Advanced Data Activation Models May Threaten Third-Party Classified Website Revenue

Many unsung heroes will emerge this year as proactive auto dealers embrace the full potential of their first-party data and leverage powerful third-party data insights. As I delve into interviews with companies that have been working for years to manage and activate dealership data, the more I am amazed at the depth of their commitment.

My research report on Automotive CDP / MAP vendors will be released March 13th. Request an advance copy today. The first-party data management leaders will be revealed in my research with the hope that more dealers will start first-party data management projects in 2023.

Spoiler Alert: There is no "one" solution that fits the needs of every dealer, but dealers will be able to find a match through continued education and guided vendor interviews.

Do Dealer Groups Need a CDP?

The first question dealer groups should ask themselves is not whether they need a CDP, but whether they are creating a value exchange that leverages data to power the experiences their customers and prospects want.

The second question is whether this data is usable (clean & accurate) and securely and readily accessible to everyone in the organization who can create value from it. Many dealers will rely on a Marketing Automation Platform (MAP) to activate the data in the CDP across media and communication channels to achieve their business goals. A third question dealers should consider: how will the customers be able to control the cadence of marketing communications to match their needs and preferences.?

Brands should prepare for the future by housing these consumer profiles in an owned environment that is not beholden to any particular software solution. They need a tool that can easily take their owned consumer profiles and build on those profiles with additional data; managing when and how the resulting profiles are used across channel-specific platforms (O’Hara, 2023).?

Three Operating Frameworks

Gartner research suggests that as companies start shopping for a CDP partner, they should outline their intended use cases by reviewing four primary CDP capabilities: 1) data collection, 2) profile unification, 3) segmentation, and 4) activation (Bloom & Kune, 2022).?

An automotive retail framework, which lines up with Gartner’s categories, is presented in Figure 1.0, with the activation capabilities divided into personalized communication and advertising.???

Automotive CDPs have not fully embraced the "communications" activation sub-channel, but there are some big announcements coming this year. Most have focused on advertising.

There are many approaches to managing automotive first-party data, but we will look at three primary models: 1) traditional CDPs which have a very open architecture and can link to any marketing automation platform (blue/red), 2) hybrid platforms which combine CDP and MAP functionality and are closed to other marketing partners (orange), and 3) hybrid platforms which combine CDP and MAP functionality and open their CDP to other marketing automation partners (green/red).

Very large dealer groups may choose the first framework, and in fact, many have done just that. Medium sized dealers may opt for the third framework because it allows the most flexibility to choose best-in-class marketing partners and activation channels. These three frameworks will be discussed in greater detail in my research report and also at the 2023 Digital Marketing Strategies Conference (DMSC).

Two Approaches to Activating Local Shopper Data

Depending on how local shoppers are being identified and resolved in your CDP, the use cases in the dealership will vary greatly. These examples should get dealers interested in better first-party and third-party data management.

• An existing customer starts shopping on Autotrader and Cars.com and your CDP gets updated that night. This triggers a workflow to send an email or a text message to the consumer with a customized offer. The CDP can also be updated to show which cars they viewed on the marketplace website.
• A consumer has purchased a vehicle but has not been in for service in over a year. Your CDP gets updated that they are servicing their vehicle at a competing service center. This triggers a workflow to contact the consumer to win back their business.
• A dealer has 15 stores in a local market, and one of their existing Ford F-150 customers starts shopping on the group's RAM website. The consumer also compares truck prices at other RAM dealers in the local market and on CarGurus. The CDP gets updated and this triggers a truck loyalty communication process that shows matching trucks in the dealer group, new and used, to keep them in the family of stores.

Can dealer's finally have greater control of shopper activities outside of their dealer owned websites? The answer is yes.

Approach #1: Dealer Data Focused

Some companies are focused on consolidating, enhancing, activating, and messaging the dealer's existing customers who are shopping online on the website(s) the dealer / dealer group owns. If an existing customer comes to the dealer's website and does not submit a lead or call, the dealer should know about that visit. Agreed.

Focusing on known customers makes sense, as a first step, because dealers know that their first-party data has duplicates, errors, and, over time, it becomes less effective for outreach and retention.

Retaining existing customers is also much cheaper than getting new ones.

Approach #2: Local Shopper Focused (Anonymous Included)

Other CDP/MAP vendors take a much broader approach to connect a local dealer with all active shoppers in their market. This includes existing customers and anonymous shoppers who are not in their DMS/CRM. The in-market shopper identification has two levels:

• Identifying shoppers (customers and anonymous) on a dealer or group owned website(s).
• Identifying shoppers outside of dealer or group owned website(s) which includes third-party classified websites and automotive research websites.

Dealers now pay a premium for shopper audiences sold by Cars.com, CarGurus, Edmunds, or Autotrader.com/KBB to power advertising campaigns on Meta, Google, and OTT/CTV platforms.

CDP/MAP offerings will threaten the premium prices that classified advertising websites charge for their unique audiences.

The impact of advanced CDPs will also impact other premium marketing partners including email companies, equity mining companies, and service retention companies.

Understanding The Potential Reach

Let's look at Figure 2.0 which illustrates the two different in-market shopper models.

For a single franchise dealer website (green), the consumers visiting their website are either existing customers (green) or unknown (black). The dealer's existing customers (green) could be shopping at other local competitor websites (orange) but the dealer would never know.

The dealer's customers (green) may also be visiting third-party classified websites and, at the same time, local shoppers in the dealer's PMA (black) are also shopping on third-party classified and research websites.

There are ways in which CDP/MAP vendors can identify which local consumers are visiting Cars.com, Autotrader, KBB, Edmunds, CarFax, and CarGurus and share that data with the local dealer, in a privacy compliant manner. This data can allow the dealer to run targeting advertising campaigns on all media channels at a much lower cost than going direct to the website owners.

Dealers with advanced CDP / MAP platforms have to understand the potential for local advertising when they can resolve identity and entity to better serve their existing customers and gain new ones at a lower cost per acquisition.

Gaining Clarity in 2023

In the past, dealers have had to trust Google and Meta that their "in-market shopper" audiences were really well designed. Dealers also had to trust that third-party classified audiences were well tuned to eliminate visits that were not qualified shoppers.

Today, a new era is emerging where dealer groups can start to own their own first-party data platform and enrich it with actual shopping activity from local consumers off their website properties.

Does this seem too good to be true? I'll let you decide when you read my research report. Request an advance copy and you can be the first to read the details.

Join the CDP Discussion in Austin

It's time to educate someone in each dealership to become the dealer's first-party data management expert.

Dealer groups who are actively researching which CDP/MAP partners to select will benefit from attending the 2023 Digital Marketing Strategies Conference (DMSC), May 21-23rd, in Austin, Texas. The show will feature the first automotive CDP showcase and will feature keynote session and panel discussion covering all the critical aspects of first-party data management.

BONUS

LinkedIn newsletter members can get a special discount by messaging me, and I will provide the discount code. I look forward to seeing you in Austin if you work at a dealership or an OEM. Questions? Just message me on LinkedIn.

References

Bloom, B., Kune, L.F. (2022). Market Guide for Customer Data Platforms. Retrieved from https://www.gartner.com/doc/reprints?id=1-29C2HHTR&ct=220307&st=sb

O’Hara, K. (2023). Between CDPs And Reverse ETLs, Brands Have A Tough Decision To Make. Retrieved from https://www.adexchanger.com/data-driven-thinking/between-cdps-and-reverse-etls-brands-have-a-tough-decision-to-make/