Zag.com's founder and CEO shares strategies for dealers to maximize a limited marketing budget and capture a larger share of the expanding online auto market.

There's endless talk about how the internet is changing the way manufacturers and dealers market their cars, making it possible for advertising to be more targeted, measurable and interactive than ever before.
 
This line of conversation is well-founded. According to J.D. Power and Associates, 68 percent of new vehicle purchases in the United States are preceded by shopping and research online, making the internet audience a mainstream demographic that you can only ignore at your peril.
 
The bad news? For most dealers, fully leveraging the internet is just too difficult to manage on their own. The ever-increasing cost of search keywords (and the growing level of sophistication required for search engine marketing on the whole), the challenge to capture some kind of localization and the difficulty of managing budgets to get results from user clicks is too complicated for most to do in-house.
 
Many smaller dealers believe that if you have a website, you have an online presence. But to take your "brochure-ware" site and convert those eyes into sales, you need help: Twenty-five percent of would-be buyers leave their names on a website or sites, but converting this easy traffic into sales requires both artistry and science.
 
As search keyword prices continue to rise, it is critical that dealers know how to identify their most successful lead-generation sources, and use their budget assets to directly target their critical base of potential consumers.
 
So, given all this, what should dealers be focusing on? Here are some top-line considerations:
 
Identify sources that provide exclusive leads.
Work with trusted brands and provide their members, customers or employees with a service-based approach. Think private-label websites and full-service call centers, which enable you to serve the needs of every consumer regardless of what brand he or she may be interested in buying. Objectivity is valuable to the customer -- and therefore the dealer -- so consider an approach that relies on the marketing strength of your partners. A lead should be yours alone.
 
Good strategy requires more than targeted keywords.
You can easily spend $8,000 a day for keywords and still get zero rate conversion. The connection to customers must go deeper than the keywords you choose to reach them with. That's where a link with member-based organizations pays off. Dealers should seek out solutions that are exclusive-- meaning one customer per dealership. Look for solutions where you pay for sales, not leads.

Lead generation is fairly straightforward: a dealer buys a lead. The value of a lead is based on closing ratio-- how many leads a dealer has to buy before closing a sale. Dealers traditionally are willing to spend $250 to $500 in marketing per sale, and the average price for a retail lead is $20. So a closing ratio of five to10 percent is okay. Some leads, however, clearly have more value-- those from direct lenders, credit unions and affinity groups traditionally are the most likely to turn into a sale, and therefore are far more valuable to a dealer. Exclusive leads, affinity group leads and pre-approved customers will save dealers time and money.  

Budget online carefully, and quantify the results often.
Always look for ways to let technology do more of the work. Sales process automation, for example, helps the customer and reduces costs for the dealer. In the late '90s, technology's primary function was to deliver better data. Today, technology enables full vehicle configuration. Next-generation programs will offer up-front pricing and the ability to locate exact vehicles in inventory-- saving customers and dealers time and resources.  
 
Ban brochure-centric thinking.
If you want to really use the internet as a sales channel, banish the belief that brochure-ware websites are of any value-- your site must be the portal to a hassle-free, efficient way of doing business, and simply providing another form of your brochure is just not going to cut it in the interactive universe. The internet is a channel for better communications, not an alternative to communication. Even online, the auto-buying process requires complex human processes-- people still go through many other online and offline steps before making a purchase, so online sales strategies must look beyond the brochure in order to be truly effective.
 
Use technology to turn those leads into sales.
Online customers expect instant results. Take, for example, turnaround time. When a would-be car buyer keys in details on the web requesting information, there is the expectation of an immediate response-- i.e., one that comes while he or she is still online. The window for this response is about four minutes. Yet typically, most dealers' response time is in double-digit hours. Already, you've lost that lead.
 
What most dealerships need is a technology enabler -- a company that works to provide technology and service solutions for auto shopping and buying -- to speed up and simplify the process of responding to leads and fulfilling consumer requests. 

From a technology perspective, it is an exciting time to be a dealer. There are innovative solutions that will enable progressive dealers to provide a better customer experience and save money. Dealerships spend money on marketing, commissions and selling, general and administrative expenses. Turn-key marketing solutions help mitigate marketing and commission expenses, while sales process automation tools help facilitate transactions, thereby reducing operating expenses. The most valuable solutions -- which are being developed as we speak -- will drive customers into an automated solution from start to finish. The next 12 to 24 months will be very interesting in terms of these types of solutions for dealers. 
 
The industry's key mission is really a mantra: Buying a car should be easier. To make that happen, the dealer community shouldn't be reluctant to ask for (and expect) start-to-finish help for consumers-- and a promise of one-customer / one-dealership leads to car sellers. Doing so demonstrates real concern for the user / customer experience and an intention to make the extra effort to improve the relationship between the dealer and that customer.
 
It's the old win/win, fired by technology.
 
Scott Painter is founder and CEO of Zag in Santa Monica, Calif. Read full bio.