SEM Best & Worst Practices: How to Spot & Stop SEO & SEM Waste & Fraud (PART 8)
TRANSCRIPT: We’re gonna jump into Section 4 here. We’re gonna look at the SEM practices. The Best and Worst Practices of Search Engine Marketing on the pay per click side.
Rather than just tell you how some vendors are taking advantage of dealers, I’m gonna give you some real examples I personally discovered and then tell you how to combat these. And by the way, SEM shouldn’t mean steal everyone’s money, but unfortunately, for some SEM vendors out there in automotive today, they are in effect doing exactly that.
All right, so first let’s level set again. Search Engine Marketing cannot and should not be a do it yourself endeavor. Again, Search Engine Marketing cannot be a do it yourself event. You cannot do this yourself. You would pay a lot more to have someone in house manually do the tasks that a good SEM provider can do automatically. So, I’m trying to cut out all waste on your side, that includes having your own people do it.
So, instead of trying to become an expert on the ever changing world of SEM, your team should become experts at holding all digital vendors accountable. Additionally, just like with SEO, see not every dealer needs to spend on SEM. Let me give you a couple of examples where I’ve uncovered wasted SEM dollars. This isn’t fraud, this is just waste.
A service department that’s over capacity, but they have co-op with their OEM for service keywords, so they’re spending $2,000 a month of their money on service keywords, for a total $4,000 a month spend. Let me go back to where I started with that. They’re over capacity. They have all the business they need and they’re buying more business for you the keywords, but here’s the good news for them. The keywords they were buying were terrible and they had on ROI. So anyway, that’s a waste, right? We need to cut that waste out. That’s an actual example.
How about this, I watched a dealer who was trying to conquest a particular make/model outside of their PMA. They were struggling with a truck. Let’s say Chevy Silverado, now let’s say they were a Chevy dealer. They could not generate enough business within their PMA on their pay per click, so they went specifically outside their PMA and tried to generate Chevy Silverado leads using pay per click. We found out that they were roughly spending about $800 per lead by trying to buy this outside of their market, using the pay per click. That doesn’t make any sense. You can buy an auto web lead for 25 bucks, but they were spending $800 a lead because they were trying to do pay per click outside their PMA. That’s just a waste, just a waste.
Again, it’s probably not fraud, it’s just a waste, but here’s where we’ve actually discovered theft. This is the number one area where I’ve discovered SEM theft, and it’s in the administrative or the management fees. Now this is a real world example that we’re gonna dive into here, but I wanna make sure that we understand. This real world example, this dealer was actually spending $10,000, where you see subtotal, and not where it says $1,000, but I just wanted to keep the numbers easy.
All right, so this dealer was told that they were paying a 20% management fee. Let’s look at the vendor invoice, the green side. They were paying a 20% management fee for their SEM purchases, Search Engine Marketing purchases. Their dealer invoice, the invoice they got from the vendor showed a 20% management fee, $800 spent on Google, $200 spent on Bing, $1,000 total, management fee 200 bucks. Okay, that’s a 20%, right? That’s correct. Well, when we did a deep dive, we discovered the dealer was paying more than 40% for management fees because this, the red invoice, should have been their real invoice.
The vendor’s invoice showed the Google and Bing spend, showed a line for management fees at 20%. The problem was that the Google and the Bing spends were inflated by roughly 15%. Now, this is just an example, but this is what we found. The dealer’s actual management fee was about 41% for this spend.
Now, again, this is just an example. The dealer was actually spending north of $10,000 a month on PPC. So, do the math. They were wasting about $30,000 on PPC budget that wasn’t going to keywords that they thought it was. $30,000 a year just thrown away.