5 Questions to Ask When Shopping Digital Vendors
Updated: May 1
As I return from another successful NADA Conference and Exposition, I think of the many dealers I spoke to at the show who were currently evaluating and choosing a new digital marketing agency. This was not surprising to me, since the usual life of a digital vendor at a dealership is somewhere around 18 months. There are many different reasons for this short tenure, including poor service from the vendor, a lack of solid return on investment (either real or perceived), or dealers simply drawn to some new and exciting alternative agency offering.
Many dealers, both at NADA and in the weeks leading up to the show, asked me for help in choosing new digital marketing vendors. Since I do not represent, or resell agency offerings, I give them my honest and un-influenced evaluations. Here are my top five (5) questions for any prospective digital marketing vendor:
Strategy – I prefer to start at a 30,000-foot level with these conversations, and get a feel for the high-arching goals the agency has for driving variable and fixed results. All of the subsequent conversations we will have during this agency evaluation will flow from this high-level strategic framework. I want to make sure the agency is thinking about the customer journey, and how to fine-tune their approach along that journey to purchase. These discussions should include how the dealer can monetize the goldmine that lives in their CRM and DMS database, conquering through effective audience targeting, as well as the smart and prudent use of paid search.
Success Metrics and Benchmarks – Once we’ve determined the agency’s strategic direction, I need to know how they will measure success. What will be the key success metrics, or key performance indicators (KPIs) for knowing what a good job looks like? Once the agency shares their KPIs, we will then need to understand which benchmarks the agency will compare against. If I begin to hear too much discussion around impressions, clicks, and exposure, I’ll work to pivot the discussions around traffic quality, page engagement, and hard conversions like lead forms, phone calls, chats, and texts. I want to hear the agency discuss how to not only attract the right kind of traffic, but then how they will obsessively measure the quality of the traffic as it lands on the dealer’s website. Dealers should avoid “set it and forget it” approaches, and find an agency that will deeply measure each month, down to the campaign and keyword level, to continually tune and improve their approach.
Audience Targeting – In many ways, this is the true magic of successful digital marketing. If the agency is highly capable in this area, and has smart and experienced account managers, it will go a long way to the success of the dealers’ digital marketing campaigns. I would rather put mediocre advertisements in front of the perfect audience, vs. putting amazing advertisements in front of the wrong audience. This discussion from the agency should include heavy doses of the dealer’s 1stparty data from the CRM and DMS. The agency should include discussions on how they improve these data sets through email appends, vehicle ownership and address correction, and other data hygiene methods. Beware of fuzziness in this area, as well as agencies that focus on massive groups of “auto-intenders” but do not include a discussion of their targeting methodology.
Google Analytics/UTM – Since the dealer should be using Google Analytics to measure the success of the prospective digital marketing agency, I need to hear that the agency both understands and embraces this approach. This discussion will likely create the need for the vendor salesperson to call in some technical folks for the discussion. No problem, I prefer that method vs. the salesperson trying to guess. The dealer also needs to make sure the agency is willing to connect Google Ads (paid keyword search from Google) to Google Analytics. There is one very large SEM agency who refuses this step, and I advise dealers to run in the opposite direction! This critical connection allows the dealer to have 100% transparency on the keywords they are purchasing, the cost of those keywords, and the performance on the website. We also need to make sure the agency understands (and hopefully embraces) the use of UTM-tagged URLs. I and the dealer will require the vendor to UTM-tag each and every paid traffic campaign to the website (and to use my Google-standardized guide to do so) to effectively measure performance. If the agency stumbles on this, even after getting their tech team involved, then the dealership will be severely limited in their ability to hold the agency accountable.
Agency Fees, percentage or flat – While a vendor’s expenses are not the sole determiner of who wins the business, the dealer needs to make sure the investment will be affordable, and that the fees are structured properly. I still see too many dealers paying a flat $10-15,000 monthly fee to a digital vendor, without any idea of how much of that money actually goes to Google, Bing, or Facebook. Dealers should require the agency to fully disclose the percentage or portion of the monthly expense that are agency management fees. I’ve encountered many situations where when we dig into these details, we find that the agency fees are 50% or more of the digital advertising spend. Dealers need to find out these answers before they choose the vendor, as well as find out how the fees are structured. Some progressive agencies are moving to a flat rate model vs. a percentage based one, which I strongly prefer. A flat rate agency model automatically removes any incentive for the agency to run up higher paid search bills. I want the agency focused on results vs. commissions, and a flat rate structure frames that out well.
So, there you have it, my hard line of questioning that dealers should use during any digital marketing agency evaluation. Dealers should not settle for high-level answers, and should instead keep pushing until all of these questions are effectively answered.
If you are an automotive retailer or B2C business, I would love to help you better allocate your advertising funds, including analyzing your paid search and social media spending. I can help you greatly improve your return on ad spend and gain more transparency with your digital marketing investments.
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