We all know that just having a website, no matter how great, is not enough to make sales in the automotive industry. LEARN MORE
Today, ninety percent of all vehicle purchasers begin their shopping experience online. Undoubtedly, online automotive shopping has fundamentally changed the way people shop for vehicles and the strategies dealers use to market to and intercept those shoppers. The process of shoppers being able to go online, enter their vehicle of interest, and then see vehicle listings with price and contact information has been an increasingly common practice since AutoTrader.com and Cars.com came on the scene in the mid-nineties. But now, consumers are able to do all of that within the comfort of their own Google experience.
Google isn’t really anything new to the automotive shopping experience. Currently, two-thirds of all traffic to dealership websites comes from a Google search, but now they’re trying to actively extract some of the value from that statistic. The aptly titled Google Cars feature that has been running in beta since last summer, allows consumers to search for vehicles of choice with a handy filter box and get access to inventory, pricing, and dealership contact information. Think Cars.com or AutoTrader.com, but with arguably a sleeker look and more streamlined experience.
But this isn’t just another vendor frolicking into the industry. This is Google. So, what does Google having their hand in the automotive inventory publishing game really mean? Let’s take a close look at all the pros and cons.
Google Cars as a Lead Provider
Dealers who sign with Google can be listed in their inventory for no monthly or up-front charge, according to a recent Automotive News article. And many dealers have said that they like the new lead system generated by Google Cars. The handling is based on a bidding system, where dealers have the opportunity to bid a minimum of $10 for any particular lead, and even define a maximum cap that they’re willing to pay. This allows for a lot of flexibility for the dealers to purchase leads that may or may not be more important depending on the type of inventory their trying to move around.
But other dealers are questioning the effectiveness of those leads. In the name of consumer privacy, the only information that dealers receive is a first name, phone number, and email address. This might actually seem enticing, as many potential customers on your website don’t leave all that information; however, the contact information that the dealer receives is only a proxy, according to an article in the upcoming publication of DrivingSales’ Dealership Innovation Guide. The dealer receives a fake phone number that redirects the call to the customer’s real number, to which the dealership can only contact 6 times before the number is terminated, regardless of whether the customer answers or not. The same follows suit for the email address: 6 unanswered emails and the address goes bye-bye.
Because of the anonymity of the leads, some dealers feel those leads are less effective. The structure, although protecting the identity of the customer, negatively impacts the ability to do any long-term follow up, unless that dealership is able to extract more legitimate contact information before the time runs out.
In this day and age, when all a consumer wants on any purchase request is price, it’s becoming more and more important to find ways to sell your value proposition. This is another argument against the Google Cars model, that it’s difficult to convey the benefits of your store when your contact attempts are limited. One dealer, in an Automotive News post, describes the difficulty as a result of Google “commoditizing” the car buying process.
Wait, that sounds familiar. The last company that popped on the scene with the intention of becoming a lead provider in the online automotive retail market was tarred with the same accusations. TrueCar, anyone? Of course, TrueCar was forced to regroup and redefine themselves in a more dealer-friendly manner, due to both industry outcries and legal nuances. Still, it seems we’ve heard this story before.
Don’t get me wrong; Google may not be like TrueCar in practice or intention. Whereas TrueCar was providing specific information in such a manner to arouse dealers to grab their pitchforks, Google is managing the potential interactions between dealers and customers, forcing dealers to reevaluate their approach. One gruesome similarity is vendor access to the dealer’s DMS.
Google, the All-Powerful
The Google lead potential can be hugely beneficial to dealers because of its size, monster brand, and trust factor. Google frequently tops the charts when it comes to companies that people most trust. I mean, we’re okay with them putting driverless cars on the road, right? That’s testimony enough. So having your customers filter from the most trusted brand directly into yours can be tremendously valuable, and many dealers recognize that. Google is almost too big of a name with which to not be involved.
But the inherent power of Google might be a double-edged sword. Google comprises over 70% of all searches on the web and can predict more consumer-shopping behavior than anyone out there. And who has control over where search results land on any given search results page? You guessed it. Google does. So now, with all the hard work you’ve done to rank first on Page One when searching certain keywords, you’re not only pushed down below the sponsored links, but also below the newly inserted Google Inventory postings. And if your computer screen is the same size as mine, those items and the organic link listed first are the only visible links available without scrolling. So if you’re not number one, sayonara.
Is this fair? Is it right that Google can just put their own product up at the top and encourage traffic there? I mean, if I type in the name of a dealership such as ABC Ford, you better believe that Google’s Inventory on Fords shows up above the link for ABCFord.com, even though it’s that particular dealership that’s being searched. For all the hard work you’ve done to get to the top of the page, it seems Google has just side stepped their way to the top.
Google has previously been investigated for monopolistic tendencies with regard to these same practices. They own so much of the search and ultimately have control over the algorithm, that the opportunity to run afoul is great. However, the FTC declared in January of this year that they would be dropping all investigations against Google, stating the Google’s mission to provide the best answers for their users did not violate any antitrust or anticompetition statutes. Basically, it leaves a greater opportunity for Google to be even more aggressive with their Google Cars push and other products in various industries.
Another Inventory Publisher
Not only does Google directly impact that dealer side of the industry, but it also has the potential to completely disrupt the current online automotive inventory publisher side of the business. With so many shoppers starting their buying cycle online, predominantly on Google, it’s not far-fetched to think the consumers are going to stay within the Google platform instead of rummaging through all of the other big names like Cars.com, AutoTrader.com, Kelly Blue Book, and the others.
Not only does Google’s brand and level of trust with consumers threaten other automotive inventory publishers, but their user experience does well. Google is typically clean and uncluttered, but with regard to their Google Cars feature, customers won’t have to click through various menus or subheading to get the answers they want. It’s a streamlined process that’s almost entirely user-friendly.
Additionally, the lack of contracts required for dealers to post their inventory is hugely appealing to dealers and makes other subscription-based platforms seem less than enticing. Will companies like AutoTrader.com and Cars.com be forced to modify their pricing strategy? The Cost Per Action Model is not new in the industry, but always exudes a shiny lure.
Not So Fast, Google
Success in inventory listings requires enough listings to make a market and enough shoppers to make it worthwhile for the dealers posting those listings. Google has a built-in supply of shoppers, but not so with inventory. Most of the several thousand people working at AutoTrader.com or Cars.com are there to help dealers. Google doesn’t provide this level of support, and it’s yet to be seen whether they can get sufficient inventory without it.
Tapping into the dealer’s DMS for inventory is no small thing, and most inventory publishers don’t require this. Getting some progressive Bay Area dealers to try the program is one thing. Getting the Chevy dealer in Burlington to sign on to the system and open up her DMS with virtually no human contact or support could prove to be more difficult.
The biggest challenge for Google will be new vehicle listings. No one has fully figured that out yet. An inventory publisher doesn’t need to get inventory from the local Volvo dealer to have at least some used Volvo listings. However, if there is only one Volvo dealer in the shopping radius, then there will not be any new Volvos listed. The same is true of manufacturer certified vehicles.
Inventory publishers generally list vehicles from private parties as well as dealers, not because there is any real money in private-party listings, but because it makes a better market and consumers are more trusting of sites that don’t look like they are just a tool of the dealers. The beneficiary is the dealers themselves. However, private-party listings require a great deal of fraud prevention effort to maintain the site’s credibility. The lack of it is what holds Craigslist back. But adding all this takes man-power. The number of people working on inventory listings at Google couldn’t run the mail room and janitorial service at AutoTrader.com. It really is that different, and moving fully into this business with a competitive level of support would require a culture shift for Google from technology provider to professional support.
How to Prepare
For the time being, it seems that Google Cars could become a major player in the space. Although they aren’t announcing any intent on expansion outside of the current northern California pocket, many experts have reason to believe it’s not far off. With their big brand, monstrous following, and lack of Federal investigations, Google is poised for a huge push in automotive retail. So, what do dealers need to do to be prepared to ride the wave?
Although in the past, Google has struggled with their attempts in the automotive vertical, they’re currently making great strides to position themselves as a permanent fixture for customers and dealers. And it has nothing to do with driverless cars.