In the year since Chrysler Group started reimbursing dealers for buying pay-per-click advertising on Google, prices for popular phrases such as "Jeep Grand Cherokee" and "Dodge Dart" have jumped in the Cleveland market, dealers say.
In the Boston area, a yearlong surge in paid search spending by Volkswagen dealers has inflated the cost of banner ads and links to dealer Web sites.
Co-op programs have long been used for traditional advertising. Now the carmakers, acknowledging that 90-plus percent of shoppers do vehicle research online, are prodding dealers to shift investment to digital.
Kevin Mayer, vice president of marketing for VW of America, said VW's 619 U.S. dealers have seen a big spike in Web site traffic from more paid search, especially to view the all-important vehicle listings. But consultant Brian Pasch of PCG Digital Marketing says carmakers' push into digital with co-op dollars has had unintended side effects, such as:
- More rival dealers bidding for key words, driving up paid search prices.
- Cookie-cutter digital campaigns resulting from few vendors managing paid searches.
- Unprecedented competition for tech-savvy dealers who began using digital marketing years ago.
Mike Warwick, director of digital marketing at the eight-store Kelly Automotive Group in suburban Boston, said popular VW key words on Google -- the 900-pound gorilla of online search -- that he could have bought for $1 to $1.50 per click three years ago now cost about triple that.
He said it is understandable that VW would provide incentives for dealers to advertise online. But the spending is mainly going to a small number of vendors -- which can result in multiple rivals bidding for the same key words, he said.
"If all the dealers are working off the same platform, bidding is forced up," Warwick said.