May 2013, Auto Dealer Today - Cover Story
When Facebook launched its updated News Feed in early March, online critics called out the social network for premiering a design that looked a lot like Google+. But that’s not the only evidence of the tech giants’ converging paths.
Google+ is Google’s answer to social media, while Facebook is beta testing a new search engine that will feature ratings and customer reviews. Then there are the companies’ annual filings with the Securities and Exchange Commission (SEC), each of which acknowledges that the other brand represents its main competition.
For dealers, the two sites share another striking resemblance: They’re both furiously chasing the automotive business.
“It’s good to have competition. Users need choice,” says Lindsay Schultz, Google’s head of industry for auto, a division that’s placed dealer consultants on the East and West coasts, as well as in the Detroit area, where Schultz is based.
“We’re really trying to help dealers understand this ever-changing digital landscape.”
To build its own team, Facebook is sourcing the industry for insiders like Patrick Workman, who’s held positions with FordDirect and Dealer.com. He serves as a client partner for Autos at Facebook and is working to forge a closer relationship with the industry.
“We’re working with multiple agencies, as well as individual dealers, automotive manufacturers, regional ad associations, as well as regional personnel in order to make sure [dealer] social media strategies are sound,” he tells F&I and Showroom.
As for the knocks Facebook took from publications like the Los Angeles Times, the New York Post and Mashable over its Google+-like redesign of its News Feed, Workman says dealers and consumers alike can expect to see more websites move to adaptive or responsive designs.
“They’re updating their services, and we’re updating our services based upon the way people actually browse,” he explains. “I think, more than anything else, it’s about, ‘How do you have a seamless experience across all devices?’ Every company is looking to do that.”
Tracking the race between the two companies, Brian Burt, CEO and founder of Chicago-based WebRev Marketing & Design, says there’s only one factor that should dictate where marketers direct their attention. “Wherever there are eyeballs on the Internet, you want to put your business in front of those eyeballs,” he says.
According to Experian’s 2013 Digital Marketer Report, Google accounted for 72 percent of total search traffic in 2012, and search is where a majority of online ad spending is directed. “Google has to be top of mind for any marketer,” the report states.
Conversely, the top search term across all search engines, including Google, was “Facebook,” a distinction the social network has held four years in a row, according to Experian. The social media site was also the most visited site for the past three years, accounting for 79.1 billion total U.S. visits last year alone.
Need a Ride
Ignoring Google’s hold on the lion’s share of online web searches, Facebook rolled out its own search engine called Graph Search. Founder Mark Zuckerberg describes it as “more natural” than typical web searches because rather than pulling from the entire web, the search engine’s algorithm pulls results from the site’s database of one billion profiles, 240 billion photos and one trillion connections.
“We’re not indexing the web,” Zuckerburg said during a Jan. 15 press event. “We’re indexing our map of the graph.”
The search engine allows users to search by 112-character phrases rather than just keywords. That means a Facebook user in Los Angeles can search for a dealer by simply typing “Dealerships in Los Angeles.” Graph Search will then list results based on the dealerships the user’s friends “Liked” and by the level of engagement the business has with its fans.
The unveiling of Facebook’s new search feature set off a race between social media marketing firms looking to help dealers stay in front of what Google and Facebook are doing. But even they are struggling to keep pace with the companies’ ever-evolving strategies.
There was the recent webinar hosted by Sunnyvale, Calif.-based Digital Air Strike, during which Alexi Venneri, the firm’s co-founder and COO, informed attendees that Facebook was collecting reviews to feed Graph Search. Efforts at the time centered on the restaurant industry, but Venneri said Facebook would expand those efforts to automotive.
But not everything Venneri shared turned out to be fact. There was the claim that dealers would need to “pay to play” in order to get their fan page updates into their followers’ News Feeds. She reasons that because only 16 percent or less of updates are seen by users due to Facebook’s high level of content being posted, advertising is crucial for dealers who want to land high visibility. Facebook, however, tells a different story.
“There have been recent claims that our News Feed algorithm suppresses organic distribution of posts in favor of paid posts in order to increase our revenue. This is not true,” Facebook says on its site.
Workman says there are no plans as of yet to monetize Graph Search with a Google AdWords-like business model, adding that dealers will need to continue engaging fans to secure top results.
As for attracting new fans, paid advertising continues to be a major driver. Workman says one of the first things a dealer can do is build a custom audience, which will connect them to potential customers by using e-mail addresses, phone numbers and Facebook user IDs. After that, it’s up to the dealers to maintain that connection.
According to Experian, the No. 1 reason consumers support business fan pages is to receive discounts and coupons. Getting product information and sneak peeks at new products rounded out the Top 3 motivations. WebRev’s Burt recommends supplementing those offers with creative updates, contests, and photos of satisfied customers and in-house events.
“Variety is the spice of Facebook,” he says. “Ultimately, you still have to be fun. That’s the whole idea about Facebook. If it’s something that can be read quickly and ingested quickly, it’s OK to throw it on your page.”
Show ’Em What You Got
Engagement isn’t Google’s top priority for Google Cars, a new service the firm is piloting in the San Francisco Bay area. Mike Shum, general manager at Sunnyvale Toyota in Northern California, was one of the first to test the service, which allows shoppers to search new-vehicle inventory by ZIP code without ever leaving Google.
“If you go to Edmunds, there are many more research tools on it, whereas Google is really just getting you straight to the inventory,” Shum says. “Google wants less, not more: ‘Here are the vehicles, here’s where they are at, here’s the price on them.’ That’s what they’re matching up. There’s no other piece to it.”
Shum’s lead conversion continues to see a boost as Google enhances the service. He captures anywhere from 100 to 150 leads per month by bidding about $20 to $21 on each one. His spend is slightly lower for leads coming from other sites — generally close to $18 — but he says the quality is what counts. “Sometimes you pay for what you get — you pay a little bit too low, and you think it’s great, but in the end it really isn’t,” he says.
The main complaint he hears from other dealers is that Google Cars masks leads throughout all communications with a car buyer, which Google limits to six interactions. Shum says that hasn’t been a problem for his dealership.
“Whether I have your actual e-mail or this masked e-mail address, if you don’t answer me in nine e-mails, or you just don’t answer me at all, the likelihood you’re going to answer on No. 10 is pretty much nonexistent,” he says. “Really, employees going past six [calls or e-mails] is rare.”
But not everyone in the auto industry is as satisfied with what Google is offering. During the 2013 Digital Marketing Strategies Conference in February, Google Cars’ listing of vehicle pricing was called out during a heated discussion between Michael Rose, Google’s industry expert for the auto vertical, and vAuto Founder Dale Pollak. The exchange was captured by several attendees on their smartphones.
Pollak called out Google for “arguably touching off the race to the bottom” by publishing transaction prices. “We’re certainly seeing some trauma in the industry recently because of similar programs,” he said.
Rose fired back, saying he does not expect MSRPs on Google to drop as more dealers join the service, adding that dealer-installed options like alarm systems are the cause of price fluctuations.
“We’re not part of the race to the bottom … We know our average prices are higher than the average price being sold,” Rose responded. “We’ve gotten a lot of feedback from dealers. Our price being wrong is not one of them.”
Media reports have floated that Google could soon expand its new service into other markets, but a spokesperson for the company says there are no such plans at this time. “We are continuing to get feedback to make improvements to the beta feature and look forward to helping to connect more users who are looking to purchase a car with the dealers who can get them the cars they want.”
Vehicle merchandising sites are also keeping tabs on Google Cars. Representatives from Edmunds, AutoTrader and Cars.com tell F&I and Showroom that their respective sites bring something different to the table than what Google is testing. That goes for Facebook, too.
The strictly auto-focused sites claim that Facebook and Google act more like partners than rivals, adding that they have not seen any impact from the piloting of Google Cars. “Naturally, when they launched in Northern California, many of us were nervous about the potential impact to our business. And then nothing happened,” says Seth Berkowitz, president and COO of Edmunds. “We saw no downturn in traffic, no fall in lead volumes, and our business continued to grow with dealers in Northern California.”
Kevin Filan, AutoTrader’s vice president of consumer marketing, says it’s too early to predict the impact Google Cars will have on the way consumers shop for cars. “Consumers are now spending over 18 hours shopping for a vehicle, with 60 percent of that time spent online,” he says. “They utilize several sites throughout that process, so we shouldn’t see a new offering from a company such as Google or Facebook as an either/or option when compared to AutoTrader.com.”
Cars.com’s Chief Marketing Officer Linda Bartman concurs. “Facebook and Google are also destinations, but they’re not built to take a car shopper through the purchase process in the same way,” she says.
Edmunds’ Berkowitz offers a different take on the race between the two digital media giants. “I’ve been to well over a hundred dealerships in the past 12 months, and all of them lament how difficult it is to contend with the fragmented reviews industry,” he says. “They have to monitor and encourage people to post on Edmunds, Cars.com, Google, Yelp, DealerRater, etc. Should Facebook emerge as the winner in that space, we will happily post their reviews if it helps our customers evaluate dealers.”