Now What Is it Going to Take…

Dealing cars in the age of the Internet.

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In a vast ballroom at San Francisco’s Moscone Center, a Jerry Lee Lewis impersonator from the musical Million Dollar Quartet is doing his best to pump up the crowd. It’s 2 p.m. on an unusually warm and sunny Saturday in February, only about half the seats are filled, and truth be told, there is not a whole lot of shakin’ going on — more like a moderate amount of somewhat engaged sitting. But the fact that there’s a crowd here at all, and that it’s not completely unwilling to belt out a chorus when directed by the faux Lewis — or by the other rock ’n’ roll replicants on stage, who include Elvis Presley, Johnny Cash, and Carl Perkins – stands as a genuine accomplishment.

   

That’s because the crowd is made up of car salesmen, and for car salesmen, there hasn’t been much to celebrate in the last few years. As sales plummeted, credit tightened, and the federal government directed Chrysler and General Motors to prune their dealer networks, thousands of dealerships closed their doors. In 2008, annual sales of cars and light trucks fell by 3.1 million units from the previous year. In 2009, the hard times continued. Even as the government gave out $3 billion in rebates to spur new car purchases and euthanize old Ford Explorers, sales dropped to 10.4 million units, the industry’s lowest total in 27 years.

But in 2010, sales rose to 11.55 million units, and that uptick was enough to animate the proceedings of the 2011 National Auto Dealers Association Convention and Expo with a glimmer of optimism. Red-and-blue signs in the shape of interstate highway shields are plastered everywhere, announcing “Bright Future Ahead.” Industry heavyweights pepper their speeches with references to “fresh starts” and “new moods.”

And it’s not just talk. Dealers dodged a regulatory bullet when they were exempted from 2010’s Dodd-Frank Wall Street Reform and Consumer Protection Act. They are therefore still free to arrange financing for potential buyers without having to adhere to all the provisions imposed by new government agencies such as the Bureau of Consumer Financial Protection and the Financial Stability Oversight Council. As Generation Y ages, millions of new drivers and potential car buyers are entering the market. Meanwhile, the average car on the road is 10.2 years old. And used car prices are at an all-time high because the low number of trade-ins during the down years has led to a lack of inventory. All of this suggests better times ahead for the nation’s car dealers.

As the sound of phony rock oldies playing 1956’s greatest hits fills up the ballroom, however, it also seems pretty clear that the average auto dealer spends a fair amount of time gazing forlornly in his rear-view mirror. And why wouldn’t he?

At least as much as record executives and newspaper publishers, auto dealers thrived in the days of information scarcity. In the good old days, only the most dedicated consumers knew where to find invoice prices or which dealer fees were negotiable. The industry enjoyed low gas prices, an ozone layer that still had decent trade-in value, and teenagers who had to travel to record stores to get music and drive-ins to have sex. In car-crazy America, dealers enjoyed big mark-ups and moved lots of units. All they needed to grow rich was a loud TV commercial, a full-page ad in the Sunday paper, a dozen American flags, and a giant inflatable Godzilla to stand watch over the lot.

OK, maybe success was more complicated than that, but it couldn’t have been as complicated as it is now. After Jerry, Johnny, Carl, and Elvis leave the building, and Time magazine honors the nation’s most humanitarian auto dealers — auto dealers, it turns out, are nearly as obsessed as movie stars with battling cancer, ending childhood illiteracy, and providing refurbished vehicles to the carless — I walk down the street to the hall where the expo portion of the convention is held.

If you had a big enough shopping bag, you could buy everything you’d need to start your own dealership in a single spree. The expo has vendors selling performance polyester sports shirts and other career apparel, vendors selling the sort of slick overstuffed furniture you only see in Acura reception areas, vendors selling touchless car wash systems, hydraulic vehicle lifts, and of course, lots of shiny new vehicles. There are also a few of the things you’d expect to see at a gathering of thousands of car dealers — a booth where you could analyze your golf swing, and another with a pair of Playboy centerfolds signing autographs.

Far more prevalent, though, are vendors selling various kinds of Internet-related software. A few years ago, it was enough to have a website. Now car dealers are being told they need thumb-friendly websites for mobile users. And applications that monitor their reputations on dealer review sites, applications that can automatically post vehicle ads to Craigslist and other free classifieds sites, text-messaging strategies, Facebook presences, and video search engine optimization.

These days, of course, most businesses are being told they need all this stuff — but with car dealers, it may actually be true. That’s because consumers simply aren’t visiting car dealerships as much as they once did. In the good old days, the dealerships themselves were the Internet. That is, they were the places buyers went to educate themselves on what models were available, what kind of gas mileage they got, and how much they cost. To learn about, say, mid-sized sedans, you went from dealership to dealership, amassing glossy brochures and other marketing materials until you decided what you wanted. Along the way, dealers had many points of contact in which to alter your course and steer you toward what they wanted to sell.

Now, an increasing number of consumers are using the Internet to educate themselves, with fewer opportunities for dealer intervention. Buyers start at manufacturer’s sites, then move on to third-party information providers such as  Edmunds.com. Only when they know precisely what they want and exactly how much they’d like to pay do they start looking for a dealer who can fulfill the order. “The average car buyer today visits just one or two dealerships before buying a vehicle,” writes Automotive News reporter Donna Harris.

For dealers, there’s an upside to this trend. It means they can spend more of their time with only highly qualified buyers — if, that is, they manage to be one of the one or two dealerships that average car buyer decides to visit. For dealers, a knack for extolling the virtues of heated seats or making onerous lease agreements sound attractive is still valuable, but not as valuable as a knack for getting their website’s URL to appear very near the Google logo when buyers enter search strings such as “Chevy Camaro St. Louis” or “Honda dealers Los Angeles.”

“We can inflict our will on Google whenever we want,” Sean V. Bradley tells me in a Moscone Center meeting room on a Sunday morning just hours before the Super Bowl. He says this like he says everything — rapidly and with supreme assurance. Bradley is a consultant and trainer who calls himself the “king of SEO” and specializes in digital marketing for auto dealers via his website DealerSynergy.com. At the convention, he’s presenting a dealer workshop called “Increase Traffic and Engagement Through Video,” and while NADA doesn’t allow members of the press to attend dealer workshops, I’ve arranged to speak with him afterward.

In theory, the Internet is supposed to rationalize car buying, equipping consumers with the facts, figures, and data they need to make better-informed purchase decisions. In Bradley’s estimation, however, the single most effective thing dealers can do to improve their sales is flood the Internet with video. Sure, the video should have some text with facts, figures, and frequently searched keywords attached to it, but the video is most important. “Google prefers it,” he says. “You could take a brand new website with a brand new URL and optimize it. Then you take a video and you optimize it, putting in the right keyword descriptions, category tags, meta tags, and embedded links back to the dealer’s website. The video is going to index to the top of the search engines 10 times faster than the website will. It’s three to six days versus 60 to 90 days, because Google wants video. People would rather watch video than reading, texting, anything else. It’s video video video.”

For a typical dealership, Bradley might create 60 videos — 20 for new cars, 20 for used, and 20 that address the competition. First, he aggregates stock footage supplied by manufacturers, clips the dealers shoot themselves, footage from his production partner’s video library, customer testimonials, and various other kinds of content that can be easily acquired. Then, that footage is cut, coded, stuffed with pre-tested keywords, and deployed to YouTube, Viddler, and 17 different video search engines in all. In a matter of days, a dealer has 1020 pieces of content on the web, all with backlinks to his website and all valued highly by Google because they’re video.

To demonstrate what he can achieve, Bradley types the words “Toyota Corolla Torrance” into Google. Toyota’s U.S. headquarters are located in Torrance, California, and there are two Toyota dealerships in the city as well, but the first two results that Google provides are videos produced by one of Bradley’s clients, a Honda dealer named Scott Robinson. “Hi guys, it’s me again,” Robinson grins after an opening panning shot of a new Honda Civic. “Sorry to keep popping up on ya, but obviously if I’m popping up on you, it tells me you you’re still looking, and you’re probably looking for the Toyota Corolla. You may want to consider the Honda Civic. It actually has the best value…”

A couple of hours after my conversation with Bradley, Volkswagen, BMW, Kia, Hyundai, Mercedes, Audi, Chrysler, and Chevy will all spend huge sums of money on elaborate, meticulously crafted ads designed to entertain millions of Super Bowl viewers, the great majority of whom have no pressing desire to buy a new car. Some will generate lots of buzz, others not so much. But compared to Bradley’s Toyota/Honda trick, they’ll all look hopelessly old-fashioned, as outdated as a Jerry Lee Lewis impersonator playing the piano with his feet in a half-empty auditorium.
10 February 2011

Greg Beato is a contributing editor at Reason magazine. Follow @GregBeato on Twitter.

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