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"Did you really just say $4000 a month for SEO?"

"Yes Mr Dealer, I did."

If you would have asked me 2 years ago how much a dealership would be willing to spend on their search marketing, I would have said the savvy dealers that recognized SEO and PPC as necessities would pay up to $1500 a month. Most wouldn't pay more than $500.

Times have changed. Competition is stiff for car dealers as more are bidding on Adwords and more are finding success in SEO. The biggest challenge we faced as a marketing company in 2009 was in maintaining our top position in the automotive SEO world with products that could be priced under $1000.

I'm here to tell you, my friends, that many dealers recognize that what would once be considered an outlandish number to pay for search engine optimization is simply not that much anymore when you consider the ROI.

This is not a pitch. The next section of the article will sound as if I'm pitching you a product, but stay with me and you'll see where I'm getting at shortly.

The BEST SEO = Unimaginable ROI

Many dealers have heard the pitch that says they'll double or triple their traffic through SEO or PPC advertising. In 2008 and 2009, that was possible, as there were dealers getting 500-1500 unique visits per month.

Today, getting an increase of 1000 targeted visitors through strong SEO can equate as such:

1000 visitors * 5% lead conversion * 20% closing rate = 10 sales * $1400 F/B gross = $14,000 additional profit.

You would ask, "But Jim, why would I spend $4000 to get $14,000 gross? That's not that great."

I would reply, "Oh, did I say $4000? That is the price of TK Power Elite SEO. Those numbers I just gave you are typical for our TK Power Premium SEO at $1500 a month."

And That's When it Hits Me

For years, I have been answering the question of "how much would a dealer spend on SEO" with a flat answer. In 2008, I would answer the question as $500. In 2009, I would have bumped that up to $1000. In 2010, many dealers are spending several thousands of dollars a month on PPC, and yet we would hesitate when we had to tell a dealer that it cost $2000 a month for top-level SEO.

Recently, I finally realized I was answering the question wrong. When asked, "how much will a dealer spend on SEO," I can't spit out a number. I have to ask the question to our SEO department, "what will the dealer get for the SEO they purchase?"

So, I did. Our SEO department is currently the largest single department in our company. Our SEO, which has been considered top-notch for years, has evolved into a fine-tuned machine with more people, processes, and activity than any other in the company.

I asked them to show me stats. I called dealers. I looked at what an average dealership could reasonably expect if we them a complete, no-holds barred, earth shaking Elite SEO product that kept them constantly expanding their market and owning the search engines.

We came to the conclusion that the ROI and work involved dictated a $4500 price tag. I dropped it to retail at $3499 and started pitching it.

What's the Point?

Would you spend $50,000 a month on SEO? You would if it could generate $250,000 in gross profits. Unfortunately, no SEO on a single dealership can deliver that, but you get my point. When dealers ask us about price and compare vendors to one another, they are doing a disservice to themselves. The real question for anything - SEO, websites, social media, classified listings - is simple:

"What is my ROI? What will my cost of acquisition be with Power SEO?"

Now you're asking the right question.

Understanding the Numbers

Our biggest obstacle today is selling against PPC. Yes, PPC can deliver clicks. But are they "additional" clicks. I was looking at a report the other day that showed me a dealer was getting over 1000 clicks a month from $1200 PPC budget. I wasn't sure what to say because the conversion rates were great and they were selling more cars than what $1200 worth of SEO could do for them, so I went to JD Rucker.

He looked at the reports and noted that over 40% of the clicks were coming from the dealer's exact name and another 20% were coming from variations of the name. While there are benefits to buying the dealership name, JD told me that these weren't 1000 additional clicks but rather closer to 300.

People that search for you by name want to buy a car from you. Yes, the traffic will be high. Yes the conversions will be high. But if you're really wanting to see what the ROI is on a PPC campaign, you must parse out the clicks for you by name because there is a very easy case that can be made that the vast majority of those who clicked on the ad would have clicked on your organic #1 listing anyway.

In 2011, we are recommending to all of our dealers that the establish a Digital Marketing Strategy. We’ll be talking more about it in the weeks to come, but no strategy works if you don’t understand the numbers.

They say, “You can’t manage what you don’t measure.” I say, “You can’t measure if you don’t cut through to the core of the numbers.” That, my friends, is the key to success in 2011.

Jo Dean
Hey, if it makes a profit, then its worth it.
Ryan Thompson
20% closing rate on internet leads! wow don't see that too often. Interesting article
JD Rucker
Actually, 20% on dealer website leads. A little higher than average, but definitely nothing exceptional.
Ryan Thompson
Gotcha!!! Here in Canada I usually see around 10% closing, but every dealer has their own strategy.

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