J D Power2006 Internet Conference Review

Fleet-ing Thoughts Page 1 of 6

SUNDAY, DECEMBER 03, 2006

Vol. 2 No. 34

J.D. Power Automotive Internet Roundtable 2.0
Once again, I was very eager to attend the latest JD Power Roundtable Conference,
November 1-3, at the Red Rock Casino (in coordination with the gigantic Specialty
Equipment Market Association “SEMA” show held annually in Las Vegas in November. By the
way, if you have never been to a SEMA show, and have any interest at all in vehicle after
market equipment, go to the next one, you have to see it to believe it.

Last year, my old friend Charlie Vogelheim, VP Automotive
Development for JD Power and Associates (and probably the car
industry's best, most entertaining MC short of Jay Leno), took the
November International Automotive Roundtable in a different,
timely and maybe just a bit daring direction, focusing on
Automotive Internet related developments, with sponsors such as
Yahoo!, Kelley Blue Book, AutoTrader, etc. Last year's debut
Internet Roundtable turned out to be a great success, but I think
this year's 2.0 version dramatically topped it, partially because it
took a “break out” session format with three simultaneous tracks -
“Dealerships,” “Online Advertising,” and “Web Site Development -
and partially because, and there is no mistaking this after
attending this two day roundtable, Internet things are getting
frothy (note: I did not say “bubbly”) again.

The Keynote Marking the Evolution
After a Dealer Aftermarket Symposium at SEMA that afternoon, the roundtable officially
opened with a keynote address Wednesday night by Dan Rosensweig, COO of Yahoo! His
presentation on the progression of the Web, Web advertising, keywords, etc. was very
insightful, although, from larger perspective, it did nothing more than confirm the dramatic
changes that were evidenced by this roundtable in general. The fact is, a few years ago, I
don't think the J.D. Power folks would have dedicated one of the largest roundtables of the
year to exclusively automotive Internet developments, and, if they had, I doubt that it
would have had the level of attendance in general, and particular, the participation on the
podium and in the audience of so many executives from vehicle manufacturers and other
“smokestack” industries. Yahoo! was one of the original leaders of the Web 1.0, and, as a
high profile successful survivor, is still out ahead - I admit I forgot the statistic Rosensweig
quoted as the actual number of people in the US on Yahoo per month, but it was an
amazing percentage of the population...easy to see why the car folks value that traffic
today.

http://www.fleet-ingthoughts.blogspot.com/ 1/26/2007


A Busy First Day - No Less than 18 Separate Presentations or Break-
Out Sessions, and then Some Networking that Night
The first full day kicked off with an informative and entertaining presentation by Dennis
Galbraith, the head of Digital Marketing at J.D. Power and their resident Internet guru,
followed by three concurrent break-out tracks, with the topic headinds of “Dealerships,”
“Online Advertising,” and “Web Site Development.” Each break-out session looked so
interesting and informative I found myself more than once attending half of one and then
ducking out to get a small dose of the other two. A hazard of the business we are in,
steeped in online vehicle sales, is that each of the three broad track categories is of
interest to me on a business and personal level, so I found value in all three focus group
topics. So much was presented, by so many excellent practioners, I can unfortunately only
comment on those that I heard and even then on bits in pieces - this doesn't do justice to
the information or value received, as this particular industry event was probably the most
crammed full with valuable information of any I attended all year.

Given my current and past retail background in the business I did gravitate more towards
the “Dealerships” focused break out sessions, and started the day with a presentation from
John Holt, founder and CEO of The Cobalt Group, entitled “Next Generation Advertising and
Marketing Solutions for Dealerships.” I'll comment a bit more on this latter, because it is
central to the reoccurent theme that I thought I noticed throughout the Roundtable, that is,
that for the first time in a major industry forum all present agreed that the dealer mix of
advertising media, for effective promotion, has fundamentally changed - now even “old
media” and “old world ” folks see the serious dollars going in a different direction than they
have in the last fifty or so years of automotive retailing.

I then attended a panel discussion entitled, “Future Dealership Sites” moderated by Scott
Kane of JD Power, with representatives from some of the leading dealership Web site
creators, which served to reemphasize the changes taking place. Another conclusion drawn
from most of the participants that dealt with the topic is that the most valuable sales leads
for new or used vehicles are generated from a dealer's own Web site, not third party or
even manufacturer site generated leads.

There was then a general session on Consumer Generated Media, and then I attended
another Dealerships track break-out session with the title/topic, “Sales Integration: Linking
Shoppers from the Dealer Site to the Store.”

The Best Panel of the Day, and the Most Thought Provoking...
Although I don't think I heard a bad presentation or panel discussion all day long, but the
one I liked the most, the most thought provoking, and, in a way probably the most
controversial, was the Dealerships panel presentation entitled, ”Dealer Marketing Plan,
2006 and Beyond.” Now, maybe its because I'm a bit partial to dealer folks, but, in fact
they do usually “tell it like it is” (or at least the way they see it), even up on stage - and



they do usually “tell it like it is” (or at least the way they see it), even up on stage - and

this quality, I think, is what drew the “standing room only” event.
Three of the four panelists came from dealerships, and one of them was my old friend Ralph
Paglia, CRM/e-Business Director of Courtesy Chevrolet (see the Sept. 15, 2006, Vol. 2 No. 30
entry for some background). When you combine Ralph on stage with Gary Marcotte, Senior
Vice President, Marketing and e-Commerce, for AutoNation, I and the rest of the audience
learned that you not only get straight shooting, but a but a hell of a lively discussion as
well, particularly when fielding audience questions.

It was this discussion on this panel that hit home for me the dramatic changes that the
Internet has produced for marketing and selling cars, even in just the last few years.
Specifically, while there might have been some fringe vendor groups that espoused the idea
that the Internet would develop into one of, if not the, dominant media for retail dealer
advertising, it certainly wasn't the thought of the mainstream with very few dealer
advocates in that regard. As was told to me when I got into the retailing end of the
business: "newspaper, newspaper, newspaper" was where consumers shopped for cars, and,
while you could experiment and add a mix with radio, television, direct mail, etc., always
the greatest portion of your media budget had to be devoted to newspaper print or you
were downright foolish. Now things have very much changed, the expert dealer practioners
on the podium, and the audience included, have come to the realization that Web based
promotion, for new and used vehicles, is where the present and future focus lies for more
efficient effective promotional dollars. Everyone agrees that newspaper print and classified
advertising for retail consumers if not dying, is, indeed decreasing and trailing off, being
replaced by creative Web based media. Also, significant, while it was said that newspaper
advertising is not dying but trailing off, it was agreed that shotgun, direct mail impersonal
type of solicitation was indeed dead, replaced by the the intelligent or sophisticated use of
the Internet, at least for panel members.

What was also said by a panel member, that, I think tells how far the automotive retailing
world has progressed, was that a few years ago in an average dealer twenty group maybe
four or five members had an Internet eBusiness Development department - it was nice to
have but not a necessity, more of a novelty. Now, on the other hand, if a twenty group
member doesn't have such a structured department in his organization, and, indeed, doesn't
devote full resources to that department, he/she is looked on as backward, lacking
something as vital as a used car department or a parts department. We have come a long
way from where we were just a few years ago, to where we are now. I'm sure many dealers
do not still understand the positive impact, indeed, the future virtual necessity of devoting
resources and energy to a dealership eBusiness department. What is clear though now, is
that the best, most productive stores do understand this and are in the forefront because of
this understanding.

The Final Session of the Day had a Group of Industry Icons
For the final break-out session of the day, I switched gears a bit and went to the “Web Site
Development” track panel discussion. All of the sessions looked interesting, but this one had
a lot of automotive Web industry icons that I always have enjoyed listening too and who



a lot of automotive Web industry icons that I always have enjoyed listening too and who

always seem to have something of value to say. First, the panel was cleverly moderated by
Cliff Banks, the Director, Editorial Development, of Ward's Dealer Business, I've known Cliff
a while now and it was clear, with the talented folks on the panel, he was going to probe
with some very insightful questions. First on the list was Chip Perry, CEO of
AutoTrader.com. For my particular niche, online vehicle sales, I've
always thought Chip was one of the smartest guys in the industry
and his success with AutoTrader.com speaks for itself.
AutoTrader.com is without doubt the leader in its category and
with Chip's direction always seems to stay one step ahead of the
pack. He was joined by Mich Golub, President of Cars.com,
another online vehicle sales expert and leader in the field. John
Holt, the Founder & CEO of Cobalt Group (mentioned above)
joined them. It is important to note that these three veterans led
their respective companies from the beginning, through the
bubble times of the 1998-2000 period and through the trough of
2001-2003, and during all of it moved steadily forward to success.
Stephen Henson, Executive Vice President Consumer Business and
Marketing of Kelley Blue Book rounded out the panel of car
veterans, and they were joined by someone new to the car
business but not new to the online world, Jim Riesenbach, the new President & CEO of
Autobytel. I had the pleasure of meeting Jim before his presentation, and, truth be known,
I went to high school with his older brother (one more thing to make me feel up there in
years).

You couldn't put together a more impressive panel, and what struck me is the fact that
while most of these guys are at the top of their game - you probably couldn't create a rival
to AutoTrader.com, Cars.com or Dealix (Cobalt) now, they have such market presence -
each are still aggressively adding innovations and are in the forefront in driving new and
improved services and processes for their dealer and consumer constitutiencies. It was an
informative way to close a very informative day. Well actually Dennis Galbraith closed out
the day after with his unique way of summarizing about, say 20 hours worth of content
(remember three simultaneous break-out tracks), in about ten minutes.

After such an information filled day, it was great to relax in the cocktail reception that was
hosted by J.D. Power. Once again, if you told me that a reception was scheduled to last
three hours, for most venues, I'd say most folks would leave after the first hour or so...not
at J.D. Roundtable, I stayed around at least an extra hour and I hear others stayed much
longer...

Day Two: Technically a Half Day...but How Can You Not Call a Day
with 9 Separate Presentations or Panel Discussions A Full Day?
The second day of the Roundtable opened with a general presentation on media and
advertising, or to be accurate, digital media and advertising, with a panel filled with



advertising, or to be accurate, digital media and advertising, with a panel filled with
representatives of the “big guys” in the business, DaimlerChrysler, Honda, Time, Inc. and

TeamOne. More applicable to me was the next break-out session that followed, under the
Dealerships track, entitled, “Successful Dealer Panel.” I'll tell you what is very clear to me
(so clear perhaps that I might have mentioned it before), the automotive retail world is
quickly being segregated by those dealers that “get it” and those that do not; and, unlike in
prior times when the knowledge delta wasn't all that vast because dealer technology really
didn't develop or change that quickly, in the last few years there has been a monumental
change in how fast and how far the most efficient practices and operating tactics have
developed. I say this, not only referring to the efficiencies of “sell side” new and used car
promotion and related retailing developments (some dealers, I'd bet, still maintain that
nothing will ever replace print advertising and that's where all of their budget will remain),
but on the “buy side” for used car inventory purchases (I see that in our business, the
dealers that don't shop for wholesale inventory on the Web are clearly at a disadvantage to
those that do), in “F & I” (a few years ago DealerTrack was a start-up, now their electronic
“F & I” service is in something like 80% of new car dealerships), in fixed operations (service,
parts, and body shop), etc.

In retrospect, I think that dealerships were the very last independent businesses to transfer
from the famous “green screen” computers to windows operated interfaces (suspended
there by suppliers for almost twenty years). I say this because I think its a symbol of an
industry that does not force or embrace change too quickly (the status quo has been good
enough for a long time)...however, I think that is a symbol of the past, and things have
changed more rapidly and fundamentally in the last few years than they have cumulatively
in the prior thirty years.
The second break-out session of the day under the Dealerships track followed the theme of
the first, and was entitled “Best Practices: Leads & Customers at the Dealership.” Again,
from what I hear on panels like these, not only is change rapid now in automotive retailing,
but, the economic efficiencies related to those who develop best practices will, I think,
force the great wave of change throughout all stores as Darwin's survival of the fittest takes
over - in these challenging times for retailers, the difference between profit and loss, in my
estimation, in may cases will come down to adopting the efficiencies of technological and
process developments. The gap in operating costs and revenues is widening between the
dealers who “get it” and those who don't.

The final Dealerships track break-out session of the Roundtable dealt with search engine
marketing, and the need for dealers to optimize their sites for organic search - again, what
a change of a few years ago, when the vast majority of dealers considered their Web site as
a sort of trendy “add-on,” in a world where any real sales leads came from third party sites.
Now the collective knowledge as expressed in this Roundtable indicate that things have
clearly reversed: the best sales leads are generated from a dealer's on Web site, which
absolutely requires both an effective and comprehensively developed site, and the
knowledge of how to attract business directly through Web based techniques like search
engine marketing.

To Sum Up 2.0



To Sum Up 2.0

In summing up the Automotive Internet Roundtable 2.0, from a very personal perspective,
its clear that the automotive retailing is a more challenging business today than ever. Not
only because of the big picture economic forces at work (energy costs, over supply etc.),
but by current the current absolute necessity to keep up with technology and processes that
today change more rapidly and with such measure, that it really is redefining the rules on
how you successfully sell cars, whether you are a manufacturer or dealer (remember the
“newspaper, newspaper, newspaper” rule above, that held for at least 50 or so years, that
now is pretty much out the window).

In a way, the “2.0” change seems threatening to the smaller independents out there, not
supported by the largest resource base or corporate parents. On the other hand, I see
maybe even more opportunity today for those, large or small, that are flexible and, above
all, willing to dedicate themselves to keeping up and learning to work smarter, ahead of the
pack. The business generating reality of the Internet has created this “knowledge based”
advantage like no other invention that preceded it. While of course having the most
resources is still an advantage, unlike the past, resources alone do not define the winners in
“2.0,” indeed, knowledge of how to most efficiently work the new systems that are
evolving rapidly is the more fundamental key. One only has to look at the major newspaper
chains to see the truth in this, as the, reflect the ever decrease in advertising of the
present automotive sector and others. Those largest chains all have tremendous resources,
but today if they have not already invested in an aggressive and successful online
compenent, they seem to be as good sold to the investment community and their largest
shareholders. Ironically, Yahoo! is now including a newspaper classified sales piece, as a
commissioned seller, to even their smallest advertising customers, in an effort to be the
single place to put promotional dollars, and, they claim, to be the most efficient source as
they can more effectively place and service advertising buys. A few years ago that would
have defined the ”tail waging the dog, ” would it not? Like it or not, the world is changing,
and this Roundtable did a good job identifying how in the car business in so many different
ways.

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