Digital Marketing and Dealerships: How the Process of Car Buying is Changing, and Who the Gamechangers Are

Car buying today is taking a sharp digital turn, and consumers are at the wheel.

Like everything else, people want to be able to purchase their vehicles online.

They want to be able to research, price match and ask questions – online. They do not want to be haggled by sales representatives on dealership lots, only to be left wondering if they actually got a deal or not. They want the same level of transparency when buying a car that they have when they, say, buy an airline ticket, or order a book off of Amazon.

And with the advent of the internet and the gaining popularity of third-party syndication, or the licensing to feature and broadcast dealership inventory on alternative websites as part of a bigger digital marketing strategy, that is precisely the direction that car buying is heading towards.

What’s at Stake: 80 Percent of the Car Buyer’s Journey

Until recently, consumers accepted the car buying process as a painful reality. Much like going to the dentist, they did it out of necessity.

But gone are the days of blindly walking onto car dealer lots and beginning the painful process of negotiation.

Now, they turn to their phone, tablets, and computers, and they shop.

“In general, shoppers go to dealership websites first. And then, in the middle of their process, we see a lot more interaction with an AutoTrader.com or a Kelley Blue Book,” said James Grace of Cox Automotive, which owns AutoTrader, Dealer.com, and Kelley Blue Book, among other automotive marketing brands. “We broke (the car buying) process into 10 different sections, and the first 10 percent and last 10 percent are very dealer website focused. People start out by going to a dealer website, and then they go do more research.”

The other 80 percent of the car buying journey is what is currently up for grabs.

2018: The Educated Consumer

Aggregate apps and websites, whether it is industry giants like Kelley Blue Book and CarGurus or Silicon Valley start-up Carjojo Corp., allow consumers to search car inventories online until they find the right vehicle at the right price.

But is this what dealerships want?

“I don’t want to get a lead to then have them sell it back to me,” said Steve Koch, Digital Marketing Manager for Cooper Auto Group out of Oklahoma, speaking generally about lead generation and third-party syndication websites. “They are a necessary evil.”

The ‘necessary evil’ view dealerships have comes from what Grace refers to as the ‘get me a lead and I’ll sell a car’ mentality that led to the creation of so many third-party syndication companies in the first place.

“If I turn back the clock, a decade, say 10 years ago, leads were very, very important,” explained Grace, who leads the analytics product management teams for Cox Automotive and for their dealership clients. “Essentially the attitude at that point was get me a lead and I’ll sell a car. You had a lot of companies get into the leads business – to provide the name, address and phone number of someone interested in a car to get to dealerships. And then dealerships were responsible for converting that lead into a sale.”

But that model has been met by the modern consumer, and there is a lot of pressure to change the way cars are bought and the way leads are generated.

“Arguably, leads are declining from a dealer perspective,” said Grace. “We need to start measuring quality instead of quantity. There’s a bunch of pressure on the ‘just get me more leads’ model. Where you once could draw a straight line from traffic to car sales – that line doesn’t really exist anymore.”

That’s because the 2018 consumer is an educated one.

They are no longer willing to fill out lengthy forms about themselves, only to get called back days later. They want instantaneous access to information about vehicles they are interested in buying – the same type of information they have access to when they buy everything else.

And this is what is opening the automotive industry up to technology companies looking to fulfill this unanswered part of the car buyer journey.

“The automotive industry is becoming more and more digital every day,” said Grace. “With that comes all of the wild, wild west of the internet.”

Industry Disruptors and the Wild West of the Internet

With dealerships no longer wanting thousands of unqualified leads that they have to purchase and then take through the entire sales process, and consumers looking for an overall different car buying experience, there are companies surfacing to answer the call for both.

“We like to say we are a technology company that happens to be in the automotive industry,” said Peter Levy, founder and CEO of Carjojo Corp. “Any company that has ever been at the forefront of change has been met with skepticism and criticism, but we really see ourselves as the Google of car buying. We provide the information consumers are craving when it comes to buying a new car, and we’re driving those buyers to dealerships – both the websites and the stores.”

So, what is the difference between a company like Carjojo Corp. and Kelley Blue Book?

Websites like KBB, AutoTrader and other online vehicle classifieds charge participating dealerships for the sales leads they generate – real estate space dealers are more than happy to pay for, especially when they know this is where their buyers are turning in the middle of their decision process.

“If you have tens of thousands of my shoppers on your site, I want to be there,” said Koch, whose auto group is made up of seven franchises primarily located in the Oklahoma City area. “I know our consumers may have been on those digital touchpoints. They’re logged into their app on my lot, so that’s where we need to advertise.”

Carjojo, on the other hand, offers a complete listing of vehicles online and charges a one-time fee to consumers for car negotiation help.

“Carjojo’s software tracks the 3.8 plus million unsold new vehicles on dealership lots at any given time, while also analyzing transaction prices and available incentives,” said Levy. “We know the lowest price a given car will be sold for and pass that information along to the consumer.”

Once Carjojo has an interested buyer, they contact the dealerships with the vehicle makes and models the consumer is interested in buying and ask if they are willing to sell it at the competitive, data-driven price the Carjojo buyer is willing to pay for it.

The dealer can either agree to the price, or not.

“Consumers search for a vehicle they’re interested in buying and we tell them where they can buy it,” said Levy. “We fulfill a big part of the sales funnel by sending free qualified leads to dealers who own the inventory consumers are ready to buy, while also fulfilling consumer wants of searching and finding vehicles online. But ultimately, whether a dealer decides to sell the car at that price or not, is completely up to them.”

Because of the little room for margin there is in selling a new car, Levy feels confident the price his firm estimates is not drastically different from the low price the car should actually sell for.

On the flip side, CarGurus, which was founded by the same co-founder as TripAdvisor, Langley Steinert, is all about reviews.

Their philosophy is this: a vehicle might be priced differently at two nearby dealerships, but the experience at one could be far better (or far worse) than the other – and consumers want to know that.

They are not about the “best deals,” but about “great deals from great dealers.”

With over 5 million vehicles listed on their site – including both new and used inventory – CarGurus uses algorithms and market data analysis to help automotive shoppers search for cars in order to quickly identify the best deals from top-rated dealers in their local area.

It is consumer bred and consumer fed, and that, experts say, is the direction the industry is heading in.

The Amazon, The Google, The Future of Car Buying

The perfect storm has formed and a digital transformation is taking place in the automotive industry.

Dealers, third-party advertising companies, technology companies, and consumers are all at the helm of the evolution.

“The big change on the horizon in automotive marketing is how we adapt,” said Koch. “Customers hate how they have to buy cars, and all of us – dealers, lead gen companies, everyone – have to ask, ‘How do we modify?’ How can we be more transparent, more convenient? We have to adapt, or it’s going to get taken away from us by an industry disrupter like Amazon.”

According to Koch, he believes the only thing protecting the industry from Amazon is dealership agreements, or the contract between car buyer and seller.

But if it is disruption the industry is calling for, Carjojo feels like they have already developed the answer.

“The proprietary analytics and consumer leads we provide to car dealerships, that predict prices and consumer behavior, is the direction that car buying is heading in,” said Levy. “Consumers and dealers are craving this kind of technology – and we’ve built it.”

Enjoyed this article? Check out this week’s episode of Auto Dealer Live for a very animated discussion about it!