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The Lead-Gen Death Throes

'Da Man' wonders if the lead-generation business is gasping its last, wheezy breath.

May 6, 2016

They came dancing into our lives back in the mid-’90s and totally transformed our industry. In fact, I recall the first time I saw Autobytel exhibiting at the National Automobile Dealers Association (NADA)’s convention. I shook my head and said, “That ain’t gonna happen.”

Well, it did happen, and we all saw a growing parade of competitors in a vicious dogfight to dominate the space. My hat’s off to the few who prevailed.

The real game-changer, however, was Scott Painter and TrueCar. Painter’s business model reflected his thinly disguised contempt for car dealers. Unlike other lead-generation providers, whose primary purpose was to connect car buyers with dealers, TrueCar’s main objective was to set prices and broker deals at a loss for the dealers. We all know how that worked out.

But hundreds of other companies followed TrueCar’s lead and got into the brokering business. But the landscape is rapidly changing, and the paradigm has shifted enough to loosen their stranglehold on dealers.

Today, the dominant players in this space are Autobytel, Autotrader, Carfax, CarGurus, Cars.com, Edmunds, and TrueCar. To their credit, Autotrader and Autobytel have never based their business models on slandering dealers. I can’t say the same for the others. They would have you believe they own the only computers capable of tapping into a wide audience.

But the worm is turning. Dealers are tired of paying good money to lead providers that portray them as greedy and dishonest. They are now taking back their turf by generating their own organic and paid traffic. But these vendors will tell you that canceling their program will put you out of business. Don’t fall for it! No dealer ever went out of business because they dropped an underperforming lead provider.

They will also tell you they’re actually “advertising sources,” not lead providers, to justify their poor results and soaring prices. What a joke! Nonexistent ROI is just that.

Many dealers I have worked with have seen tremendous results from each of the companies previously listed, including firms I have railed against the most. If you have forged a mutually beneficial partnership with a lead provider — and the price is right — I won’t twist your arm to drop them. But I would encourage you to take a hard look at your provider’s numbers.

If you’re wondering what the future holds for these vendors, take a look at what’s happening at TrueCar. Painter is out and my friend, Chip Perry, is in. Good move. Painter seemed willing to change course, but he kept steering the S.S. TrueCar into the same iceberg. If Perry can avoid any hint of anti-dealer sentiment, the company has a chance to make it.

The TrueCar story is unfinished, but it’s nearing its final chapter. It has a lot of haters out there and a lot of damage and double-crossing has been done. The odds are not favorable, but I would love to see the firm come through this as a new and viable company in “true” partnership with the dealers and the consumers.

Regardless of what TrueCar or any other lead provider is or pretends to be, the bottom line is this: Are they producing sales at a profit? Don’t tell us about vehicle display pages, search results pages, impressions and pageviews. That’s a smokescreen. Stop forcing us to sell cars at a loss. We don’t mind fair, but you are an abomination when you steal customers who would have bought from us anyway.

Finally, stay out of our profit centers. Stop selling F&I and service. Stop sending shoppers who click on the cars we paid to advertise to other dealers and other manufacturers because you have made side deals against the best interests of your customers, the dealers! You sell your leads to multiple dealers and we all pay for the same customers, and then you sell them to a broker who sells the same customers we paid for to other dealers. If they click on our unit, they’re ours. Don’t market them away to other dealers and even other manufacturers who have paid you to steal our customers.

Lead providers have a definite place in our business. We would like to have you as a part of our marketing plans, but not at the extravagant, excessive prices you charge. Stop slandering us and defaming us with the consumers if you want our money. Doing the right thing is the best way to ensure you’ll still be around when the dust settles.

Thanks for reading, and please keep those calls, emails, and social media messages coming.

Jim Ziegler is the president of Ziegler SuperSystems Inc. Contact him at [email protected]

Comments

  1. 1. Chris Scott [ May 13, 2016 @ 10:19PM ]

    Well said Jim! You take our money so it would be nice if the the 1st thing sales people (and/or dealers) didn't have to do was try to convince the potential consumers (that we paid you to bring through the doors) that we're not the cut-throat scumbags you've led them to believe that we are before we ever shake hands and welcome them to our facility.
    It's a shame that people in the car business basically have to defend and differentiate themselves (sometimes unsuccessfully I might add) upon introduction to anyone not in the industry, because of the preconceived notion, that we're not the greedy con-artists we've been portrayed to be for such a long time! Meanwhile, the ones that plant this train of thought into the unsuspecting, easily persuaded consumer, is doing EXACTLY what they claim we do to consumers, to us, while they make themselves out to be heroes! Absolutely ludacris!

  2. 2. Sean Sprague [ May 14, 2016 @ 07:01AM ]

    Da Man,

    I can appreciate your sentiment. I am a brand new used car dealer with a unique approach to the business.

    Some of the companies listed do try to bring the customer more transparency and market data to stream line their buying process. I do like that part of the evolution.

    However, when you pay good money to advertise only to have your specific Vehicle Detail Page bombarded with a ton of other products, I feel cheated by the provider. Once a customer has clicked on your car, I agree they should see "your" car.

    In terms of slandering dealerships...

    well, many dealerships do get their reputation for a reason. They are a typical car dealership playing the games we have been trained to play.

    However, rarely have I seen an advice article or top ten list of how to buy a car really give a customer solid advice. These articles have only provided me with Intel on how to adjust my process to better prepare for a modern car buyer.

    But like I said, I am taking a different approach, a radically different approach for my business, and I am still figuring out what providers will be my partners.

  3. 3. Jennifer Briggs [ June 15, 2016 @ 02:26PM ]

    Jim you know my feeling on "leads" I am a firm believer that as a dealer we reserve the right to represent OUR brand. Not spend thousands of dollars to promote a third parties branding efforts. If it doesn't result in a direct action on or to MY website. I'm out!

  4. 4. Glyn Taylor-Williams [ July 08, 2016 @ 10:17AM ]

    Jim this is what happens when a business has a kind of monopoly on the marketplace, they have the audience and can charge what they like. And dealers are forced to use them otherwise they face potentially not getting any sales at all.

    It is a bit of a joke how much they charge. Also I've noticed the sites are quite basic in design. And they offer no real value other than being a display ad for your inventory.

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Author Bio

Jim Ziegler

President & CEO of Ziegler SuperSystems

Jim 'Da Man' Ziegler joined the magazine in 2011 to deliver his On-the-Point message about the car business to dealer principals and store managers. He'll offer strategy advice on everything from sales and F&I to marketing in the digital age. Catch him every month at www.fi-magazine.com.

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