In these tough economic times, many dealers are looking for ways to cut expenses and protect cash flow. Some will feel the need to cut back on advertising, while others will recognize that advertising can be a lifeline in a down market. The trick is to focus advertising dollars on those things that produce the best results in relation to the dollars spent.

Purchasing quality leads and direct mail programs can be a good use of advertising dollars. If generated correctly, Internet leads and direct mail can produce some of the best results for dollars spent. Here’s my list of the top five things dealers should look for in a lead provider:

1. Choose a lead provider that makes a commitment to doing things right. You may be responsible for their violations of laws and regulations when they are providing services to you. Reputable lead providers will not balk at making representations that they will comply with applicable laws, and take steps to ensure their partners do as well.

2. Ask how leads are generated. Are they bought from other providers or aggregators, or are they generated by the lead provider itself? Obviously, providers can better control the quality of leads if they are generating them through targeted marketing techniques that focus on consumers truly interested in obtaining auto financing. Reputable lead providers will take steps to ensure the leads they acquire from other providers and aggregators also represent consumers seeking auto financing. Beware of lead providers who are providing recycled leads — many of these leads were never interested in financing to begin with. They thought they were entering a raffle for a free iPod.

3. Make sure your leads are fresh (i.e., generated in the last 30 days or less.) This is true of both the Internet leads you purchase and your direct mail program. Old and recycled leads are a waste of time and money. You may pay more for fresher leads, but your results should be better. Also, make sure the process used by the lead provider to obtain the leads makes it clear that the lead should be interested in auto financing.

4. Make sure your direct mail provider is using a mailing list that is in line with the customer attributes and demographics you’re seeking. Your return on investment will only be as good as the quality of your mailing list.

5. If your provider uses prescreened lists derived from information in consumer reports, be sure the mail piece contains a firm offer of credit. Don’t rely on your lead provider to get this right — you’ll be liable even if the provider indemnifies you, and there’s no assurance that the lead provider will have the wherewithal to do so. Spend a little money to have your counsel sign off on the mail piece. It will be worth it in the long run.

In short, don’t be afraid to vet your lead providers as you would any other vendor. The good ones expect it, and you probably don’t want to take a chance on the ones that don’t.

Michael Benoit is a partner in the Washington, D.C., office of Hudson Cook LLP. He is a frequent speaker and writer on a variety of consumer credit topics. He can be reached at [email protected]. Nothing in this article is intended to be legal advice and should not be taken as such. All legal questions should be addressed to competent counsel.