Dealer Marketing Magazine Ralph Paglia Interview about Search Engine Marketing and Digital Advertising
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<!--[if !supportLists]-->• <!--[endif]-->Ask for and then check references.
<!--[if !supportLists]-->• <!--[endif]-->Ask for details about ongoing consultation and training.
<!--[if !supportLists]-->• <!--[endif]-->Make sure the provider clearly understands your stated SEM goals.
<!--[if !supportLists]-->• <!--[endif]-->Make sure you understand how your SEM funds will be managed, and what
portion of the dollars you pay to a SEM provider actually goes toward your search campaign versus the SEM
<!--[if !supportLists]-->• <!--[endif]-->Ask for and demand reports, more reports and then more reports so that
results can be measured and you have hard evidence of what is working and what is not.
How SEM Works For Courtesy Chevrolet
Search engine marketing coupled with an aggressive use of third-party lead providers has generated a substantial return
for Courtesy Chevrolet, Phoenix—more than 174 units sold in 120 days at an average cost per vehicle retailed of $412.65.
The dealership, which uses a combination of business development centers and dedicated Internet sales teams in
conjunction with a fully integrated interactive marketing strategy, certainly dominates the online buying experience for
anyone looking for a new or used Chevrolet in its market.
The dealership receives more than 6,000 leads a month, of which about 1,500 are incoming phone calls and the balance
eLeads, with 1,000 of that balance driven by the dealership’s SEM campaigns.
Ralph Paglia, CRM/eBusiness director for Courtesy Chevrolet, was asked by Dealer Marketing Magazine to share how he
uses SEM to drive online shoppers through his dealership’s doors.
Q: What results does SEM deliver? Can you separate those leads from OEM, third-party, and other online listing
A: We have no problem separating SEM leads from our other lead sources, as well as by individual SEM campaign. We
use designated landing pages with separate lead routing addresses into our CRM tool as well as specific campaign source
tags embedded into each online form. This way the leads identify themselves as a separate lead source within our CRM
When we use deep links within our general purpose Websites (we have five) we use Google conversion tracking code that
we asked the Website providers to embed into the content that we link some campaigns to. This then results in conversion
tracking that is automatically reported to us by our Google online applications each week and month.
These reports are sent to management by Google via email. We use unique toll-free phone numbers on each of over 40
landing pages, micro sites, and Websites so that we can also monitor and factor in the phone calls generated by our SEM
campaigns. Each phone call is automatically converted into an XML data feed that is then routed to a specific campaign
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address within our CRM tool.
Here’s an example of just one of many SEM campaigns we have effectively executed within the past year, based on one of
Courtesy Chevrolet’s in-house Google Adwords Campaigns from December 1, 2005 through March 31, 2006:
<!--[if !supportLists]-->• <!--[endif]-->33,257,657 car shopper impressions generated
<!--[if !supportLists]-->• <!--[endif]-->29,528 car shopper visits to Courtesy Chevrolet Websites, landing pages, and
<!--[if !supportLists]-->• <!--[endif]-->2,248 electronic leads and phone calls generated
<!--[if !supportLists]-->• <!--[endif]-->174 vehicles sold
<!--[if !supportLists]-->• <!--[endif]-->$71,801.30 was invested with Google Adwords & Google’s Display
Advertising Website network
<!--[if !supportLists]-->• <!--[endif]-->$2.16 cost per thousand car shopper impressions
<!--[if !supportLists]-->• <!--[endif]-->$2.43 cost per car shopper that clicked through to a Courtesy Chevrolet site
<!--[if !supportLists]-->• <!--[endif]-->$31.94 average cost per lead generated
<!--[if !supportLists]-->• <!--[endif]-->$412.65 average cost per vehicle retailed (PVR)*
Q: Overall, what is your lead acquisition cost by source?
A: Our cost per lead generated by Courtesy Chevrolet’s various SEM campaigns varies by both campaign and by month.
For example, our ClickMotive-managed SEM campaigns produce leads at the lowest cost from amongst all our SEM
campaigns; ClickMotive produces leads at less than $16 each. Many of our internally managed SEM campaigns generate
leads that cost in the neighborhood of $50 to $55, some as low as $30 each, depending on the subject matter of the
campaign and how many other dealers, third-party lead providers and non-automotive businesses we are competing with
for keywords or site placement.
Sometimes, we notice that other advertisers run out of SEM budget near the end of the month and that creates an
opportunity to pour on the steam and scoop up leads at a far lower cost than at the beginning of the month. The cost per
lead is then mitigated by sales closing rates for each SEM campaign.
All our SEM campaigns produce higher closing ratios than what we yield from third-party lead providers, but none of our
SEM campaigns yield sales closing ratios as high as our full-featured Website-produced leads or the leads we get from the
GM Certified Internet Dealer program.
Generally speaking, if an SEM campaign nets us a $600 cost PVR or less, we will keep running that specific campaign.
SEM campaigns that produce sales at a PVR of $300 or less usually result in us getting greedy; we start to pour more
money into it to get more sales, which we do get, until the cost per sales hits $600 and then we back off on the money
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being invested into that specific campaign.
Over time, some of our SEM campaigns fizzle out and the cost PVR starts to go up. Eventually there are some campaigns
we simply pull the plug on and roll those funds into other newer or higher yielding SEM campaigns. It is a lot like more
traditional advertising, except that it is far more profitable and infinitely more measurable.
Q: Are the leads you receive from shoppers closer to the beginning or end of the sales funnel?
A: This is a huge variable and is often determined by the nature and content within your SEM campaigns, and has little to
do with SEM in and of itself. A long time ago a very wise veteran car guy told me, “A lead is a lead is a lead.” And we have
found that unless the phone number is wrong or the email address is bad, the vast majority of SEM leads are the result of
ads that only people who want or need to buy a car fill out the online forms.
We have far more problems with bogus leads from certain unscrupulous third-party lead suppliers who are buying them
second and third hand to sell at a profit to dealers with little knowledge as to how they were produced. That is why our
SEM leads always out-yield third-party leads, with a few notable exceptions.
Certain third-party lead providers have sophisticated “scrubbing” technology and processes that weed out any truly invalid
leads. Dealix, for example, does a remarkable job of validating phone numbers and email addresses from prospective
customers who submit leads through any of its network of sources. If you ever want to see something interesting, go to a
Dealix source site and submit a lead using a valid email address, but a bogus phone number. Do that and you’ll get an
email from Dealix asking for your correct phone number, or asking if you would prefer that the dealer send the price quotes
The same thing done on one of our SEM landing pages or micro sites would result in a lead coming in to us with a bogus
phone number. My compliments to Dealix; from amongst the 25 third-party lead providers we use, Dealix does the best job
of scrubbing invalid leads before we get them. However, this validation process is offset by the fact that Dealix sends every
lead we get to two other Chevy stores in addition to us, which does not happen to our SEM-generated leads which we own
Q: What recommendations might you offer to dealers considering integrating SEM into their total media mix?
A: The top three considerations that should be addressed before a dealer begins spending money on any type of paid
search engine marketing are:
<!--[if !supportLists]-->1. <!--[endif]-->Will the campaigns be managed by in-house staff or outsourced to an
SEM services provider? In-house managed campaigns avoid the various fixed and variable fees charged by
suppliers, but the daily management tasks can easily consume an hour out of each day. Experienced suppliers
can oftentimes outperform a dealership employee at a rate that more than offsets the fees.
We use a mixed SEM strategy with half our budget invested into self-managed Google and Yahoo! SEM
campaigns, and the other half invested with SEM services providers such as ClickMotive and BZ Results.
<!--[if !supportLists]-->2. <!--[endif]-->How much of the dealer’s advertising budget will be allocated to SEM
and online advertising? That depends. We have continuously shifted advertising funds away from
underperforming media channels and moved those funds into our Interactive Marketing Budget, which includes
SEM campaigns. This budget shift has been used to place online display advertising within the SEM-managed
campaign efforts that we self-administer using the same online applications that we use to manage sponsored
links (search engine ads) and targeted Websites that consumers visit within the Google advertising network.
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<!--[if !supportLists]-->3.<!--[endif]-->Who will be assigned responsibility for the daily tasks of managing self-
administered SEM campaigns and/or monitoring and reporting back on the results from SEM services
providers? The key issue here is accountability. Both for internally run SEM campaigns and for any services
charged to the dealership by an SEM services provider. The key metrics that we monitor for every SEM dollar
spent at Courtesy Chevrolet are:
<!--[if !supportLists]-->• <!--[endif]-->Dollars spent by campaign
<!--[if !supportLists]-->• <!--[endif]-->Total impressions by SEM campaign
<!--[if !supportLists]-->• <!--[endif]-->CPM or cost per thousand advertising impressions
<!--[if !supportLists]-->• <!--[endif]-->CPC or cost per click
<!--[if !supportLists]-->• <!--[endif]-->Clicks-to-leads submitted (conversion rate) by landing page, micro site or
<!--[if !supportLists]-->• <!--[endif]-->Total number of leads generated by each SEM campaign
<!--[if !supportLists]-->• <!--[endif]-->Cost per lead generated
<!--[if !supportLists]-->• <!--[endif]-->SEM generated lead conversion rate into showroom traffic (whether by
appointment, or otherwise)
SEM Terms To Know
As the number of online vehicle consumers continues to grow, so does their use of search engines. According to J.D.
Power and Associates 2005 New Auto Shopper Survey, 89 percent of online vehicle shoppers used a search engine
during their buying process.
As more and more dealerships look to boost performance from online sales opportunities, search engine marketing,
whether handled in-house or by a SEM provider for the dealership, is gaining momentum.
As you consider SEM for your dealership, the following SEM terminology, compiled by the Cobalt Group, are important to
Search Engine Optimization (SEO) – SEO is a process designed to attract search engine “spiders” to a Website.
Spiders “crawl” the Web to match consumers search terms with relevant content. SEO increases the odds your site
will get high rankings in “organic” search results, which are free, as opposed to paid advertisements. SEO also
incorporates keywords popular with consumers into your Website copy, making it more search engine friendly. Your
website provider should supply this service to you.
Search Engine Marketing (SEM) – SEM is a “catch all” term that includes the different techniques used to get
your Website optimal placement in search engine results. SEM includes search engine optimization, paid placement,
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paid call, contextual advertising, etc.
Keywords – Keywords are words and phrases used to find relevant Websites. The goal of search engine
marketers is to match their advertisements with popular keywords used by potential customers.
“Organic” search results (Algorithmic results or natural results) – Organic search results are ads and Website
links returned by a search engine based on the relevancy of the search query to various Web- sites. If you search for
something with Google, the results you get in the middle of the page are the “organic” listings, while those at the very
top and to the right are paid advertisements.
Paid Listings (Paid placement, sponsored links, or pay-per-click advertising) – Advertisers pay to have their ads
displayed at the top, or on the right side, of the free listings, or "organic" search results. Advertisers bid on keywords in
an online auction setting in an effort to get optimal placement. Those that bid more for keywords, and also get the
most clicks on their ads, have the best odds of premium placement in search results.
Pay for Performance – Pay for performance relates to the paid advertising part of SEM. Advertisers pay the
search engine (or Web publisher) when a prospect takes a desired action, such as clicking on their ad, hence “cost-
per-click.” The pay for performance model can work in other ways too, such as the advertiser paying when a prospect
calls a trackable phone number in their ad.
Cost-per-Click (CPC) – CPC is what the advertiser pays the search engine when someone clicks on their ad in
search results. CPC is the most common pay for performance program in search engine marketing. While some CPC
rates may seem quite low, around $0.05 or $0.15 per click, they can also go as high as $8.00 or more. You need to
ask yourself if it’s worth it to pay $0.05, $2, or $8 every time someone clicks on your ad.
Paid Inclusion (Trusted feed) – Paid inclusion allows you to pay a per click fee to submit to a search engine or
directory via XML to a Web page(s) that is indexed in organic search results. CPC can occur from Paid Inclusion.
Pay-per-Call – As noted above, pay per call is a pay for performance program where the call to action is for the
prospect to make a telephone call (usually to a trackable phone number.)
Cost per Acquisition (Cost per lead) – Your average cost generated when a prospect calls, fills out a form, sends
an email, or otherwise submits a sales lead. Calculation: Number of clicks it takes to generate one lead multiplied by
the cost per click.
Cost per Vehicle Retailed (Cost per vehicle sold) – Your average cost accrued from your SEM efforts to sell one
vehicle. Calculation: total cost of the SEM program for a given month (or set time period) divided by the number of
sales generated from the program in that time period.
User Centric Design (Site Optimization) – Designing the layout and functionality on your Website in order to
convert visitors into leads. For instance, you can show incentives and special offers on your home page to give added
incentive for your visitor to take action.
Last Updated ( 01/22/07 )