CARS a Lesson in Social Media

It’s anyone’s guess what will happen first, funds running out or the Nov. 1 expiration date for the Car Allowance Rebate System (CARS), or what is known as Cash for Clunkers. Whatever the case, the federal program has not only breathed new life into the industry’s battered entrepreneurial spirit, but it’s also uncovered what might be the working formula between traditional and new-age marketing.

Franchised dealers began receiving letters from manufacturers in the days leading up to the National Highway Traffic Safety Administration (NHTSA)’s anticipated July 24 release of the program’s finalized procedures, which, for dealers like Stoneham Ford, couldn’t come soon enough.

Stoneham Ford’s story of how it’s taking advantage of what amounts to a $1 billion, government-subsidized, advertising campaign is a case study on the future of marketing. It’s also a tale of just how quickly the online world moves and how quickly it can morph into something completely unexpected.

“We started working on this in late March, early April, and our belief was that social media was going to play an important role,” said Michael Warwick, Internet director for the Stoneham, Massachusetts-based dealership, which hopes to sustain a 25 to 28 percent sales increase over the life of the program. “Listen, I’m a big online guy who thinks print advertising is dead. However, this is different. People go to newspapers to get information, which is why I think dealers should consider taking out newspaper ads to go along with their online strategies.”

Social Media in the Spotlight

Not more than three months after Congress proposed the Cash for Clunkers legislation in January, Warwick began strategizing with the dealership’s New Jersey-based marketing firm, Pasch Consulting Group (PCG). Warwick wanted his store to get top billing whenever potential customers ran a Google search on “Cash for Clunkers” in Massachusetts. What happened next is a lesson in the power of social networking.

“The first thing we did was have marketing firm add us to their microsite targeting the keyword, ‘Cash for Clunkers’,” said Warwick. “Once the Cash for Clunkers microsite was up, we were getting 60,000 to 70,000 page views a day, and it became the No. 1 search result on Google.”

The success of the microsite, however, ruffled the feathers of some regulators and bloggers, who complained that the site was launched before NHTSA’s www.cars.gov information site went live. At issue was the tagline PCG developed for its client’s Websites, which read, “Cash for Clunkers Participating Dealer.” Warwick said his firm voluntarily changed the tagline to “We Can Help” since the official NHTSA registration process had not yet begun.

With the site in place, Warwick then moved to create an eight-person Cash for Clunkers team, a group that included three business development center (BDC) reps, four salespeople, and the main decision maker in the F&I department.

While most of the team worked on figuring out what vehicles qualified, and setting up relationships with local wrecking yards, the F&I manager and his department began working with banks to set up guidelines for people who qualify. The big question was whether CARS credits would be viewed as down payments, or calculated as customer income. While questions like those had many dealers wondering if participation in the program was worth the hassle, Warwick preferred to concentrate on what he did know and let his online marketing strategy do the rest.

“Mike’s the new breed of forward-looking car dealers because his dealership is embracing technology, automotive SEO, blogging and all of those things,” said Brian Pasch, president of PCG.

Pasch also represents a new breed of marketers, a group that’s preaching the power of what he calls automotive search engine optimization (SEO). He views the chatter regarding the Website’s original logo as evidence of the power of SEO. “Some critics didn’t like the fact that we had created a dealer marketing message before dealers could officially register for the program,” said Pasch. “We just looked at it as a marketing opportunity for dealers to communicate that they planned to be involved in the Cash for Clunkers rebate program.”

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The adjustment to Pasch’s microsite, which provides free links to hundreds of car dealers across the country, didn’t stop it from taking on a life of its own. Through the site’s forum, Pasch began to notice consumer complaints about the less than 18 miles-per-gallon (MPG) requirement for clunker owners to qualify for the $3,500 or $4,500 incentive. He also saw a number of complaints regarding the one-year insurance and registration requirement.

These revelations led Pasch to create www.nocashforclunkers.com, a site that is now working to lobby Congress to remove the registration and insurance restrictions, and to reward a purchase which yields a net 10 mpg increase. Pasch, who predicts funding for the program will run out by Labor Day, said he hopes the site can collect enough signatures to convince Congress to not only extend the program, but to amend the qualifying guidelines. At the very least, he said, the social-networking experiment puts his clients in a good position to take advantage of a three-month program that could result in 250,000 additional vehicle sales.

“What Mike and I did was simply create an online strategy, which then morphed into a national organic search marketing phenomena,” said Pasch. “We felt you don’t get many chances like this, so we wanted to do it right. The fact is, dealers are moving toward a stronger online presence. It started in sales, but now it’s extending down the food chain into parts and services. I think F&I is the next step.”

Congress Puts Dealers in Control

Cash for Clunkers has definitely been a shot in the arm for many marketers, a fact many attribute to how Congress wanted the program to work. Companies like Experian Automotive and www.OnlineBKmanager.com’s direct mail division responded by touting services aimed at identifying and marketing to qualifying customers.

“I really like the way [Congress] did this,” said www.OnlineBKmanager’s Robert Davies. “Rather than put the control of funds in the hands of consumers like they did in Europe, they put dealerships in control. It lends itself to more avenues of advertising.”

While the program was a lot less complicated in Europe — both in what constituted a qualifying clunker and how consumers received the reimbursement — Congress wanted to make sure the program put consumers in dealership showrooms. However, it added a little twist, choosing to mirror the U.S. version after the fuel-efficient component in Germany’s program, which Michael Harrington, chief legislative counsel for the National Automobile Dealers Association (NADA), said spurred a brief 40 percent increase in sales.

“It’s a lot less complicated in Europe, both for the consumer and the dealer,” he said. “They did the reimbursement by mail; the consumer would buy the vehicle and then apply for the reimbursement. For dealers, it was just like any transaction.”

Members of Stoneham Ford's Cash for Clunkers team, which includes Bill Pollack, sales manager, Aram Mooradian, F&I director, Nicole Masson, BDC coordinator, MIke Warwick, Internet director, and John Melkonian, F&I manager. The team put their heads together in April to develop a strategy that would center around it's online presence, a tactic that resulted in 60,000 to 70,000 additional site views a day.

Harrington was well aware of the concerns among NADA’s members, concerns he hoped the association’s July 27 Webinar would address. He hoped it would address dealers’ fear  of the prospect of policing consumers who try to take advantage of the program, but said the administration would hold consumers accountable as well.

Harrington also understood why dealers were scratching their heads over the scrapping requirement, but said administration officials were aware of those concerns as well. He also acknowledged why dealers questioned NHTSA’s requirement for orderly paperwork despite not having a submission system in place. The one thing he didn’t understand is why dealers wouldn’t see Cash for Clunkers as a good thing for the industry, especially with manufacturers fully behind the program.

“Whether we should do it or not, that question’s already been answered,” he said. “Like anything brand new, it’s probably going to take a few weeks before we get our sea legs with this program, and I’m sure the computer system they put in place is going to crash at some point. But this is a good thing for the industry.”

For dealers who still question the program’s viability, Stoneham’s Warwick has some advice. “If you’re afraid of the program, stand on the sidelines and we’ll be happy to take your customers.”