as the landscape changes. OEM’s will understand the value in making it easier for proven “startups” like ours to quickly deliver value to in-program dealers.  While, at a glance, it seems the opposite trend is happening now, we believe that is going to be corrected. Smarter people than us have written about this and we think the change is coming, either top down or bottom up.
  • eCommerce Will Evolve Organically: We believe eCommerce, both as a buying behavior and as software, will evolve rather than emerge from one dominant platform (today there are like 40+ players, which in many ways confirms this hypothesis). This evolution requires the patience to truly understand what customers want and how all the automotive marketing, inventory, payments, finance, and desking systems can seamlessly deliver that experience. We see the eCommercification of AutoLeadStar as a whole-product experience, not as a feature, module, or “new” thing we’re going to build.
  • Data Hangs In the Balance: The battle for car buyer attention online is won and lost in microseconds. Data acquisition and processing is the edge to win those contests: who can close the sensor to solution loop most quickly. Data should become more and more available for dealers to leverage, but we don’t know if this will happen. The answer to this question is in the hands of some very strong players that have different interests than the dealers when it comes to their data. We, and many of the newer auto companies, are building in a manner to leverage data, and also make data accessible to dealers and other vendors. We hope this trend takes, and there have been some good signs on this front from bigger players like CDK.

Now, in light of these convictions, here’s how we’ve built our platform to reflect the reality we believe is coming by NADA 2030:

1) Acquire – to solve for dealer-direct marketing and software taking the lead in the 2020’s: Acquire is our next generation engine for getting found online, and it goes the farthest in the industry when it comes to automation and leveraging smart optimization. We believe that, from the data we’ve analyzed, dollar for dollar, Acquire provides the best cost per quality lead in automotive. Period. It works by fully and thoughtfully automating every major aspect of search engine marketing (what people often call PPC), display marketing, retargeting and social media marketing. When a dealer first sees Acquire build out hundreds of ads and tens of thousands of keywords, and then sees it optimize tens of times a day, it feels like magic. Very quickly–because it is so transparent and open–dealers realize it’s not magic, just smart SaaS leveraging data, direct access to the APIs of the marketing platforms, and a tremendous amount of testing. Dealers have access to it all, including the raw underlying accounts.

2) Connect – to solve for vendor consolidation and the need to have customer-centric shopping experiences online: Connect has consolidated the functions of 5-6 vendors on the website into one platform, raising the conversion rate for dealers on the website. This includes AI-chat, trade-in, appointment booking with a VIP option, offer presentation, review display, and more. This product makes dealers look good, and it’s smart and focused.

3) Explore/Data – to solve for the challenges of leveraging data on behalf of dealers: We have built 7-8 frameworks and tools that enable dealers to get more data in play, more quickly, than ever before. This is ready for more, but already outperforming with the data we do acquire.

Those who have used our full stack–Acquire, Connect, Explore–know that we’ve overcome some of the industry’s largest technological and cultural obstacles to solve for the reality we believe is coming. The AutoLeadStar platform gets dealers found by shoppers online, and makes the dealer websites feel really smart when the shoppers arrive to browse. This tech is dealer direct and customer-centric. Dollar optimized, data-driven. Quality and sales focused. Smart, automated, adaptable. Ready to be eCommercified where relevant.

As above, we believe this reflects the future needs of dealers: expand the number of quality leads acquired for the same budget (i.e. lower the Cost Per Lead), and make lead conversion optimization an easy one-vendor integration, rather than a daily 5+ vendor struggle. Do this while enabling dealers to manage their software and marketing directly (our system can operate as a full SaaS product or be supported by our Account Managers) and reduce wasted spend.

As we continue to evolve our company, we hope to contribute to the success of our auto dealership clients. The automotive industry being one of the great engines of US social mobility and job opportunity, it’s a true honor to be part of that journey.