Archives for June 2011

Brand Protection: The Line In The Sand

June 13, 2011 By Arnold Tijerina

(Originally published on Dealer magazine)

In our online world, many companies’ brands are increasingly being challenged by others. Dealers are increasingly becoming more aware of the importance of reputation management. Vendors are shouting its importance through blog articles, conference session and webinars. Many people only look at one aspect of brand/reputation management – online reviews. While reviews are certainly important, they are only one aspect of it. Search results, domain names, PPC campaigns and online content also must be monitored in any company’s brand and reputation management programs.

There are many “types” of brand attacks your company can be forced to deal with ranging from those that are hostile to those with good intent. Here are some types:

Domain squatters – These are individuals that buy domain names (website addresses) that include other company’s trademarked names with the express intent to sell them back to those companies for profit.

Competitor attacks – These would include people who buy domain names, create content or run Google pay-per-click ads with the intent to use your branding for their benefit. In example: Your competing dealer buying domains, writing blog articles or running PPC campaigns that are designed to appear when consumers search for YOUR name.

Supporters/Fans – Yes, even your supporters and fans, despite their good intentions can also attack your brand. More about this.

Which do you deal with? All of them? Some of them?

The first two are the easiest to decide. Of course you don’t want your competitor running around driving your consumers (actual or potential) to them. I’m fairly certain that you also don’t want to have your brand name hijacked by a domain squatter and be held ransom for some exorbitant amount of money. There is at least one industry vendor who screams to dealers that they MUST control search engine results by buying domains that contain their names and branding then quietly buys domains that belong to others. There are certainly moral dilemmas involved here. On the one hand, you want to maximize your exposure to people not looking for you but, at the same time, you don’t want your competitors doing it. I’ve heard many people complain about their competition doing this to them and arguing how it’s “dirty” and “immoral” and then opposite comments resembling “you snooze, you lose” (usually followed by a snicker).

The last one is where many companies waiver and don’t know what to do. You can take the open path and allow all of your fans and supporters to create any content they want or you can protect your brand from these actions also. Every business likes and wants fans and you certainly don’t want to alienate them. Your company may even have “partners” that, while in support of your brand, utilize it for their interests, even if you benefit in some way.

What’s the “right” response?

Here’s my advice:

Any use of your brand or trademark that allows others any amount of control over your name without your permission and consent should be treated the same whether it’s out of malice or support.

Some would call this extreme and disagree. That’s fine.

Let’s take some examples of extremely popular brands with gigantic fan bases: Apple, Lucasarts and Toyota.

“Between January 2008 and May 2010, Apple Inc. filed more than 350 cases with the U.S. Trademark Office alone..” [link] Apple aggressively protects its brand in all cases. There aren’t many days that go by that you don’t see Apple suing somebody or sending “cease and desist” letters for some violation of their trademark whether it’s from companies utilizing part of their names (ie. iWhatever), fans creating websites supporting (or not supporting) Apple products whether or not they actually contain any reference to “Apple” in the domain, or blogs leaking unannounced product information. Do they piss their fans off? Sure, at times they do. Do they still do it? Absolutely.

Lucasarts, the owner of the Star Wars brand, has arguably one of the largest fan bases in the world. Whether its companies selling knock off products , websites that are “close” to something they own (Note: They sued Digg because the popular social media sharing site sounded too much like an old video game they made titled “The Dig”), or fans creating (and growing) the Star Wars brand through fan created content or websites, they don’t care. It’s their brand and name and they are very aggressive in controlling it. They’ve even gone so far as to say if you create anything that involves or uses any of our trademarked assets or intellectual property, we own it. Go ahead, draw a picture of R2-D2 right now. Yeah, they own it. Sorry.

Any Toyota dealer out there can attest to the aggressiveness in which Toyota protects its branding. I worked as an Internet Director for two dealer groups that owned Toyota stores. I remember all the hoops I had to jump through whether it was with Google or Toyota just trying to buy Google pay-per-click ads containing our dealership’s name. I even had to argue with Toyota to buy my own dealership’s exact domain name! Go ahead. Buy a domain or try and place a GoogleAd containing the word “Toyota.” See what happens.

While your company is arguably not as popular or has as much of a fan base as either Apple or Lucasarts, does that mean you shouldn’t take the same position? I would argue that they have even MORE to fear from this standpoint than any dealership would ever have to worry about. How many people could you potentially upset versus either of whose companies? I would guess they have some of the best attorneys and brightest employees on the planet making these types of policy decisions. Any of us would happily trade places with them in terms of company success, popularity and brand awareness.

How do supporters of your brand hurt you? It may not be so obvious. Think about a consumer searching your brand on Google. When the results appear, they see all sorts of content, which you may or may not own. Any content that uses your name but doesn’t drive the traffic or business to you is an attack. Whether it’s a Google pay-per-click ad, a fan community, or a competitor trying to use your name to drive the consumers to themselves, it is all the same.

Look, I’m not against your business having fans. You should create and encourage your raving fans to be fans. You should identify the ones with the most influence and have them shouting how great your business is from the top of a mountain. That being said, there are many ways in which your fans can support you without innocently (or not so innocently) attacking your brand. They can encourage their friends to join YOUR community, leave reviews FOR you, write blog articles saying how great you treated them, and SHARE your content with their social network. Your brand protection and your fans’ support can coexist without your trademark being violated. Encourage fans that are supporting you the right way, absolutely.

If you come across a fan that IS using your name, identity or branding that, in any way, could potentially confuse your consumers or drive traffic to themselves that you would have received had that content not existed, you should take action. I would advise that the first thing you should do is reach out to the supporter, thank them for their support, explain your brand protection policies and ask that they cease, alter, or turn-over your trademarked assets (depending on what the trademark violation is).

What do you do if they refuse? Well, if they refuse to respect your wishes and comply, you only have two choices: allow them to retain control of the asset(s) or not.

We’ve all heard the saying that 1 happy person will tell 1 person about their experience while 1 unhappy person will tell 100.

Keep in mind when deciding whether to enforce your trademark that it only takes one bad experience to turn that happy person controlling trademarked assets from a raving fan into avocal opponent. I would advise that rather than wait until that moment arrives to deal with it, you become proactive and take control of your assets. None of the companies I used as examples are where they are from being passive.

If you reinforce the ship before the attack, you minimize your company’s vulnerability and spend less time doing damage control and more time on building a better ship.

If You Could Only Make Front-End Profit, Could You Stay In Business?

June 12, 2011 By Arnold Tijerina

(Originally published on Dealer magazine)

You may be forced to find out.

How many less cars would you sell if you couldn’t spot deliver cars?

What if you couldn’t add negative equity into a transaction?

What if you couldn’t make any reserve money on the financing?

What if the mark-up on back-end products was regulated?

On July 21, 2010, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). This legislation gave the Federal Trade Commission the authorization to regulate, in essence, how car dealers do business by defining “unfair or deceptive acts or practices by motor vehicle dealers.” It seems now the FTC is moving towards defining, and enforcing this.

On March 15, 2011, the FTC announced the start of a series of public round roundtables in which they are seeking “data and empirical evidence” to begin deciding in what way, and how, to regulate car dealers.

The question isn’t whether they will, it is in what way. The FTC is a consumer protection organization. “Unfair and Deceptive” are certainly subjective terms which mean different things to car dealers than they do to consumers.

In the roundtables, some of the questions they want feedback, data and evidence on are very telling on how they view the practices of dealers. The mere fact that they are asking the questions at all leads me to believe that they already have some idea of the answer and just want confirmation (or the opposite) of their views.

So let’s go on a jaunt holding hands with the FTC while they explore, and decide, the fate of your store’s profit.

Q: Do motor vehicle dealers engage in “yo-yo financing”?

This question is obviously talking about spot-delivering customers and then having to re-write them. The definition they use in the footnotes defining “yo-yo financing” pretty much alludes that dealers intentionally do this and focuses on instances in which the actual secured financing increases interest rates and/or elevates monthly payments. If the FTC is asking whether consumers believe this is an unfair or deceptive practice, someone believes it is. If the FTC decides to regulate rewrites, which is the natural solution in protecting the consumer, the response by a dealer will have to be to cease spot deliveries. It’s hard to believe that they will prevent dealers from offering consumers more favorable terms after delivery so my guess is that regulation would be limited to instances in which terms are less favorable. What’s less favorable though? The question focuses on two components: higher interest rates and higher monthly payments. There are many facets of any deal that could cause either of these things to occur. Shortening the term of the loan would increase monthly payments. Will that be considered “unfair and deceptive”? I’m sure you can see how their definition immediately impacts how, and to whom, you spot deliver a car (or if you do at all). This changes how you desk a deal even. If you know that you can’t spot deliver a vehicle unless you can pretty much guarantee that you won’t have to re-write them unless the terms are more favorable to them, you are forced to offer WORSE deals up front, in the box. This just makes deals harder to close. How many sales would you lose from customers that cool off between the time you would have spot delivered them and the time you actually get an approval and are able to complete the delivery?

Q: Do finance companies provide incentives or payments to motor vehicle dealers in exchange for consumers receiving more expensive credit? Do motor vehicle dealers charge interest rate markups..for credit or leases about which consumers are unaware?

Yes. It’s called reserve and, apparently it’s being considered as an unfair or deceptive practice. I highly doubt most consumers are aware that dealer-secured financing isn’t always at the “buy-rate” and that dealerships can make money by marking up the interest rate. Sure, we can justify it a lot of ways but the bottom line is that if consumers believe it’s unfair, and the FTC agrees, dealers could lose the ability to make reserve. How does this affect how you sell a car, work a deal, or determine the selling price discount you would offer to a customer?

Q: Is substantial negative equity from a prior purchase, or money owed on a prior lease, frequently rolled into consumers’ next vehicle purchases or leases?

I highly doubt that the FTC will remove a dealer’s ability to roll negative equity for several reasons: banks already monitor and regulate loan-to-value and limit the amount of negative equity they will accept. What I do think could happen though is that the FTC could limit theamount of negative equity a person could roll into a new loan or lease regardless of the purchase price, loan structure or bank criteria. What if the maximum you could roll into a deal is $5000? $4000? Does it make a difference in how much your car costs? Will some makes get an advantage over others if the amount is regulated (versus a percentage)? How they choose to do this and/or determine this will absolutely effect how a deal is structured and/or if it happens at all.

Q: Do motor vehicle dealers engage in credit or lease packing, such as by including amounts for credit insurance, guaranteed automobile protection (GAP) or other add-ons into payment amounts?

I thought this was addressed by the single document rules but, apparently, the FTC is investigating this as well. They also want to investigate and consider the mark-ups allowed on these products thus limiting the price at which you could sell them. What’s a fair markup? Do you think your answer would match a consumer’s answer to that question?

These are just four of the 14 questions (each of which have multiple parts) that the FTC will be considering at the roundtables. I actually counted each question and sub question being considered and there are 72 questions that encompass a huge range of topics including: discriminatory financing offers on the dealer level, financing military personnel, paying off liens or trade-ins, the use of GPS devices on financed vehicles, vehicle auction houses, and more.

The first roundtable is scheduled for April 12, 2011 in Detroit, MI. They say there will be a total of 4 roundtables disbursed around the country but the other ones haven’t been announced yet. Given the chance, I’d love to be a part of one of those roundtables as a fly-on-the-wall.

To read the whole text of the announcement and all the questions that will be posed to the public, visit this link. Just the URL name alone (that’s not anywhere in the document) should give you an idea where this is headed: AutoTaskForce

Is Social Media Important To The Auto Industry? AutoNation Thinks So.

June 12, 2011 By Arnold Tijerina

(Originally published on Dealer magazine)

Many dealerships have realized that social media has become the communication method of choice for people. Dealers came across this revelation via many methods – maybe it was through an article they read, a session topic at a conference, through their OEM’s initiative or through an enlightened member of their staff. Some dealers are just now realizing it while some dealers still don’t.

AutoNation has not only been progressive in their social media campaigns, they’ve created positions within their organization that, to my knowledge, were the first of their kind in the retail automotive industry.

They have a “Chief Blog Officer” and a “Chief Facebook and Twitter Officer” within their corporate marketing department and have designated a “Social Media Champion” at each of their dealerships. They’ve embraced social media at all levels and in every way. These positions indicate a top-down embracing of social media from the corporate to the dealership level.

They took the next evolutionary step yesterday when they announced Alison Rosenthal as a new member of their Board of Directors. Ms. Rosenthal joins AutoNation’s board after leaving a 5 year career as an executive of Facebook.

“We are very pleased to have Alison Rosenthal join the AutoNation Board,” said Mike Jackson, AutoNation’s Chairman and Chief Executive Officer. “Alison’s technology experience, especially in the areas of mobile applications and social media, will be a valuable resource for the Board.”

AutoNation has run some great Facebook promotions in the past, including “Mosaic” which utilized the Facebook platform to achieve over 36,000 page views in less than 30 days while increasing interactions with fans by over 76%.

Their goal is to be known as the “un-dealer” through online interactions, transparency and responding to their customers. They answer questions publicly that most dealers would shy away from such as financing and invoice pricing as well as proactively seeking out online conversations about their brand, whether that’s through blog articles or social media, and participating. Every customer gets asked to leave online reviews – good or bad.

It’ll be interesting to watch in what ways AutoNation leverages Ms. Rosenthal’s expertise to further engage its fans and increase its already large online footprint.

We’re used to seeing technology companies being acquired by technology companies. It may not be too far in the future where we start seeing technology companies being acquired by automotive industry companies.

The Case Of The $30 Million Rims

June 11, 2011 By Arnold Tijerina

(Originally published at Dealer magazine)

Last week, a California Court of Appeals judge determined that a dealer violated several California state laws and ruled in favor of the plaintiff in a class-action lawsuit that will have huge ramifications for dealers within the state. The ruling was the result of some poor decisions from start to finish. Ultimately, this ruling will allow 1,500 car buyers the right to have their purchase contracts rescinded, which is estimated to potentially cost the dealership upwards of $30 million.

The story began in 2004 when Reginald Nelson purchased a vehicle from Pearson Ford (now Kearny Pearson Ford) in San Diego, CA. The car cost $9,995 and was spot-delivered without financing being secured. The customer also did not have existing auto insurance, so a binder was purchased for $250. This was added to the purchase price of the vehicle as well as some rims that were promised the customer. The insurance binder was on a “due bill,” but it is unclear whether the rims were. (My guess is that the rims were initially on a due bill but, once the approval came through, either the profit was reduced or the structure didn’t meet the approval’s financing restrictions. So, to keep the car on the road, the rims were taken out of the deal.) Six days later, the dealership contacted Reginald asking him to return to the dealership to fill out more paperwork. The paperwork reflected a change in the financing terms per the actual approval received by the dealership and was dated the date the vehicle was spot-delivered. Mr. Nelson signed the new contracts.

In interviews with Mr. Nelson, he says that he repeatedly tried to get the rims he was promised by the dealership but the dealership would not give them to him. Eventually, this led Mr. Nelson to contact an attorney. Unfortunately for the dealer, he contacted Hal Rosner, a consumer-advocate and auto law expert attorney specializing in automobile transactions and dealerships.

Mr. Rosner immediately identified several things that the dealership did that were not in compliance with state laws:

1. The second contract was backdated to the date Mr. Nelson took delivery of the vehicle, not the date in which he signed the new contract.

2. The insurance binder was added to the price of the vehicle, not itemized separately on the contract.

Both of these are violations of the state’s one document rule. Through discovery, Mr. Rosner was able to determine that these violations had occurred many times at this dealership. The 1,500 occurrences that Pearson Ford manipulated were all illegal. “That’s more than once a day for five years that they’re telling people, ‘We gave you the wrong financials,’”said Rosner. “That’s hardly an accident.” Rosner was able to get the lawsuit converted into a class-action in March 2007.

Prior to the class-action trial, Pearson Ford made a settlement offer of $500,000 which was accepted. After the settlement was approved, both sides asked for their attorney’s fees to be paid by the opposing party. The trial court awarded attorney’s fees to Mr. Nelson and denied them to Pearson Ford. Upon further review, the judgment was vacated and trial moved forward.

The initial trial court found no violation save for a “technical violation” and awarded restitution in the amount of $50 per class member ($75,000). Both parties disagreed with the ruling (for different reasons) and it was taken to the California State Court of Appeals.

The California State Court of Appeals found that both actions described above were, in fact, violations of the Automomobile Sales Finance Act, the Unfair Competition Law and the Consumers Legal Remedies Act by backdating the contract and including the insurance in the cost of the vehicle, effectively costing Mr. Nelson an additional $27 in interest plus the sales tax on the $250 insurance binder wrapped into the vehicle purchase price (then approximately $19). This ruling effectively will give the 1,500 class members the right to have their contracts rescinded.

Keep in mind that these contracts are at least 7 years old, some much older. Assuming some of these vehicles were used at the time of purchase, this dealership will have to buy back contracts IN FULL for vehicles that could be 10+ years old.

I personally know that the practice of backdating contracts is common in Cailfornia, as is wrapping in insurance into the purchase price. In the past 3 years or so, dealers have slowly been changing those practices, but this ruling sets a dangerous precedent. I’m sure there are plenty of civil attorneys itching to get their hands on a consumer with a backdated contract right now.

This story started as a credit challenged consumer, with no car insurance, that wanted some rims for the 1998 Infiniti I30 that he bought from the dealer. This vehicle was already 6 years old when he purchased it. Had the dealer honored their promise to the consumer and given him his rims, legal action probably would never have happened. Once legal action happened, the dealer argued against paying the plaintiff’s attorney’s fees on top of an accepted settlement offer.

Those rims and $46 ultimately put the dealership on the hook for an estimated $30 million.

Those have got to be the most expensive rims in history.

Click here for ABC news 10 story: Pearson Ford Ordered to Buy Back Over 1,500 Vehicles

Click here for a Copy of Appeal Court Ruling

Social Media ROI Just Got A Little Easier

June 11, 2011 By Arnold Tijerina

(Originally published in Dealer magazine)

Social media has been a hot topic for a while now in the automotive business. As the communities grew, dealers and OEMs started paying more attention. Progressive dealers started social media campaigns while others adopted a “wait and see” attitude. As time progressed and search engines started recognizing the importance of the content generated by the sites, they started integrating data from these sites into their search algorithms (Google includes Twitter content while Bing includes Facebook “Like” data.)

The biggest, and most basic, question that dealers always ask is the same core question that they ask for any advertising medium: How will this help me sell more cars?

Facebook recently announced that it was phasing out FBML in favor of iframes. All those custom landing tabs you created won’t go away… yet, however. If you already have the “Static FBML” application installed on your fan page, you’ll continue to be able to use it for now. It is, however, expected to be phased out eventually with some saying it could go away completely by year’s end.

The advantage of using an iframe on your Facebook page, in simplest terms, is that you now have the ability to use your current tracking software to measure traffic generated by Facebook to your site. An iframe basically allows you to create a “window” within your Facebook page (on its own tab) in which you can show users a website without having to pull them away from Facebook.

Historically, search engines have ignored content within iframes – they see the window but not the picture inside. I don’t know whether this will be changing or not so the SEO value of the framed website may be negligible. Don’t get me wrong, your actual Facebook Page will still be seen by search engines, it’s only the content framed into your landing tab that may not count.

About a year ago, I wrote an article showing people how to frame in their inventory and/or website into their Facebook page. It was great while it worked but it had its drawbacks. The biggest one being that, the easiest “solution” for website integration or display was displaying an existing web page on your site, which framed in your website at its actual size. Your website, in whole, is still much larger than the display area contained within a Facebook tab. This produced ugly looking results with horizontal and vertical scrollbars. Facebook also didn’t allow outside analytics so, while it was cool to have your website or inventory framed in, you couldn’t really tell whether anyone was on your site within Facebook. Facebook then got rid of the ability to implement iframes and limited businesses to FBML.

With their migration back to iframes, and their decision to allow analytics on the framed site, you now have the ability to measure traffic that is viewing your website from within Facebook. You also have much more control over the design of what you display.

My advice to you has several components –

Install the app “Static FBML” on your fan page now. You will not be able to do so after March 11. If you have it before that date, you can keep it. I only say this because, if you decide you would rather use FBML, or some website or SEO wizard determines that a FBML landing tab converts or optimizes better than the iframe, you’ll have the OPTION of using it.

If you decide to utilize iframes, create SEPARATE LANDING PAGES for each tab you create. (ie. If you have a tab “About Us” with a website framed in, create a page (website) just for that tab. If you then decide to add a “Specials” page, create a different landing page for that tab.

Make sure your analytics code is installed on these customized landing pages.

Make pages specifically designed for optimized viewing within Facebook. What do I mean by that? As I mentioned before, by simply framing in existing websites, you end up showing people a very small view of your website and have these scroll bars in which they have to scroll all over the place to see it in whole.

Bottom line:

Facebook landing tab windows are exactly 520px by 800px. Create individual landing pages, with analytics code installed, and sized to view within Facebook. By doing this, you will have an attractive landing tab for your fans AND you will be able to measure conversion and views. Personally, I would create and display some sort of conversion device within the landing tabs, like a “Contact Us” page, or something that could generate some leads.

I’m not promising that you’ll all of a sudden generate massive traffic and leads.

What I’m saying is now you’ll have the ability to track views, test different landing pages and measure conversions…

And that’s the first step towards being able to measure your efforts.

To learn more cutting edge digital marketing strategies, please join me at the 10^th Digital Dealer® Conference & Exposition being held in Orlando, FL on April 19-21, 2011.