Best PracticesOpinions & Advice

Generators Vs. Aggregators: Who’s got the Glenngarry Glen Ross?

Buying leads at their origin versus buying them from one of the big third-parties.

Now that I’m about to bring on my third lead generating vendor, I thought I’d probe the DealerRefresh community for their thoughts on the choice between buying leads at their origin versus buying them from one of the big third-parties. I’m very much on the fence myself, and usually it just comes down to whether or not I think the vendor’s program works for me.

For those of you, who have never bothered to consider the pros and cons of each camp, let me present some ingredients for the debate:

  • Lead generators have a web site- or network of sites- that reel in consumers via SEO, PPC, and other advertising, and subsequently sell that lead to a dealer.
  • Lead aggregators buy leads from the premier sources in the industry, like Edmunds and KBB. While most aggregators also generate some “original” leads of their own, purchased leads constitute the majority of their business.
  • Most generators will sell you their lead exclusively, as opposed to aggregators who are usually going to sell their acquired lead to several dealers. This sounds like a great benefit, until you consider that consumers often submit leads to several sites. So that exclusive customer information you think you have could easily have already gone to your competition a few days ago via a different web site. Think about the  brand awareness of consumer sites and you’ll quickly understand how a consumer could go to Edmunds or KBB first to submit their lead, and then decide later on to google “Honda dealers in NY” and end up at one of the other lead generators’ sites. So in theory, if your generated lead isn’t the only lead that customer sent, it’s probably old information to your competition.
  • Lead costs should hypothetically be lower coming from a generator, because there’s one less middleman to get paid. However, depending on the vendor’s program, you could easily pay more for generated leads than aggregated ones… I pay anywhere from $16 to $21 for my generated leads. There’s really no consistency here, as the primary factor in lead cost is the intensity of the program (i.e. closing ratio guarantees, buyer status updates, 800# tracking, etc). Nevertheless, if you have a fetish for paying the lowest possible price for a customer’s information, a lead generator is the way to go.

Anyone have some experiences to share? While I believe it all depends on the vendor, part of me wants to be able to say that one of these sides of the fence is greener than the other.

Mitch Turck
Internet Director – JelMAC Auto Group

R
I have a somewhat biased opinion because paid search marketing is what I do. When it comes to auto dealership leads the aggregators close on average 5-7%, manufacturers website leads 10-12%, and leads generated directly by the dealership site 15-20%. A lot of dealerships are beginning to realize its more valuable to market themselves directly because they can sell more for less budget allocation. A locally targeted paid search campaign that promotes all the profit centers is the best return I've come across. However it is very easy to waste budget when done incorrectly. A conversion-based optimization platform generates the highest possible ROI, sending you more of the website traffic that converts and less of the traffic that doesn't.
K
I have to agree with Rob on this... our best closing leads are the leads from our own website, and we utilize SEM to maximize that asset. We have also ensured that we use a conversion based platform in doing that (otherwise you are just throwing away money - as many others have experienced). When it comes to third party leads, my biggest piece of advice is to ensure that you have a first-class, aggressive process in place in following up on leads, as you are competing against the clock with your competition that has received the same lead. The dealership that "touches" the prospect first is going to win most every time, so if you have an inefficient process with a response time that is several hours or more on average, third party leads will be very ineffective for you. With all that said, if you have a good process in place to handle your third party leads, I would lean towards the lead aggregators for the quality of the lead (which I find to be better than the lead generators). My experience with the quality of many of the leads I receive from the lead generators is that the prospect had their info harvested when clicking on something like "learn the inside secrets of the dealerships" or "how to beat the dealer at his own game", etc.. , and many times when we contact these folks, they feel like they were "tricked" into giving up their information, hence they often do not close as well as the other leads we obtain... Kevin Frye/eCommerce Director/Jeff Wyler Automotive Family
M
I agree for the most part, but that's not what we're debating in this article. And let's not forget that the #1 reason (far and away) that companies and executives don't participate in SEO/SEM is because they don't understand it. You're not going to transform an industry this stale in just a year or two of proven performance. SE vendors should worry more about educating dealers than landing an account.

And to say companies are wasting their budget on leads is a bit overzealous, considering all the half-wit Search Engine vendors out there trying to grab at a dealer's pockets. Your industry gets a lot of bad PR via schmucks in India calling up dealers trying to say they know what's best for the store. Maybe you should have a chat with your competitors who try to solicit my business, only to find that I know more than they do about SE's. If I'm a dealer and I'm getting those kinds of cold calls, I'll take my trusty lead providers any day of the week.

Plus, last time I checked, there aren't any Search Engine vendors out there providing sales training seminars for my ISMs, guaranteeing me a closing ratio, or taking me out for lunch and a round of golf.
R
I have a few questions from a SEM vendor.

When a potential car buyer accesses the internet to gather information, do they go directly to KBB, Edmunds, etc. or do they go to Google, Yahoo, MSN, or some other search engine first?

If they go to a search engine first, how do they end up on a lead providers website? -What are the lead providers doing to attract that buyer?

If the lead providers are doing paid search marketing, how do they make a profit selling you the lead?

If paid search is working for them to gather leads, would it work for a dealership?

I'm looking at a completed campaign (case study) where a new car dealer spent $5,000 on a paid search campaign. It generated 3,498 visits to the dealer website, and 801 phone calls. If you consider a phone call to the dealership a lead, that comes to $6.24 per lead.
If anybody doesn't believe this, I would gladly send it to you.

Why would someone at a car dealer pay $16-$21 for a $6.24 lead? Is it the lunch, or the round of golf?

OK, sorry about that last question.

The truth is, the highest converting sales leads come from the dealers website, and the least expensive way to get people there is paid search, thats why the lead providers do it.

The providers got their start before the technology was available to geographically target a paid search campaign to a 10, 25, or 50 mile radius from the dealership. Now that its available, it makes good financial sense for the dealership to get those leads at their true source.

As far as Search Engine vendors providing sales training to car dealers, we would rather not tell you how to do your job, anymore than we would want you to tell us how to set up and run a paid search campaign.









M
Rob, again my point is that this isn't an article about where the best leads come from overall, but rather comparing third parties. I don't question that the most cost-effective way to get leads is through search engines... but I really don't see this post as a place for that discussion, especially seeing as you're an SEM vendor yourself. Kinda like going to see a band in concert and telling the crowd "hey, there's a much better band down the street. Oh by the way, I'm in that band." We're all Internet-savvy here... you're not enlightening anyone on this blog when you say search engines get the best ROI.

But at any rate, you neglected to address my main point as devil's advocate: for every good SEM vendor out there, there are 10 horrible, inexperienced, fly-by-night ones... to an old-school dealer with no knowledge of search engines, it just looks like the latest third party get-rich-quick scheme... and lest we forget that there are many other tools/services out there that are just as valuable to the dealer that are just "coming up". Dealers get stuff like this thrown in their faces every day, and it was only 10 years ago that all they thought they had to worry about was what their newspaper ad looked like. It's daunting to say the least, and given that, most dealers are going continue using their trusted third party vendors. Hence, this article.

And the reason I like vendors to train my guys is because those account reps are all people who came up through the auto dealer industry and mastered the system... something few SEM vendors can say.
M
P.S.: Come talk to me in five years when all the dealers are doing as you've suggested, and the CPC to get in the top 3 for a term like "Pleasantville Honda Dealer" is $6.50 because there are 15 dealers competing on that query. If every dealer ran dedicated PPC campaigns, it would be anarchy. Your industry is in a very convenient spot right now.
B
Rob,

I don't want to make this post negative but firstly your not an SEM vendor. All your doing is reselling reach local's product (your website proudly proclaims it at the bottom) and all of your collateral is linking to their website. Now that we got that out of the way I:

1) Highly doubt 801 phone calls were generated for $5,000. I am an ACTUAL SEM vendor and professional in the business and have never seen these types of results.

2) Suspending my disbelief, lets say Reach Local (Notice I didn't say you) did provide those type of results, how many of the phone calls were for parts and service compared to new or used car leads. I bet a good deal of the phone calls were for parts & service and if thats the case you arent even comparing apples to apples and oranges to oranges when you quote a cost per lead of $6.24.

Please respond with proof of your stated results and answers to my questions.

Thanks

xBMANx
B
Mitch,

Very impressed with your dealer blog. Good work.

xBMANx
R
Brandon,
Proof of my stated results are available on my website.
Click on the orange link labeled Case Studies where it says "see actual campaign results here:" or on the lower left of the home page where it says Activity Reports. There you will find the all the campaign activity for the $5,000 campaign that generated 801 phone calls, along with a couple others not dealer related.
The keyword portfolio used for this campaign was focused on new and used vehicles, not parts or service. There still may be a small number of calls for parts or service. Even if only half of them were for sales, your still looking at a cost per lead lower than the $16-$21 Mitch mentioned he's paying.
Would you consider ReachLocal a SEM vendor? Just curious.
B
Yes ReachLocal is an SEM vendor but you are not. Those case studies you are pointing at are reachlocals case studies. Give us the dealer name (which you can't because its probably fictitious) and I will call to confirm these results with them.

xBMANx
R
Brandon, or should I call you Brad?

You can call me a reseller, a vendor, an agency, call me anything but a lier. Those results are from a real dealer, and a real campaign.

Speaking of fictitious, I have copied and pasted an inquiry that came in from my website concerning this thread.

Is it just me or are there some similarities between this inquiry and Brandon's post above?
-------------------------------------------------------------------------------
Email: [email protected]____.com

Name: Brad Kowal

Phone: **********

Comments: Rob, i saw your post about a dealers campaign you ran that
generated 801 phone calls for $5000. I work for a dealer and would
like to see some proof of this as we would be interested in
advertising with you. Are many of these calls to sales & service?
Please send case study via email.. Thanks
-------------------------------------------------------------------------------
Thankfully all the other inquires I received from this debate had phone numbers and email addresses that identified where they worked.
But I humored "Brad Kowal" anyway by responding professionally.


B
"Those results are from a real dealer, and a real campaign."

How do you know? YOU didn't conduct the campaign!

Rob, I am calling you out, name this dealer so we can verify these results!
R
I know because I see it all the time.
For you to say that ReachLocals posted case studies are likely fictitious is a bit of a slanderous stretch, don't you think? I do.
Do you honestly think that the dealer in that case study would like to be identified so his competitors find out what their doing, then have the likes of you calling them on the phone to verify?
Get real.
I'm calling you out?..please, enough drama already..give it a break.
I would gladly wave my fees and run a $5000 campaign for any dealer out there who wants to see the highest returns possible from a paid search campaign. Then, since your the "Real SEM Vendor" you beat my results... theres a call out for you Brandon, AKA Brad, AKA xBMANx AKA????? Put your money where your mouth is.

B
Any company can claim results. I'm not hear claiming i'm the best or that I got any dealer 801 phone calls for $5,000 and calling each of those phone calls a lead. Meaningful case studies are backed by a name. I deal with over 100 dealers at an NY based advertising agency. Ive seen some reachlocal clients do well, ive seen others do horrendously (just like any other advertising program, no advertising works 100% of the time for anyone) but ive never seen ridiculously high results as are claimed in this case study.

Provide 1 name of a dealer that got results even close to as high as this case study.
S
Unfortunately, lead generators can still provide more leads at a very fair price than SEM campaigns run by the dealership or an agency. This trend like many within the automotive internet space will evolve, but it will take some time. If you're a dealer that wants/needs supplemental leads, you owe it to yourself to take a good look at lead generators. The one I'm most familiar with won't even charge you unless the lead is completely legit (valid contact method and actually in market for a vehicle).
S
Mitch, in response to your post:

“P.S.: Come talk to me in five years when all the dealers are doing as you've suggested, and the CPC to get in the top 3 for a term like "Pleasantville Honda Dealer" is $6.50 because there are 15 dealers competing on that query. If every dealer ran dedicated PPC campaigns, it would be anarchy. Your industry is in a very convenient spot right now.”

A positive thing about the pay per click model is that the value of a customer acquisition/conversion helps keep click costs in check because most companies who are bidding on the same terms have a similar value of a new customer/conversion. If every dealership was bidding an exhaustive amount per click then none of the dealerships would continue running PPC anyway because of the diminishing ROI. However, Google also has something called a quality score which helps keep click costs in check based on how relevant the search term is & content on the landing page. If 15 dealerships are bidding on the same term each dealership may be prompted to bid a different amount as a minimum bid based on how relevant the search term is to the content of the ad copy and most importantly the content of the webpage the traffic is being driven to.

I don’t see an issue w/ the search engines becoming over saturated w/ ads because of the measures that are already in place w/ relevancy.


B
  • B
    Billy
  • August 24, 2007
Having played on the dealers side of the fence for 15 years I understand many of the frustrations you all are currently expressing. I know how hard it is to sell a car, I've done it. In a perfect world 3rd party lead generation would be, 3rd party sale generation. I don't want to speak out of turn or upset anyone on the site, but I would love to express the direction of my company. I have been in business for 5 years as a generator. Over the last 120 days I've started to aggressively pursue dealers for a retail relationship. Our mission is simple. If we produce SALES for our dealers at a PROFIT, they will keep us around forever. My goal is simple I want to get paid by the dealer only when they sell a car, PERIOD. I don't feel anything else matters. So I ask many of you in the room, Does anything else matter? We sell sales not leads,not referrals, not clicks or anything in between. We generate 100% of our traffic online and will be happy to show our dealers exactly where the lead is coming from. I brand my dealers 100%, no hidden agenda. I need them to be successful and sell cars, because I get paid for SALES. Again, with my program the dealer only pays if they sell a car to my referral. We are tied to the dealers success everyday all day. If I want a raise it is there for me, I just have to send the dealer more SALES. We have just eclipsed 170 dealers and are growing everyday and have had our bumps along the way. I know it's hard to believe but there are numerous dealers who don't call or email leads. That is tough, when I'm putting my money where my mouth is. I front the advertising money to generate the traffic to grow their business and they let the leads hit the floor. I want long term partnerships with my dealers. I care about growing their business and sending them SALES. So in closing I ask anyone or everyone to respond, Is there a place for me in the industry?
J
  • J
    JackalLion
  • November 20, 2007
Billy, your service obviously will beep the antenna of any ISM listening. So list your contact info so they know how to find you and get on the path of becoming your long term partner...
J