But it’s Co-Opable!

Has the Time Come for You and Your OEM to Find New Digital Marketing Partners?

I spoke with a marketing manager for a good-sized group the other day and he lamented that many of their current digital marketing “partners” were wasting tens of thousands of dollars every month with no regard to actual dealership results.

I asked him why the group didn’t fire these vendors and just find companies that can truly help.

His answer: “I can’t; it’s co-opable.”

But… it’s Co-Opable!

I’ll repeat here what I told him; “If the biggest argument you have against dumping your current digital marketing vendor is that you can co-op the spend, it might be time to consider a career change.” 

Digital marketing waste and fraud is so rampant (and many of the results so tenuous) that the smartest and largest corporations are actively rethinking their earlier headfirst dive into digital. Here are just two recent examples:

• Restoration Hardware found 98% of their PPC sales came from just 22 of the 3,200 keywords they were bidding on – and all 22 were VARIATIONS OF THEIR OWN NAME! (Story Here)
• Proctor & Gamble (P&G), meanwhile, cut $200 million from its digital ad spend in 2017 and increased its reach by 10%! (Story Here)

OEMs and dealers should figure out what these two companies already have:

1. Digital marketing is not the panacea they were promised.
2. Digital marketing (at least how it works with many industry vendors) is not providing the 100% transparency that’s possible.
3. Uncovering digital marketing fraud and waste is easy if you just take the time to look.

Let’s be clear: if you think that faceless company that likely wined-and-dined their way into the hearts of your OEM’s digital marketing team to become a “preferred vendor” has an answer to this waste and fraud, you might be shocked at what you find when you start to peel back a few layers of the onion.

Unfortunately, much of the waste and fraud I’ve uncovered for dealer-clients comes from OEM-preferred vendors. In fact, I began finding so much vendor waste in SEM co-op programs that I recently recorded a 73-minute video on spotting and stopping this. (VIDEO: How to Spot & Stop SEO/SEM Waste and Fraud.)

While I am certainly not anti-co-op, I do think dealer councils should demand more from their OEM-partners when it comes to all things digital.

The Math

Oh, and it’s not just dealers that should rethink this co-op; OEMs might be losing as much in wasted and/or fraudulent spend. Let’s look at one tiny example from one month for just one dealer using their OEM’s preferred vendor for display advertising “… because it’s co-opable!” (I’ve rounded the numbers immaterially to anonymize the data):

• Total display ad budget of $2,000 per month; reportedly $1,000 each from dealer and OEM.
• Last month, this $2,000 bought roughly 145,200 display ad impressions.
• If these were bought directly from Google (as I recommend, but as the OEM and their vendor will not allow) the dealer could’ve purchased the 145,200 impressions for about $146… all-in!

Yes; you read that right! The dealer could’ve spent just $146 on their own and had all the control; instead they spent $1,000 and had almost no control over these ads.

So, how much is being wasted here? By my calculations, the dealer and OEM each threw away $927. This is one dealer; covering one month of spending; on one miniscule part of their digital marketing budget.

This begs the question: How much total waste and fraud is there in automotive digital?

(To be fair here, the roughly $1 per 1,000 impressions – a.k.a. a $1/CPM – is very doable on a regular basis with the right partner; though I have seen legitimate CPMs run as high as $1.72 recently. This is still much lower than $13-$18 CPMs we see when these budgets are paid to an OEM co-op “partner.”)

The Solution?

Okay Steve, you’ve identified the problem – that’s easy! Now, what’s the solution?

Thankfully, there are several steps dealers and OEMs can take to spot and stop this waste and fraud:

• OEM executives and dealer council members should question everything when it comes to the digital marketing recommendations and mandates that are being cast upon dealers. If P&G can cut $200,000,000.00 and increase their reach, imagine what an OEM and their dealers can do!
• Dealers must set up proper tracking and measurement that includes solid Return on Investment (ROI) metrics. If something doesn’t pencil, dump it. We were all promised better and more transparent ROI with digital, weren’t we?
• When it comes to Pay Per Click, Display Advertising and Social Media; OEMs should recommend that dealers pay the final vendor directly. This means paying Google, Facebook, Twitter, Bing with the dealership’s credit card. This way, no one is marking up costs without your knowledge.
• Fire and NEVER rehire an agency you catch stealing from you. Whether that theft was intentional or unintentional is of no concern. Allowing an inept or dishonest agency to remain in control of your budget just because you think they’re trustworthy now that you’re watching is naïve. Once a thief…
• Be mindful if you allow a digital vendor (especially SEO and SEM vendors) to do business with your direct competitors. Regardless of what they will tell you, it’s just not possible to serve multiple masters when it comes to search. For example, if you’re a Ford dealer and the nearest competitive Ford dealer is 10 miles away, which one of you enjoys the top spot on a Google Search for “Ford Dealer” if you’re both using the same company to buy your Pay Per Click advertising? (OEMs can help eliminate these conflicts by approving multiple vendors for digital co-op with a bias toward smaller, boutique agencies.)

There are many other steps even the most non-digital-savvy dealers and OEM executives can and should take to understand and manage this growing budget. The 73-minute video I referenced earlier is a great start. Once you’ve employed the lessons learned there, it’s very likely you’ll be savvy enough to spot and stop any digital fraud.

Good selling!