Preferred vendors not always best option

When dealers seek the best digital marketing vendors, they are often faced with a choice: Use a company that has preferred status with their automaker — and comes with the support of co-op advertising money — or take a chance with an outside vendor and bypass the co-op dollars.

As dealers try to grab consumer attention in the digital age by tailoring campaigns for their markets, some are choosing the outsider.

That can lead to consumer outreach that is more individualized, said Nick Brunotte, director of industry practice for consultancy DHG Dealerships. He's seen firsthand how some dealers have decided to forgo co-op money in favor of vendors without preferred status.

The reasons are many. Sometimes preferred vendors get bombarded with dealership clients because of that automaker stamp of approval, Brunotte said, and they subsequently aren't able to customize campaigns to fit the various needs of dealerships in different markets. And at a time when technology is changing rapidly, dealers often want to experiment.

"Dealers would like to see an opportunity to try and test new products as they come out," said Mike Bowsher, chairman of the Chevrolet National Dealer Council and owner of Carl Black Automotive Group in Kennesaw, Ga. "There are so many new digital go-to-markets that come out weekly, daily, monthly."

Testing such products is necessary because dealers otherwise won't be able to determine what will help them, Bowsher said. But "if dealers don't have the co-op wherewithal to do it, many of them won't try it."

Some automakers have responded to that pressure. In 2019, General Motors expanded dealers' options for preferred website providers beyond CDK Global Inc., which previously had exclusivity.

Bowsher said it would help if GM enticed dealers by saying, " 'If you'd like to try that X, Y or Z for 90 days, we'll support it.' We're asking them to allow us to test and try new things on a certain percentage of our co-op dollars."

Todd Ingersoll, chairman of the Buick-GMC National Dealer Council, said GM allows dealers to suggest vendors they'd like to see approved for co-op dollars. The vendors are vetted quickly on their "ability to scale and what differences they are bringing," he said.

"We find that the vast majority of the vendors we would want to do business with are co-op approved," said Ingersoll, CEO of Ingersoll Automotive in Danbury, Conn.

With the high number of dealerships in a preferred vendor program, the vendors sometimes get backed up. Brunotte recalled recommending a website provider with preferred status to a dealer only to find out the migration would have to occur months down the line.

"Part of the reason the dealer wants to change platforms anyways is because they don't like their current one," Brunotte said. "It's costing them effectiveness, and now all of a sudden, they have to be ineffective for another six months because they can't switch."

Such logjams also can hurt effectiveness once a program is in place at a dealership. Each dealership should be treated differently, Brunotte said, but many preferred vendors deploy "boilerplate strategy."

"The GM dealer in Ohio — their [search engine optimization program] is the same as the one in Arizona," he said. "It's just in order to keep up with the sheer volume; it's cut-and-paste. That's not fair to the dealer."

Hannah Lutz contributed to this report.