Agencies Using the Wrong Metrics for Paid Search
I'm enjoying my new role consulting with dealer principals, VPs or partners on their digital marketing investments. Working one-on-one with these business owners to help them both shed waste, and make better investments is fulfilling. While I've uncovered many areas of waste for dealers I consult with, the most consistent problem is managers paying attention to the wrong success metrics for paid search. I can’t really fault the dealers, since they are depending on their vendors. Many of these paid search vendors struggle with helping dealers answer the question of, “What do successful paid search campaigns look like?”.
While there are many qualified paid search providers out there, there are also many who do not have a good handle on how to provide strong ROI to the dealer, and therefore waste tremendous amounts of money on poorly executed campaigns. Whether the dealer is using an automotive-centric provider, or a non-automotive national agency, the process many times looks like this: 1) The agency works with the dealer to decide on a strategy and keyword list (nothing wrong here, I of course agree this is the right approach). 2) The agency and dealer work on a budget, and apportion the budget to various categories. This is usually where I begin to disagree, far too much budget on make/model conquest, not enough on fixed ops. 3) Goals and success metrics are determined by the agency, usually centered around impressions, clicks, CTR, CPC, etc. Conversions are usually phone calls only, with no real goal of what a reasonable cost per conversion should be.
The monthly recap calls, which I usually attend with the dealer, focus mainly on impressions, clicks and budget. Keywords that the dealer and agency have decided are important are discussed, and if impressions are not high enough, the decision is made to move more budget toward those keywords. There is little to no discussion on landing pages, how the keywords are performing downstream on the website, average session time or pages viewed, and definitely not focused on shopper engagement. At the end of the monthly paid search review calls, recommendations are given to increase budget in areas where the dealer is not getting enough impressions or clicks, without regard to the quality of the clicks. In some cases, dealers give approval to move as much budget as possible to maintain a #1 or #2-page position for various keywords, with no cap placed on the cost per click (CPC). The results? I’ve seen CPCs as high as $75/click where ridiculous automatic bidding seeks to keep the dealer always on top of page. For a sales campaign, how would that math ever pencil to keep marketing-cost-per-vehicle at a reasonable rate? How many clicks equal a VDP? How many VDPs equal a lead? How many leads equal a sale? If you start at $10-75 per click, you better be closing 100% of every lead you receive, or you will be upside down quickly.
When I’m invited to monthly paid search reviews, I come prepared to those calls with many things, but always carry two lists. The dealer’s top 100 performing keywords, and the top 100 worst performing keywords from the prior month. From there we discuss ad copy, landing pages, keyword match type, geo targeting, and more importantly whether paid search will be the right weapon for the mission. While paid search performs wonderfully for dealer branding campaigns, geo-radius conquest and fixed ops, it is much more challenging around make/model conquest, yet dealers continue to pour thousands monthly into these losing campaigns. If we see clicks with a reasonable CPC, that are delivering strong downstream visitor engagement including leads (forms, calls, chats), then moving budget toward these stronger performing keyword groups makes sense, but only up to a certain CPC level.
As dealers begin inspecting paid search campaigns with the right success metrics, that drive quality traffic at a reasonable cost, they will see their marketing costs per vehicle, or marketing costs per closed RO decrease. At a high level, my advice to dealers is to use the appropriate ammunition for the various targets. Simply investing increasingly large budgets toward paid search, without a good measure of success at the campaign and keyword level, is a recipe for wasted spend.
If you are an automotive retailer, I would love to discuss helping you with digital marketing audits, including auditing your paid search traffic. I can help you get more transparency with your digital market investments, saving you wasted spend and improving your return on advertising spending. Details here: www.generationsdigital.com
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