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Dennis Galbraith

Dennis Galbraith Chief Marketing Officer

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What Will Vendors Look Like In Five Years?

     In 1995, nearly all dealer marketing dollars were spent with local vendors. Local newspapers, shopper magazines, radio stations, TV broadcasters, and cable companies enjoyed a fair amount of autonomy from parent companies and very little competition from national companies like Autobytel and AutoTrader.com.

      Today, well over 100 companies compete nationally for dealers marketing budgets. Integration is often a nightmare. Even more challenging, many of the new products are participatory models, requiring the dealer to modify operations in order to extract full benefit. These dealership challenges will not stop dozens of new vendors from forming and taking their shot at the multi-billion dollar market.

     The vast majority of national vendors went into business to gain penetration and sell out. Getting bought out by a larger company is the dominant exit strategy for these national companies. Yet they serve local dealers who sell vehicles in a tiny sliver of the national market and hope to do so for generations to come.

     The recent wave of vendor consolidation is but a small spec of what is yet to come if vendors' dreams are to come true. But who will be left, and how will they be received. Any vendor that gains a large share of the budget gets demonized by a portion of the dealer community (e.g. ADP, Reynolds and Reynolds, AutoTrader.com). Many dealers are afraid to place too much of their budget with one or two companies. But it could get worse. The prospect of being limited to a hand full of vendors forced on them by manufacturers is enough to make some dealers leave the business. Yet synergies among all three tiers of advertising must develop.

     Will the large vendors become mega vendors? Will they get there via the OEMs? Will companies like Google, Microsoft, and eBay make a move to become the new heavyweights? If small vendors are here to stay, how will dealers decide among them? How will dealers objectively measure the value of so many vendors while trying to run a business in an increasingly completive market? Can vendors attract top talent without the prospect of a big payoff? Will any of these scenarios result in a faster level of consolidation among dealers into large dealer groups with centralized marketing teams?

     More than marketing hangs in the balance. You can't have a five-year plan unless you have some idea what the environment looks like in five years. The answers may change the structure of stores, dealer groups, and the relationships between dealers and OEMs.

     Thoughts?

Matt Watson
The future (and present!) is fully integrated solutions. There are huge benefits to having your CRM, desking, dealer website, inventory management, marketing campaigns, surveys, and many other things tightly integrated together.
Dennis Galbraith
I fully agree with you Matt. I'm not sure if this comes about through single company solutions, industry standards, of families of integrated products from various companies. I'd love to hear your thoughts on this. Still molding my view, but here it is so far: For dealers, the ideal situation would be a competitive landscape among solutions providers that are interchangeable within an integrated solution. Sadly, that does not seem to be the current path of vendors.
Matt Watson
Here is a simple example: When you send an email from your CRM, you should be able to email pictures and details about your inventory. You should be able to click links on those details that take you to that vehicle on your website for more details. That example requires inventory and website integration with your CRM. That is such a simple example and unfortunately dealers can't even do it. It requires a fully integrated solution like VinSolutions.

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