Attribution (or, TrueCar is the Mob)

The new ‘buzz word’ of the business? It’s a sham
Attribution has become the buzz word in the auto marketing world. TrueCar is the leading profit taker of this sham. A sham? Yes it is. Marketing is essentially continued exposure to a brand. That’s what it is. To ‘attribute’ one particular entity and one point in time as the ‘overwhelming tipping point’ is intellectual fallacy and a very bad joke; a bad joke and an expensive one in the case of TrueCar.
I may not have to explain this further, but I will because it may not be obvious to you. On second thought just read the first part of this blog 3 or 4 times and think about it. If you hid your dealership inside an airport hangar and removed all your signs and took down your website and all other advertising, then you could work with TrueCar and not be party to the sham. They have figured out a way to intercept the buyer and get in on the deal. When they say ‘this is how car buying was always meant to be’, they really mean that this is a great way for a third party to get in on the profit!
TrueCar figured out a way of grabbing your profit so that you wouldn’t have it to promote your brand. Instead, you get a thinner deal and help to promote them. We should all be hoping mad, but we’re used to this kind of thing on a much less aggressive scale ( and AutoTrader).
Other than that scenario, no dealer actually increased their market share or bottom line by working with TrueCar. It’s like the Mafia. You need TrueCar because all of your competitors are paying the protection money to them, so you have to as well.

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The Appearance of Success vs. Reality

Why do dealers refuse to appreciate empirical evidence of successful marketing strategies? Because there is a hoard of voices trying to convince them that anecdotal evidence is more important.  It’s an age-old story.  The appearance of success is more sexy.  It appeals to emotions, much like a customer’s choice of vehicle to purchase.  It’s part of the business, right?

Let’s review:

Anecdotal – Appearance of reality

  • Traffic
  • What the salesmen say
  • What the non-customers (paying, that is) say
  • How something feels or seems

Empirical – Reality

  • Market Share
  • Market Share
  • Market Share
  • You either outperformed your market or you didn’t
  • You either outperformed your brand or you didn’t

I will use an example with a huge sample size to illustrate.  This is an 8 year study. Four years before taking on a highly touted national marketing concern and 4 years with that firm.  You know what, I’ll name names because the data is all public record from the state of Georgia. Allan Vigil Ford is the dealer and Team Velocity is the national marketing concern.The study takes into account only franchised dealer sales (new and used) in a 25 mile radius around Allan Vigil Ford.

Market share for Allan Vigil Ford during the 4 years WITH Team Velocity was down 17.28% compared with the previous 4 years (without Team Velocity).  Market Share for New Fords was down 7.69% compared to the first 4 years.  For Allan Vigil to have just kept pace with the demand for their brand, they brand would also have had to be down 17.28%, but it wasn’t.  That is empirical evidence that Allan Vigil lost about 28 vehicle sales a month to the market and adjusted for the lower Ford demand, lost about 16 vehicles a month net.

Here is where the appearance of success overrides the actuality of success.  The market volume in the 25 mile radius of Allan Vigil was 11,150 (new and used, franchised dealers) during the first 4 year period, but it was 13,853 during the second 4 year period.  In other words, the dealer’s actual monthly volume was up about 3 sales a month during the Team Velocity 4 year period from the previous 4 year period.  The fact that it was really down 28 vehicles (or 16 adjusted for brand demand) never sunk in because the appearance of success (due to a stronger market) completely overshadowed the reality of the situation.

I know dealers are not stupid, but clearly Team Velocity was party to them losing in the market (to the extent that marketing contributes to sales).  Yet, for some reason, it appears successful and felt good.  That’s a lot of profit thrown out the door.  Had Allan Vigil merely kept up with the market and the demand for their brand, they would have sold 16 additional vehicles a month just for standing still.

Let me know if you would like a copy of the study or want to discuss this further.

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