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  1. #1
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    New car & automotive Pay-Per-Lead programs?
    Over the past few years, I have been told that there are some good profit opportunities at the pay-per-lead automotive sites (Edmunds.com, carsdirect, autobytel, trueautoprices, etc.), including a variety of offers (new car price-quote leads, used-car leads, car insurance, extended warranty, vehicle history, blue book, auto parts, aftermarket, auto enthusiast). I see that some merchants are offering as much as $8.25 per new-car lead, which sounds like a good price for a lead.

    A potential client asked me whether I thought I could attract traffic, either through pay-per-click promotions or via an affiliate program. The client is prepared to pay $8 to $10 per valid new-car lead.

    However, after some preliminary testing, I am having trouble finding the "market opportunity" in this space. Bid rates on Google AdWords and Overture/YSM are prohibitive -- and I am getting only trivial numbers of adviews and clickthroughs even at $1 to $2 per-click bid rates. I can't figure out how I could make money at those bid rates, and I suspect that I'm bidding against other affiliates who aren't making money either -- or maybe there is some trick or technique here that I just don't understand.

    So my question: is anyone making money in this space? Specifically, since I have pretty much ruled out pay-per-click as a source of significant traffic, are there actually affiliates out there who can drive meaningful traffic at these pay rates? I am seeing some very wide variations in post-click "conversion to lead" from AdWords -- sometimes 10-20% converting, but sometimes fewer than 1% converting, depending on the search phrase.

    I am trying to figure out if I should agree to spend some time trying to build and grow an affiliate program for the merchant. Since I do this work on a pure "performance" basis (e.g. I only get paid if the program works and drives valid leads profitably), I am concerned that this space may be "played out" and that there are simply too many merchants (Autobytel, edmunds, etc etc) and not enough online car-buying prospects to justify the effort.

    I'd LOVE some feedback.

  2. #2
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    No profit, no interest, or just no replies?
    Wow, no reply at all? I don't know whether that means there really is no profit to be found in this space, or just no interest, or perhaps even just no replies because no one wants anyone else to know....

    Sigh.

  3. #3
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    Talking
    take your pick

  4. #4
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    The automotive business is not in that good shape right now, in my view. They are already selling their vehicles at under invoice prices to anyone that walks in the door and will finance many at 0% APR for up to seven years. The big question is, why would any dealer pay someone for leads right now when they are already selling their vehicles below cost? It was a great source of revenue of us for almost seven years, but I think the days of selling leads to auto dealers on the Internet has past. I'm sure others will disagree, so I'll get out of the way and let them comment!

  5. #5
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    Wow. You don't understand the new-car business.
    Quote Originally Posted by mhutch
    The automotive business is not in that good shape right now, in my view. They are already selling their vehicles at under invoice prices to anyone that walks in the door and will finance many at 0% APR for up to seven years. The big question is, why would any dealer pay someone for leads right now when they are already selling their vehicles below cost?
    You need to spend some time researching on the web or elsewhere to understand what a "dealer invoice" price is. In most industries, an "invoice" reflects the "actual cost." But in the auto industry, the invoice includes a huge buffer for "holdbacks," which the manufacturer later credits back to the dealer, plus exceptionally high discounts if the invoice is paid "early" (before 90 days, which is also an exceptional time for interest-free payment). In short, the "dealer invoice" reflects a price which gives the dealer at least $1,000 in gross profit on most cars, and for high-end models, many thousands of dollars in gross profit.

    The terms of finance deals are also not relevant to the car dealer: they are PAID to create a car-finance deal, either by the manufacturer's financing arm or much more frequently by banks or other finance companies. I assume that my $8,000 finance contract at 2.9% generated a fee of several hundred dollars for the dealer.

    Car dealers make money selling cars, and they are willing to pay for leads. The issue I raised here is simply that the competition in this space seems to be unreasonably tight, with pay-per-click bids set above a reasonable price for most automotive terms (often above $1 per click for searches that generate only 2% to 5% lead conversion).

    The key (for my client) is whether there are affiliates out there who are generating a reasonable number of new-car sales/price leads and being paid $5 or $8 but who would like to earn more per lead ($9 or more). If affiliates were actually making money in this space, I think they'd express interest in a better offer, and then I could invest in setting up an affiliate program. Right now, I am advising my client to pursue other strategies because I see no sign that there is any opportunity here.
    Last edited by markwelch; December 4th, 2005 at 02:05 PM.

  6. #6
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    August 5th, 2007
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    Hi Mark,

    The thread is quite old...but could not find any information related to new car price leads.

    Have you made any progress since the last information, auto leads are now selling at $15 per qualified leads or so.

  7. #7
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    At the time I wrote this, I was working full-time on a gig for a company in the industry; to the best of my knowledge, they never launched the "auto lead" program that was one of the reasons they hired me (which explains why I quit after only 3 months). I haven't been involved in this affiliate segment at all since February 2006. (It's interesting to read through this thread -- I wrote then about recently getting a new-car loan, and just this past week I wrote a check to pay off the remaining balance.)

    The main problem is likely to be the "rate of qualified leads." Unfortunately, many of these lead companies can't use or resell leads for MANY (sometimes MOST) regions of the USA. Since some of these lead companies allow dealers to toggle "on and off" at any time, qualification may be completely dynamic. Some companies provide real-time systems that don't even accept a lead that can't be resold; others accept all leads and sort them out later.

    Of course, each of these "auto lead" companies is carefully managing its own PPC campaigns, optimized to maximize their profit and sometimes with automated bid adjustment as the "lead market" expands and contracts in a particular region; this leaves little room for affiliates who will earn less money per lead and who will have much less data.

    During my experiments, I never experienced a significant "reversal rate" of leads that were initially accepted but later reversed because the lead seems to be invalid. But I know that some affiliates do complain about this; the worry is that the "ultimate customer" (the dealer) may mis-handle the lead (in my brief testing, I identified several situations where dealers NEVER followed up on these paid leads, or waited a week to respond to a consumer's "immediate purchase" lead, and others where the dealer's staff actually drove away good prospective customers; other dealers simply complained that any time a consumer didn't actually buy a car, it was a "bad lead." I think most companies manage this process reasonably (for example, crediting the dealer as a customer-relations move, but not reversing the affiliate commission).

  8. #8
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    August 5th, 2007
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    Hi Mark,

    Thank you for the quick reply and deep insight....As Im starting out in Affiliate marketing, i will live this ground and start with something, that is somewhat hassle free and from reading the forum gauge what would suits me.

    Thank you again..it saved me lot a of time going in circles.

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