More and more of the car buying process is taking place online – so is it time that dealerships step up their online game?

An AutoTrader-branded study from last year found that new and used buyers spend 75% of total time spent researching their next new car purchase online, while Google stats suggest that these customers take an average of 2.7 months to decide on a purchase. This presents a challenge for car dealers to grab the attention of these (largely online) researchers and route them in the direction of their dealership before they buy elsewhere.

One might naturally think that one’ sure fire’ approach to grabbing and qualifying online sales leads, once your website is up to speed, is to use Google Pay Per Click (PPC) campaigns to provide leads against specific keywords (prescribing relevant makes, models and region searching from for example).

Interestingly, Google itself trialled an online sales lead generation service for the automotive sector called ‘Google Cars’ back in 2012 in both Palo Alto and San Francisco areas. During this pilot users searching for individual makes or models were able to compare prices and specifications of vehicles available in nearby dealerships that had entered in agreements with Google. If the user found a car that met their spec they could, while still remaining within Google’s platform, arrange a meeting with a participating dealership to test drive the car and buy. But the trial did not prove a great success and Google canned it.

Is this because Google recognised the power of specialist online intermediary service providers which naturally have greater authority and the expertise needed to provide superior online sales lead generation services in discreet markets? Judging by the rapid rise and aggressive expansion of the likes of US-based online sales lead generation and nurturing service Autobytel, there is a huge potential and big bucks to be made as the online ‘man in the middle’ between the search engine and the dealer or OEM.

Autobytel has hoovered up top ranked provider of auto sales leads Dealix for $25m as well as the online automotive lead provider and advanced analytics platform AutoWeb over recent months with a view to offering US dealers a service which includes highly qualified online sales lead harvesting, routing of those leads through to appropriate dealers (or manufacturers) and even nurturing those customers online post-sale.

And it looks like the same trend is heading across the Atlantic if the successful £12m plus funding round in January by CarWow is anything to go by. Carwow allows users to put details into its platform about the car that they want to buy, including the model, year and spec. The request is then passed on to all the dealers on the Carwow platform, and the user receives up to five offers from the best-rated dealers, who they can then contact directly.

The investment round, led by Spotify and Dropbox backers Accel Partners, will help Carwow to fund advertising and the costs associated with training dealers to use the platform. The money will also be used to build several new products and hire more people across the company's sales team.

Car Wow’s Co-founder James Hind said:

We’re excited to roll out our service even further on the back of strong growth in 2015. A new car is an important purchase, typically a person’s biggest after their home. At Carwow, we enjoy working with the industry to make things simpler and more efficient for all involved. This new round of funding gives us the firepower we need to change the way the UK buys cars.

The more established online sales platforms like AutoTrader.co.uk are also seeing strong growth. AutoTrader’s chief executive Trevor Mather reported sales revenues up 8% for the year ending in March 2015 and explained that it is benefitting from more dealers and manufacturers increasing advertising on their site in order to grab the online buyer’s attention as they begin considering selling an old car and/or buying a new one. He explains:

Growth has mainly come from providing greater value to retailers in a marketplace where consumers are increasingly researching their next vehicle purchase online. A healthy automotive market has supported the penetration of our retailing solutions. These complement our core classified advertising offering and help retailers to: buy the right vehicle, at the right price, market their business and manage their forecourts, improve stock turn and therefore return on investment. Growth has also come from display advertising, where in particular manufacturers have increased their advertising spend on the marketplace in recognition of a growing and relevant audience for their brands. On average, c. 13,450 automotive retailer forecourts chose to advertise on our marketplace in the year, which is an increase of 2.5% on 2014. The marketplace also had a record number of cars being advertised through the year, averaging 423,000. Retailers increased average spend with us by an additional 6% per forecourt on the back of the increased value delivered to them.

The other question is where all this leave car manufacturers themselves. Are they likely to be build out their own sales lead generation platforms for franchise dealers? Certainly if you look at the likes of Land Rover they are entering the online fray effectively by investing more heavily in lifestyle content which helps build brand engagement and delivers qualified sales leads straight into the laps of relevant local dealers.

So where does all this leave car dealers trying to proactively optimise online new and used car sales lead generation right now? It seems clear that dealerships are likely to be spreading their digital marketing spend to ensure that they are optimising numbers and quality of online sales leads and then stimulating them to visit their dealership. We think they are likely to be:

  1. Improving their own websites, adding more lifestyle and brand-specific content more quickly as well as ensuring car inventories are posted online faster (with flattering photos and appropriate tagging) as quickly as possible
  2. Investing in building commercial relationships with some of the new breed of intermediaries like Carwow
  3. Continuing with their engagements established online players like AutoTrader and Carbuyer
  4. Refining Google PPC campaigns