Machines drive new marketing efforts

Dream Motor Group needed extra in-house capacity to expand marketing to customers of its Mercedes-Benz dealerships across the South.

For less than the cost of an employee, the dealership group stepped up its email outreach for sales and service. Only Dream didn't hire anyone to do it. The newsletters and email messages are written, sent and tracked by a computer.

"We are seeing so much growth that's measurable," said Amy Rothenberger, the group's marketing and business development director. "You can see how that touch point absolutely has a direct correlation for somebody coming in and purchasing."

Machines are helping dealerships with everything from turning inventory to handling customer inquiries. Proponents of the technology say artificial intelligence also can help dealerships maximize their marketing budgets by being more cost-effective than traditional media, such as TV or print, or paid search. And because computers can do the work more efficiently than humans. It has applications for sales and service departments, and for managing inventory.

Yet artificial intelligence and its subset, machine learning, are not yet widely adopted in dealerships. Just less than half of dealers who responded to a Cox Automotive survey released this fall and said they're not likely to use automation or AI in the next two years pointed to staff resistance as the largest barrier. Another perceived hurdle was that the technology wouldn't fit with the dealership's processes.

Even proponents of the technology are careful about how it's used.

"I'm a fan of it. With that being said, it needs to complement my business, not replace anything," said Al Gillespie, chief marketing officer for Feldman Automotive Group in New Hudson, Mich. "If the staff in a store can't work with it, then it's for naught."

Still, several players in the space told Automotive News that the technology is only going to evolve and dealerships will need to embrace it to stay competitive.

"The ones that are going to continue to be profitable, that are going to win, are going to be the ones that are going to lean in to that," said Marianne Johnson, chief product officer for Cox Automotive.

The premise behind marketing — getting the right message in front of the right person at the right time — hasn't changed. What machines have enabled, however, is the ability to laser-focus on consumers based on how they interact with various messages.

Computers can be trained to perform more advanced tasks, such as testing different messages and taking action automatically based on which version resonates most with recipients, said Erica Sietsma, COO of Digital Air Strike, a Scottsdale, Ariz., digital marketing company.

And machines can process more data points than a human can, with a computer repeating and refining tasks as it learns more about a consumer.

Outsell, a Minneapolis automotive marketing company that specializes in artificial intelligence, processes data daily from millions of customer actions at its more than 1,500 U.S. dealership customers. It then crafts automated communications via email, social media and even direct mail based on where the customers are in their ownership life cycle, founder and CEO Mike Wethington said.

The machine can determine who should see which messages on which channels and alert dealerships when consumers have engaged with the content, Wethington said.

Dream Motor Group, which has five dealerships in four states, hired Outsell after finding that business development center employees were so busy following up on fresh leads that they couldn't keep in touch with customers longer term, Rothenberger said.

Dream's marketing blasts cater to prospective customers, recent buyers and people who have visited a dealership service lane, Rothenberger said. In the service department, for instance, she said the system knows a customer's last visit and can send coupons for future maintenance work.

Outsell can track whether a customer opened an email and what actions he or she took afterward. In October, Dream attributed 29 vehicle sales linked to Outsell's messages, and seven of the buyers previously had only visited the dealership for service.

Several providers of machine-driven marketing said they don't envision their tools will replace other marketing efforts but complement them.

Cars.com, which pays tens of millions of dollars annually to advertise on Google, has assembled a team of data scientists using machine learning to attract consumers not only in the market for a vehicle but who intend to buy, said John Thornton, the Chicago company's vice president of growth marketing.

LotLinx, an automotive marketing technology company, also targets buyers who are ready to purchase with VIN-specific ads, CEO Len Short said. He likened automotive marketing to a basketball game, in that the only score that matters is the one at the end.

LotLinx focuses on customers deeper in the buying process because, for instance, a dealership that advertises a Chevrolet Tahoe to a consumer because he or she searched for it early in the shopping process won't convert that spending into a sale if that customer later opts for a different SUV.

"What we've been able to do is get materially better at understanding when people are in that moment," Short said. "A lot of people are saying, 'Well, they went here, and they looked at that, and therefore we should show them ads about this.' But the problem with that is there are a lot of false signals, and there's a lot of waste in that."

Feldman, which has 10 dealerships in Michigan and Ohio, hired LotLinx three years ago to help increase traffic and the number of shoppers submitting leads, Gillespie said. Different stores run different ad campaigns based on what they need to sell, such as vehicles that have sat for a while on the lot.

Gillespie said he attributes more customers contacting Feldman dealerships asking about specific vehicles in part to LotLinx.

Google, too, says it is getting smarter.

The company has introduced machine learning into its Google Ads platform to target ads to customers most likely to do business with a particular dealership, said Kelly McNearney, the company's senior automotive retail strategist. And, McNearney said, Google uses machines to report to advertisers aggregated data about how many people clicked on a paid search ad and then visited a physical store within 30 days. That can help signal the profitability of the advertising, since a dealership knows its close rate and the profit made on each vehicle sale or service visit, she added.

"A cost per click on its own is not a helpful business metric, so that's why we're leaning toward these more sophisticated forms of reporting," McNearney said.

"If a cost per click is $4 and it results in no sale, or a cost per click is $25 but you profited $1,700 on a new-car sale, would you be willing to spend the $25 for that click? And I think every dealer in America would say yes."