When dealers seek the best digital marketing vendors, they are often faced with a choice: Use a company that has preferred status with their automaker — with the support of co-op advertising money — or take a chance with an outside vendor and bypass the co-op dollars.
As dealers try to grab consumer attention in the digital age by tailoring campaigns for their markets, some are choosing the outsider.
That can lead to more individualized consumer outreach, said Nick Brunotte, director of industry practice for consultancy DHG Dealerships. He has seen firsthand how some dealers have decided to forgo co-op money in favor of vendors without preferred status.
The reasons are many. Sometimes preferred vendors get bombarded with dealership clients because of that automaker stamp of approval, Brunotte said, and they subsequently aren’t able to customize campaigns for dealerships in different markets. At a time when technology is changing rapidly, dealers often want to experiment.
“Dealers would like to see an opportunity to try and test new products as they come out,” said Mike Bowsher, chairman of the Chevrolet National Dealer Council and owner of Carl Black Automotive Group in Kennesaw, Ga. “There are so many new digital go-to-markets that come out weekly, daily, monthly.”
Testing such products is necessary because dealers otherwise won’t be able to determine what will help them, Bowsher said. But “if dealers don’t have the co-op wherewithal to do it, many of them won’t try it.”
Some automakers have responded to that pressure. In 2019, General Motors expanded dealers’ options for preferred website providers beyond CDK Global Inc., which previously had exclusivity.
Bowsher said it would help if GM enticed dealers by saying, “ ’If you’d like to try that X, Y or Z for 90 days, we’ll support it.’ We’re asking them to allow us to test and try new things on a certain percentage of our co-op dollars.”
With the high number of dealerships in a preferred-vendor program, the vendors sometimes get backed up. Brunotte recalled recommending a website provider with preferred status to a dealer only to find out the migration would have to occur months down the line.
“Part of the reason the dealer wants to change platforms anyways is because they don’t like their current one,” Brunotte said. “It’s costing them effectiveness, and now all of a sudden, they have to be ineffective for another six months because they can’t switch.”
Such logjams also can hurt effectiveness once a program is in place at a dealership. Each dealership should be treated differently, Brunotte said, but many preferred vendors deploy “boilerplate strategy.”
“The GM dealer in Ohio — their [search engine optimization program] is the same as the one in Arizona,” he said. “It’s just in order to keep up with the sheer volume; it’s cut-and-paste. That’s not fair to the dealer.”
Pat Koballa, dealer principal at Coastal Kia in Wilmington, N.C., recently made the switch from a preferred vendor to a smaller company better suited to his dealership’s needs.
Koballa said he’ll now have to jump through hoops to get back the money he spends with his new vendor. The co-op assistance won’t be “an automatic feed from the manufacturer.” But Koballa doesn’t mind the extra legwork it will take to recoup his ad money from Kia because he’s confident in what the new vendor can do.
“I feel like, in return, the results will be much more positive based upon their ability to deliver what I feel I need,” Koballa told Automotive News. “It’ll be a custom, tailored approach based upon what’s going on within my marketplace and within my dealership.”
Koballa said his previous digital partner, which handled things such as search engine marketing, was producing content that resembled campaigns for other stores. That wasn’t enough for him.
“I felt like I was dealing with more of a cookie-cutter environment,” Koballa said. “I was seeing what they were placing for me [and] I was seeing the same thing at other dealers, not necessarily close by, but I felt like they were on a little bit more of a plug-and-play scenario with me rather than actually communicating with me, finding out what was going on in my environment, trying to tailor their approach.”
Sometimes, the money isn’t there from the manufacturer to support co-op programs.
Porsche’s program ended in January as it prepared to run its first Super Bowl ad in 23 years.
The funds that were going to be used for co-op advertising went toward the Super Bowl spot for the Taycan, the automaker’s first battery-electric vehicle, said Robert DiStanislao, chairman of the Porsche Dealer Board of Regents.
“Dealers were given a template, and if you wanted to do co-op advertising, and you stuck to the template and inserted where you advertise your store, Porsche would reimburse you for half,” DiStanislao said. “It didn’t even have to be an ad. If you could document it, it could be a function or an event, and they would reimburse you 50 percent. That has gone away, and we are lamenting it.”
The influx of clients that vendors can get after earning an automaker endorsement can be a challenge to deal with.
Digital Air Strike, a digital marketing company with an array of products, first landed co-op status from GM in 2011 for its social media marketing and online reputation management services. It added around 900 clients to its roster within a few weeks.
The company underwent a hiring surge on the administrative side to deal with the traffic.
To maintain a personal touch with its customers, Digital Air Strike customers often will have a three-person team of “client advocates” from the vendor to assist them, said CEO Alexi Venneri.
“They know them by name,” Venneri said of the advocates. “It’s not like some call center.”
Digital Air Strike clients can take advantage of co-op funds for other company tools as well, including its Response Logix lead management technology that allows dealers to create videos when responding to customers.
A problem Brunotte has spotted is that the strategies for some preferred vendors align with those of the automakers, not the dealers themselves. So a dilemma arises, Brunotte said, where the vendor is focused on moving as many vehicles based on what the automaker wants them to do. Dealers, he said, should make sure that these vendors are mindful of their strategies as well.
“Sometimes the strategy is to sell more General Motors cars, to sell more Chevrolets; it’s not Bob Smith Chevrolets. Not his Chevrolets, but Chevrolet in general,” Brunotte said. “A lot of time, the vendors align their strategy with what the OEM wants them to do, and then pushes that strategy on to the dealer. Sometimes you have to have one of those ‘is the juice worth the squeeze’ conversations when you’re analyzing these co-op programs.”
When taking advantage of those co-op dollars in some cases, Brunotte said, dealers are “getting reimbursed for a whole bunch of advertising dollars, but your advertising stinks. I’d rather spend [$50,000] outside of the co-op program and have a really efficient marketing strategy that is nimble, that you can select little pieces and segments at your own doing.”
Jim Henry and Hannah Lutz contributed to this report.