Why Third-Party Listing Sites are Hurting Your Dealership (And What to Do About It)

Why Third-Party Listing Sites are Hurting Your Dealership (And What to Do About It)

Auto dealers need leads, but not all leads are created equal. Dealership managers need to understand exactly where their best leads come from, how to control those sources and how to measure their return on investment (ROI).

Why Do Shoppers Use Third-Party Sites?

The perception of a comprehensive inventory is what motivates in-market shoppers to look at places like Edmunds, Carsforsale.com, AutoTrader, and the like. In fact, these third-party sites are often the first stop on the shopping journey.

Fortunately for dealers, they’re not the only stop.

For example, if I’m shopping for a Ford Fusion, I don’t want to see only the local Ford dealer’s inventory, so I’ll rely on someone like Cars.com to tell me what’s out there in my area.

For these unfortunate shoppers, the dirty little secret is that Cars.com doesn’t have every Fusion in the market — they only have the ones that dealers paid to list.

And, for the unfortunate dealers who pay thousands of dollars to list their Ford Fusions, the listing site is giving preference to those who pay a premium — even showing competitors’ ads next to the vehicle listings.

How Do Car Listing Sites Make Money?

Ads! . . . and bonus features that unlock with certain tiers.

Not all listing sites are structured the same, but they all serve a basic purpose: To give users what they think is a comprehensive, filter-able inventory of their market.

With all these eyeballs, the listing site then makes money off of ad placements — those banners that appear above, next to, and below the actual vehicle listings. Every time someone clicks one of those ads, the listing site makes some change.

On many third-party listing sites, these ads have become a competitive clutter. As Perficient notes:

Third-party auto sites have become overrun with ads. Some of these sites have 8-12 ad units per page. Third-party sites make their money by selling their ad space, so the more ad space they have, the more inventory they have to sell, and the more money they can make. The volume of their inventory is also dependent on the number of page views they get on each page. So, the more page views they can generate, the more ad space they have to sell, and again, the more money they make.

With facts like this, it’s easy to see why third-party listing sites try so hard to offer “cheap” packages just to get inventory on their pages.

The Attribution Puzzle for Dealership Managers

But, questionably-placed ads are only half of the problem. Dealers also face an issue with attribution.

While many third-party sites send leads to a dealer’s customer relationship management system (CRM) or refer traffic to the dealer’s vehicle description pages (VDPs), it’s very common for a third-party listing site to be self-contained.

The reason? Obscurity.

Automotive News recently published a study that attributed 30 percent of one dealer’s monthly gross to Autotrader and Kelley Blue Book (both products of COX automotive).

While this sounds impressive, it doesn’t show the whole picture. Nor does it truly illustrate the merit of the site. For instance, they don’t say how much this dealer spent to reach 30 percent, and this is only a one-month picture for one dealer. Longer-term ROI requires accountable, transparent reporting which relies on more than last-touch attribution.

In the same article, Automotive News also reported that sites like Cars.com work with digital marketing companies to give dealers a multi-touch perspective using tools like Google Analytics. While this approach is more honest in that it doesn’t give full credit to one touchpoint on Cars.com, it still lacks the accountability of an independent, replicable analysis.

With research that is questionably unbiased, these larger third-party sites like AutoTrader and Cars.com are all connecting the dots for dealerships — at least, to convince them to sign on that dotted line.

However, these analyses are not independent, transparent, frequent, or consistent. Only third-party attribution tools like LeadsRx will give a dealership the insight it needs to evaluate each lead source side-by-side.

At the end of the day, every dealership manager should use impartial tools to understand:

  • Where their lead data comes from
  • How leads convert (simply visiting a VDP vs. actually filling out a form)
  • If their lead sources are handling that data responsibly
  • If the contacts in their CRM are expecting to be contacted in any way (email, phone, ads, etc.)
  • Which lead sources are yielding the best return on investment
  • Which vendors are able to provide an unbiased look at this return on investment

Unless a dealership has an equal view of all of their lead sources, and all of those lead sources are contributing to the CRM, listing on third-party sites will risk the budget and the resources of a dealer’s marketing department.

Fleeting Fairness on Third-Party Listing Sites

Because dealers are competing alongside each other on listing sites like CarGurus and TrueCar, many of these sites have implemented contextual comparison data to show if a vehicle price is a “good deal” or not. This has caused many less-than-honest dealers to trick the system by listing prices that will earn positive ratings and then hide the rest of the pricing info in the fine print.

In addition to the tolerance of questionable pricing practices, listing sites often let dealers pay for priority placement, for integrations or for advertising add-ons that retarget visitors with the vehicles they viewed (alongside vehicles from competitors).

Plus, sites like AutoTrader even discourage people from visiting any dealership during the consideration phase in the car buyer’s journey. Instead, they encourage people to use — you guessed it — yet another third-party service for buying a car online.

These questionable practices illustrate the value of having a reliable view of all of your digital marketing strategy and reporting under one roof: yours.

Alternatives to Questionable Classifieds

The salespeople who sling Carsforsale.com, Cars.com, AutoTrader, and the like are keen on convincing dealership marketing managers that theirs is the end-all, be-all service; they use percentages and scales to claim a significant slice of your sales. Don’t let a one-time snapshot of data influence your important marketing budget decisions.

Try these alternatives to expensive third-party listing sites:

  • Feed into Facebook: Connect your inventory feed (which is already used for most third-party listing sites) into a Facebook Product Catalog. Then, take the money that you had been pouring into third-party sites and put it into thoughtfully targeted Facebook Ads.
  • Show Up on Search Engines: Have an agency optimize your own website and map locations so that you show up on search engines.
  • Get Better Mileage From a VDP View: When someone visits your website but doesn’t convert into a lead, you can reach back out to them with retargeting ads on Google or Facebook. Additionally, use these VDP views to inform your email targeting strategy.
  • Augment Your Home Base: Choose dealership marketing partners that are willing to work with your website, your reporting and your CRM, rather than against them.

When you’re ready to see exactly how these sites impact your bottom line, ask 9 Clouds about our independent and impartial attribution system. We have the know-how to give you a clear picture of where your leads are coming from and where your sales can go.

9 Clouds has no stake in any third-party game, and neither does LeadsRx software, so you can rest assured that you’re getting an unbiased view of your ROI.

Get a Clear View of the Return from Your Marketing Investment

Keeping up with automotive digital marketing trends is a never-ending task for dealership managers. That’s why 9 Clouds not only shares relevant news and advice on this blog, but we also publish premium ebooks, webinars and case studies.

When you’re ready to take the next step, contact us for a no-obligation proposal. We’ll be here with the real data.