13

Jun 2018

The OEM Trap

Most car dealers struggle with their marketing, and digital marketing in particular.

This is understandable, digital marketing is complex and constantly evolving. Just keeping up with all of the changes is a challenge for full time marketers, let alone for dealers who have a lot of hats to wear.

It doesn’t help that their own manufacturers are screwing them too.

The OEM Trap

It goes something like this. Dealers have to have an OEM approved website, so they pick one, if they have a choice, and the OEM approved website vendor cheerfully sets everything up for them.

Then the dealer needs traffic to their website, hopefully people interested in buying their cars. The OEMs offer dealers money to do this in the form of coop, but there are strings attached.

The dealers have to select an OEM approved agency to spend the money with, so they select one, assuming they have a choice, and then they sit back and wait for the leads and customers to roll in.

But the leads and customers don’t magically appear. They trickle in and sales suffer.

Dealers panic, vendors are called, meetings are held, the dealers are told their sites and marketing is doing great… they just need to spend more money.

So they do.

But they never really seem to get anywhere.

Why?

Because they’re stuck in the OEM Trap.

Swim in Your Own Lane

The OEMs don’t care if one dealer sells more than another, in their ideal world, every dealer sells the same number of cars. That’s why they have Primary Market Areas, or PMAs.

And in their ideal world, the OEMs are able to control their brand with these mandated programs.

They want dealers to “swim in their own lanes.”

But there’s always one or two in each metro area that dominate, taking sales from the smaller dealers. These dealers win all the awards, get all the attention and make all the money.

When smaller dealers try to find out what the big dogs are doing, they’re inevitably told they’re spending more money on digital. But when they increase their spend, they never seem to be able to catch up.

So dealers attend twenty groups, go to conferences, talk to other dealers, switch vendors, and nothing really changes.

At this point most dealers just give up and accept their fate. They muddle along in the middle of the pack and for the most part they’re happy because they’re still making pretty good money.

Score another one for the OEM Trap.

What the Big Boys Know

So, how do dealers break out of the trap? What is it that the big boys know that they don’t?

Simple.

They know the OEMs and their vendors make money off of them with these programs.

A lot of money.

They know that the OEMs squeeze the profit margins of these vendors for the privilege of selling to a market that is forced to buy from them.

They know that the OEMs markup whatever the vendors charge by 30% to 40%.

And they know that a vendor who is forced to operate on reduced margins for a large number of accounts can’t afford to hire and pay experienced marketing experts to manage their accounts.

It doesn’t take a rocket surgeon to know that if a dealer gives an advertising agency a dollar to run ads for them, they are not going to get as many walk-ins or leads from the agency that is only spending 35% to 40% of their money on ads vs an agency that is spending 80% to 90%.

The big boys know that they can get twice the ads for the same dollar.

They also know that an agency that is working for only them can afford to hire an expert to manage their account. And these experts don’t swim in their own lanes, they own the pool.

Dealers Need Their Own Website

Now, about those OEM mandated websites.

The big boys don’t use these sites to do their real marketing. They know that the OEM website vendors are forced to do a bad job at SEO because the OEM wants to control where dealers show in the search results.

They also don’t like to share the leads and retargeting data they paid for with others.

If you’ve never seen who gets the leads and data from your OEM approved website, let me know and I’ll run a free tag scan for you. The results will shock you.

The OEMs are able to resell the data and leads from your site to vendors who will then offer to resell it to your competitors, like the big boys, and often times back to you!

Dealers relying on OEM approved websites, vendors and coop programs can’t win against the big boys.

How to Get Out of the OEM Trap

The only way for dealers to break out of the OEM Trap is to use a website they control and digital agencies that work for them, not the OEM.

They need to take control of their digital marketing analytics so that they can make informed decisions with accurate data, not the crap the OEM vendors set up to make them look good.

They’ll also insist that any vendor they use works from Google Analytics, AdWords and Facebook accounts that the dealer controls, not the agency, for full transparency.

It doesn’t cost much to run a separate website. Any automotive website vendor worth their salt will be able to use negative SEO to bury the OEM site so that the dealer controls their leads and data.

Once that’s done, it’s easy for dealers to spend more money on marketing because they can see that they are getting the ROI they deserve.

The best part is, it’s not hard when the effectiveness of your spend is automatically doubled, then increased again because you have a real pro managing your account, and then increased yet again because they’re not sharing leads and data with their competitors.

I’m sorry this post is so long, but it’s critical that dealers understand how and why the OEM Trap prevents them from getting the results they are paying for.

If you have any comments or questions, call or send me an email and I’ll be more than happy to discuss them with you.

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