AUTO DEALERS CONFRONT INTERNET

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By: Peter M. Zollman

Most Will Continue Offline Advertising Spending

ATLANTA – With auto dealers viewing the Internet as a serious threat, how will it impact their advertising spending, especially in newspapers? Like many other businesses, car dealers are slowly but steadily increasing the percentages of their advertising and marketing budgets used to promote and to operate their online services.

At a two-day conference for auto dealers held here last week, about 200 dealers, software vendors, and online services discussed the issues of e-commerce, customer relations, and online advertising by car dealers. But it wasn’t until nearly 11 o’clock on the second day that the words newspapers dread came up at the podium.

?Take some of those non-performing newspaper [advertising] dollars and move them over to the interactive media,? said John Holt, CEO of the Cobalt Group, a dealer marketing and Web development firm. ?If 40% of your customers are using the Internet, you should spend there. It doesn’t have to be incremental spending – you can take it from other places – but you’ve got to be there.?

Other than that one jab at newspapers, however, there was surprisingly little discussion of cutting ad budgets, shifting money away from print or broadcast, or how dealers’ traditional methods of advertising are losing effectiveness. In fact, several speakers emphasized that, at least for now, dealers have to maintain or even add to their traditional media spending.

Ann Delligatti, chief operating officer of Autobytel.com, met a somewhat cool reception (like Bill Gates at a newspaper publishers’ conference) when she tried to convince the dealers that Autobytel.com is working ?in partnership with you, not separate from you,? to help sell cars.

Alex Simons, group product manager for Microsoft’s CarPoint, talked about some new personalized advertising targeting initiatives at CarPoint planned for launch sometime in the next few months. ?The Internet is the best way ever to inexpensively and very precisely micro-
target your customers,? he said. But he reminded the dealers to spread their advertising across all media. Customers use lots of media, he said, and ?you want to be wherever they are going to go.?

The major themes at the conference included:
? Dealers have more information than ever about their customers and more opportunities to gather that information, but they are struggling to make effective use of it.
? Response time is critical in converting Internet leads to sales. Two hours or less is best; four hours is acceptable; 24 hours is weak, and anything beyond that sends buyers to competitors.
? There is tremendous trepidation about the relationship between dealers and manufacturers. Many dealers believe their manufacturers want to put them out of business. Recent moves by GM to open a ?clicks and mortar? used-car business in Houston, and by Ford to buy up more of its franchise dealers, have increased the dealers’ concerns.
? The auto sales process is radically different dealing with showroom buyers, or ?ups,? and Internet buyers, who are roundly hated by traditional car sales reps. Smart dealers, speaker after speaker emphasized, will keep the two types of buyers separate and will handle their business separately.

Steve Hanson, director of marketing and business development for Kelley Blue Book (which, according to J.D. Power and Associates, is used by 48% of all online car buyers, more than any other site) said dealers have to face the reality that their world has changed, and that they cannot change it back.

?Lesson No. 1 is, the consumer, the customer is in control,? he said. ?Do whatever the customer wants, and you will succeed.?

The conference was sponsored by First Conferences Ltd. of London.

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Peter M. Zollman (pzollman@aol.com) is founding principal of Advanced Interactive Media Group.




(c) Copyright 1999, Editor & Publisher

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