Artificial Intelligence – Reduces Google Ad Costs & Can Eliminate Single Keyword Decisioning

Artificial Intelligence

Your days are filled with vendors claiming to have the “new, game-changing, world-beating technology that will change your business.” The challenge is, how do you know when to stop and listen to the one that truly is the new, game-changing, world-beating technology that will change your business?

Well, I’m here to tell you to stop and listen. AI is the new game-changing, world-beating technology that will change your business!

Dealership managers often struggle to understand which of their online marketing investments are working to sell cars efficiently. Managers know that there are inefficiencies in their marketing spends and significant labor costs with managing their campaigns. Artificial intelligence (aka “smart” software) promises to reduce the labor costs associated with running ad campaigns while increasing the dealer’s Return on Ad Spend (ROAS).

One of the biggest areas of opportunity for auto dealers is optimizing their Google Ads (formerly AdWords) investments to gain a competitive advantage. Dealership managers in the United States are spending tens of thousands of dollars each month on Google Ads. This is primarily a result of dealer education messages that have brainwashed store managers into thinking that it is easy to drive an in-market shopper to their website using Google Ads.

When dealers look at their cost per sales opportunity they are often shocked. Dealers using Google Ads are spending $75 to $300 per sales opportunity, based on my analysis of millions of dollars in Google spend. The range is outrageous, especially since it takes approximately five to seven sales leads to sell a vehicle. This can bring the cost per retail sale of Google Ads campaigns to over $1,000 per vehicle.

Google Ads can drive in-market consumers to a dealer’s website, but it is not very efficient. The reason is because consumers use Google Ads as an internet taxi to move them to a company’s website as quickly as possible. Even though the ad text might indicate an offer to lease a Honda Accord for $199 per month, users click on the ad to visit the dealer’s website so they can call to see if their car is ready to pick up from service.

In fact, CarWars research has shown that less than 15 percent of phone calls generated by Google Ads for new/used car sales are actually sales opportunities! The other calls are for service (25 to 35 percent) and the balance goes to contact people with basic questions that cannot be attributed to sales opportunities. CarWars knows this data because they listen and score millions of calls a year.

THE ACHILLES HEEL OF GOOGLE ADS IS HOW THE CAMPAIGNS ARE STRUCTURED.

Agencies deliver an ad when a keyword is used by a consumer in Google search. These ads, called Search Engine Marketing (SEM), assume that the agency can properly guess what the consumer had in mind when they typed in the keyword. The agency also has to guess which page on the dealer’s website is best to deliver the consumer to.

Data from Google Analytics shows that agency partners, managing automotive advertising campaigns, are bad guessers. I have come to this conclusion based on studying millions of Google Ads clicks and analyzing the actions consumers take when they land on a dealer’s website. Artificial intelligence will offer dealers advertising models that do not base complete ad decisions off single keywords, and this is exactly what dealers need to implement.

In many Google Ads campaigns designed to sell new and used cars, agency partners will take a consumer to a Search Results Page (SRP). The SRP lists cars that are in stock and ready for sale. When I analyzed the abandon rate and conversion rates of these campaigns, it was common for me to find that 70 to 80 percent of consumers landing on an SRP stop and leave the website.

THOSE WHO STAY AND MOVE TO A SECOND WEB PAGE ARE PARTICULARLY INTERESTING TO STUDY.

There are visits to service pages, special pages, and employment pages, all originating from make/model or offer-based Google Ads campaigns. This shows that buying the keyword “Honda Accord” and assuming that it will generate sales opportunities will disappoint more often than not. In fact, I estimate that only 40 percent of total conversions from Google Ads campaigns designed to sell new or used cars are actually sales opportunities. That means that 50 percent of the time, the dealer’s AdWords investments are not achieving their intended goal.

Sound wasteful?

Using artificial intelligence, companies like LotLinx are developing models that look at multiple actions consumers take online without assuming that the company knows what the visitor wants. For example, as LotLinx tracks shopping behavior, if a consumer searches using the keyword “2018 Ford F150,” and then later in the day searches using “2018 Ram 1500,” they would not show an ad unit until the consumer demonstrated higher, more specific intent. If the consumer searched repetitively, over multiple time periods, for Ram trucks as an example, then LotLinx will serve them up an ad in the right place at the right time.

Using artificial intelligence, companies like LotLinx can determine the best landing page destinations based on their intent engine. The choice can also include sending the consumer to an Accelerated Mobile Page (AMP), (especially if the dealer’s website is too slow), increasing conversion rates.

The single-keyword fallacy, which makes Google Ads inefficient, can be minimized with artificial intelligence. AI sifts through millions of data points to determine market demand and shopper intent. If you doubt my claim that Google SEM is inefficient in generating new sales opportunities, just listen to the phone calls generated from new and used car campaigns. Look at the chat and text messaging transcripts.

Dealers can calculate the discounting factor of conversions-to-sales-opportunities based on their own data. The discounting table could look like this:

Using this table, a dealer who received 365 conversions from their Google Ads campaigns might find that there were only 140 actual sales opportunities generated. If new and used car managers knew this, they would be more apt to turn to better marketing technology platforms that leverage AI. Unfortunately, most managers stop at conversions and don’t track conversion outcomes.

I share this information because few dealers are taking the time to configure Google Analytics to track engagement and conversions properly. Few dealers are recording phone calls from advertising campaigns using Dynamic Number Insertion (DNI). It is time for dealers to invest in the right framework, optimizing their ad spend to generate more sales opportunities. Dealers who focus on conversions will be supplanted by dealers that focus on advertising outcomes.

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