Automotive Brands are Digitally Cannibalizing Themselves
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Automotive Brands are Digitally Cannibalizing Themselves

Digital marketers, working on behalf of the same brand across all three tiers in the automotive industry, are competing with each other. They are driving up costs for each other and providing inconsistent messaging and pricing to consumers. To give you a specific example, let’s use Paid Search marketing, as this is the marketing channel that has experienced this cannibalization the most. There are auto digital marketers bidding on keywords and running SEM campaigns nationally at the brand agency, regionally for dealership networks, and locally for individual dealerships. Most of these Paid Search marketers, even though they are at various levels within the industry, are bidding on the same keywords. The result is higher prices for these keywords and ultimately higher prices to run campaigns overall. You can see how this is a problem.

Why the Problem Exists

This is something that has been going on for far too long. Many professionals in the industry know it is happening and continue to contribute to it. However, they aren’t continuing it because they are lazy, stupid or don’t care. They do it for 2 main reasons:

  1. Marketers are incentivized to continue to do it through the performance goals they are held to, especially those at the tier 1 level. OEM and brand agency digital marketers, those at the tier 1 level, are not tasked with driving increased sales, they are tasked with reaching as many in-market consumers as possible, as well as driving leads and KPI usage on the brand website.

  2. There is no strategy being put in place across all three tiers by the manufacturer. There is nobody coming up with guidelines that each group of marketers, at each level or tier, are expected to follow. An effective strategy would stop these different groups from purchasing the same keywords and provide consistency and/or structure in messaging across all three tiers.

Tier 3 Has its Own Challenges

Because there is no strategy in place, things can get really messy at the tier 2 and 3 levels. Dealers have not been savvy enough to ask the right questions and hold their marketing services providers accountable. This allows many pf these providers to exaggerate performance and sometimes flat-out pull the wool over a dealers eyes. So, the problem of cannibalization continues to fester and grow. A strategy, handed down by the marketing experts at the tier 1 level, would help dealers hold marketing service providers accountable and make it much more difficult for them to exaggerate performance.

A Strategy That Works

So, now that we know a strategy will solve many of the issues, let’s explore some of the specifics of a good strategy:

• Keyword Bidding Structure: Be smart with keyword bidding, but keep it simple. Do the most logical thing and develop buckets for each tier that each keyword falls into. If a keyword doesn’t fall into your bucket, you don’t get to bid on it. The hard part is bucketing them correctly. The simplest, and possibly most common way, is to bucket keyword terms based on geography. Tier 1 takes national terms like “Chevrolet Silverado” (brand) or “2019 Best Trucks” (segment), tier 2 takes regional terms like “Chevrolet Dealers Near Me” or “Detroit Chevy Dealers”, and tier 3 takes local terms like “Silverado for sale near me” or “Keyes Chevytown” (dealer name).

• Consistent/Structured Messaging: Demand consistent messaging across all tiers. This is much easier said than done. You must realize that you will never get to 100% consistency, but the key is to make progress and improve upon where you currently are today. One way auto OEMs have achieved some level of consistency has been the use of a PAP (promotional allowance program). In a PAP, OEMs provide clear and defined guidelines on how they want their dealer base to spend their digital marketing budgets. These guidelines can include the digital channels dealers can use, the messaging they can put out there and even the marketing service providers they can work with. If the dealers follow these guidelines they can submit their PAP paperwork to the OEM and get reimbursed for their digital campaigns. You can clearly see the incentive dealers have to follow the guidelines and the consistency OEMs achieve from this type of program. Obviously, this comes with a substantial investment from the OEM. But, this is just one way to improve consistency across the dealer base and help combat cannibalization.

• In-Person Meetings Across Tiers: This is probably the most overlooked and discounted part of this strategy. Schedule meetings that bring together the main players at each tier. Get them in the same room to discuss the strategy and share ideas/learnings regularly. When professionals meet in-person, they put a face to the name and the person becomes more “real”. You become more open to their ideas, understanding towards their mistakes and care about their workload at a slightly higher level. Which is important because friction can occur when working across tiers. This will all lead to better performance across the extended team.

• Actionable Reporting: Develop simple KPIs and easily digestible reporting that allows the tier 1 marketers (those driving the strategy and holding everyone accountable) to quickly identify when the strategy guidelines are being violated or ignored. If you don’t have agreed upon metrics everyone is working towards, you will never get the results you want. If these agreed upon metrics aren’t timely and easy to digest, you won’t be able to identify issues. This includes the ability to quickly identify when those at the tier 2 or tier 3 levels are breaking protocol and bidding on terms outside of their bucket.

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