If 2006 was the year automobile dealers really discovered SEM (search engine marketing), then 2007 will be the year those same dealers will be put to the test in producing effective SEM campaigns.  As ad dollars continue to pour into the market,  dealers who understand the elements of effective SEM will benefit greatly, but those that are not prepared may quickly find themselves very quickly burning through budgets with little return.

By far, the strongest player in the SEM game remains Google. While Yahoo!’s new Panama ad system and MSN’s recently launched AdCenter platform promise to deliver unique services, both remain behind Google’s AdWords in both reach and features.

As a result, for dealers just now getting serious about driving qualified buyers to their websites, it is important to understand just how the giant called Google works, and some of the basic concepts that will lead to success in this competitive marketplace.

The following is a very brief overview of 3 ways in which SEM in general, and advertising on Google in particular, is an effective marketing approach.

Consumers are searching for auto dealers

• 3 out of 4 online consumers looking for an automobile dealer use a search engine to find that dealer (Insight Express Study for Google, 2003)
• More than 50% of all automotive searches on the web are now conducted on the Google ad network (StatMarket 2004)
• The Google network reaches over 80% of all internet users every month (Media Matrix, December 2004)
• Google attracts more 2-year intenders than any auto site and ranks second in reach to 6-month intenders (Source: Allison Fisher Research 2003)

Targeting local customers makes sense

• Targeting users by state, city or geographic location enables automobile dealers to reach only local customers and to avoid wasting money on clicks from distant locations
• Consumers don’t just shop for new and used cars locally, they also will perform locally based searches for parts, accessories and repairs
• Local commercial searches – those seeking merchants “near my home or work” – represent 25.1% of  all searches performed by online shoppers (Kelsey Group, 2003)
• Local consumers with Internet access use search engines 22% more frequently than printed  Yellow Pages (Kelsey Group, 2003)

SEM offers a superior return on investment

• With CPC (cost-per-click) advertising, dealers only pay when a customer clicks on their advertisement
• Dealers can calculate, to the penny how much it costs to drive traffic to their website, generate qualified leads and, most importantly, sell vehicles!
• FordDirect’s cost per lead is less than $5, and the dealer cost per sale is less than $100 (FordDirect Case Study, 2003). By driving searchers directly to a dealer’s website Octane Internet has found an average cost per sale of $80 or less.