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Automotive Systems & Communications Service

Showroom Service & Parts

OEM

Briefing - Current Events in Context

No. 20 - 2008 - 5. August 2008
Topic... 1. 2. 3. 3.1 4. Different orientations in Europe and North America ADP and Fords on-line Digital Advertising Program 5Square assets sold Brief note on Gumiyo More snippets Autosoft and GM MSN and Dealix NeoSynergy on-line OEConnection and GM Quorum in the USA The Region affected USA USA North America

1. Different orientations in Europe and North America

Research for future Analyses, and the developments covered in recent Briefings, confirm the differences between the two Continents. Some examples are...

Most Dealer Systems developments in Europe are at the DMS level. In North America, developments at the Internet and lead management levels are at least as numerous as those related to DMS. Customers behave differently, especially in their use of the Internet, in Europe and North America.

Open Networks for Finance and Insurance are dominant in North America. In Europe, most Finance sources (Captive and Independent) hope that open will never happen here, and at present, we know of nobody who is openly active, and has the potential influence, to change that. Local providers with the necessary technical capabilities exist.

The DMS business in most European Countries is not dominated by the Big 2, although the situation in the UK is very similar to that in North America where they hold about 80% of the market. ADP has very large positions in Italy and Spain, but R&R is not in either. Situations vary widely between Countries.

Few European DMS are sold in North America - we can only think of two - Audevs CARIT and SAPs DBM, and both have very small penetrations so far. ADP has not yet taken its International Autoline into North America, although a few years ago Kerridge (before ADP acquired it) did try to start in Canada. Equally, few North American DMS are sold in Europe - we can only think of one, R&Rs POWER.

The Systems Integration business in Europe almost does not exist. It would be of little value to produce an Analysis like North American Systems Integrations - a changed situation - March 2008 for the European markets. It would be very short, and mostly discussing what is not done compared with North America.

These differences are particularly important for the OEMs who operate in both Continents, and would like to have standardised systems at all levels.
Woods & Seaton 2008 Tel. 44 (0)1628 525 960 Fax: 44 (0)1628 530 210 E-mail mike@woods-seaton.com Web: www.woods-seaton-com

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No. 20 - 2008 - Page 2

2. ADP and Fords online Digital Advertising Program

Background A recent announcement by Ford and ADP confirms that, although major OEMs may have similar objectives, they often adopt different Partners - and different approaches - to help them. Briefing 14-2008 included a report on GMs use of Cobalts Web sites as part of its digital advertising and marketing structure.

Note: Cobalt is a Specialist DSP, not involved in the DMS business, and therefore it may be considered logical that it would gain this type of business. The project is discussed in GMs Global Dealer Systems Strategy, to be delivered later in August.

In June, Ford launched a digital advertising program with ADP which, as one of the two major DMS providers in North America, may be considered by some to be a surprise choice for this highly specialised role. However, ADP has expanded strongly in the Specialist on-line systems area, including Digital Marketing.

It started in 2006 when ADP acquired BZ Results, which was reported at that time to have been involved in Search Engine management for about 4 years. Since then, ADP has been expanding its Digital Marketing Systems and Consultancy services, and considers its partnership with Ford a logical result. Digital Marketing was one of ADPs key topics at the 2008 NADA Convention.

Fords Digitial Advertising Program (FDAP) - the announcement This Program is available to all Ford, Lincoln and Mercury Dealers in the USA - over 4,000 in total. The announcement overview states that up to 80% of vehicle purchases now begin online. Ford Motor Company, in alliance with ADP Dealer Services, is now offering you the opportunity to explore the value of Online Advertising and Search Engine Marketing for your dealership. The primary objective is stated to be to...

Drive increased traffic to Dealers Web sites. Sponsored links with all of the major search engines, including Google, Yahoo and MSN. Advertising campaigns of a design proved to increase showroom, web site and telephone activity. Campaigns can include Radio, Print and Cable channels, as well as the Internet. Pre-negotiated OEM advertising prices for Dealers. Compliance with Fords Digital Growth Initiatives.

The program uses...

Dealers do not need to make long-term commitments; they can cancel with 30 days notice. Initial trials in the 6 months before the launch are reported to have generated increased traffic and sales for Dealers, and reduced cost-per-lead. Comment: In these difficult times, Ford and its Dealers need every possible sale, which makes the program particularly relevant! Basis of operation Fords FDAP is different in detail from GMs approach. Its main characteristics are...

ADP works with Dealers existing Web sites. FDAP co-operates with Dealers existing situations. GMs project provides Dealers with free Web sites which they need to use if they will work with it. Many Ford Dealers use the DealerConnection sites which are provided via FordDirect, which was a joint business of Ford and its Dealers, but is now owned by Ford. ADP co-operates with these Web sites. Many other Ford Dealers use Web sites from a wide variety of sources. ADP also co-operates with them - but it also suggests that it has its own Web sites which may offer advantages.

Woods & Seaton 2008 Tel. 44 (0)1628 525 960 Fax: 44 (0)1628 530 210 E-mail mike@woods-seaton.com Web: www.woods-seaton-com

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No. 20 - 2008 - Page 3

ADP is Fords Partner, and the Dealers are its Customers. Ford arranges special pricing with advertising channels, including aggregators, e.g... Jumpstart Automotive Media, Google, Outsell, Specific Media and Yahoo. These prices are then made available to Dealers via ADPs Digital Marketing operation, which aims to help them increase the efficiency of their advertising as well as the cost. FDAP includes tools and Consultancy which are supplied to Dealers by ADP.

Multi-choice Dealers can choose from three levels of service... Do it yourself: ADP provides the Digital Marketing tools with documentation and a manual, and connects the Dealers Web site. One of ADPs Regional Digital Marketing Consultants visits for 1 day in each 6 months, to provide any help the Dealer requires. Ford pays for these services... they are free to Dealers. ADP helps the Dealer: ADP provides additional on-site Consultancy, for which the Dealer pays 50% of the cost, and Ford the other 50%. Turn-key: ADP becomes the Dealers virtual Marketing Manager. Again, the Dealer pays 50% of the cost, and Ford the other 50%. This role includes working with the Advertising Agencies used by Dealers. ADP applies a rebate from its sales of advertising to Dealers, to reduce its Consultancy price.

Reporting ADP provides reports for the Dealers - in Customer format, and Ford - in Partner format, covering performance and results.

Other aspects ADP assists Dealers in recovering their share of Fords Co-operative Advertising budgets. It also co-operates with Fords higher level digital marketing activities, to avoid competition between it and its Dealers when bidding for Search Engine positions. Note: Ford was already employing ADPs Digital Marketing Consultants before FDAP was launched.

Comment: This project has been running for only a short time, and apart from some results of trials, no details of its impact have been released. At this stage, the main activity is to make Dealers aware of the project and its planned benefits, so that they participate.

With so many Ford/Lincoln/Mercury, Ford Direct, Dealer Association and other Web and advertising initiatives, it is not surprising that Dealers need to have the situation clarified, and FDAP includes some funding for that purpose.

This project is another component in the trend to measure advertising results precisely, and place money where it has the maximum benefit for the minimum cost.

It is tough being a Dealer in the present market, but it is at least equally tough for those trying to sell them advertising when they are using the tools available via FDAP.

3. 5Square assets sold

One of the very interesting Showroom Control systems in the USA, on which we have reported several times during the past 4 years, has a new owner. The assets of 5Square - or some part of them - have been acquired by iCarMagic - also called imagiclab. More details are available at... http://www.imagiclab.com/
Woods & Seaton 2008 Tel. 44 (0)1628 525 960 Fax: 44 (0)1628 530 210 E-mail mike@woods-seaton.com Web: www.woods-seaton-com

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No. 20 - 2008 - Page 4

The owner of the organisation is reported to be Keith Latman, and Web searches in the names of iCarMagic, imagiclab and Keith Latman provide more information about their products and history. Some key details available on the Internet are...

iCarMagics software is reported to be used by about 1,400 Dealers in the USA. The company has made several previous acquisitions, including... DealerSite.com e-Pencil.com, AutoPencil.com MyCarLink.com

Comment: So far, we have little information about the future plans for the 5Square product, but it is expected that the iCarMagic product-line, which has included Internet Lead Manager (ILM) and CRM products, will be expanded to include its components to make a complete Showroom Control system. It is also expected that existing 5Square customers will be supported by imagiclab.

One to whom we spoke is hoping that the larger imagiclab organisation will provide a secure future for the 5Square product.

Investors in 5Square, who contributed an unknown amount probably measured in $millions, may not have recovered all that they spent. We have not seen an announcement of the terms of the acquisition. However...

3.1. A note on Gumiyo

Some of the employees of 5Square are understood to be at Gumiyo, mentioned as an innovative newcomer in Briefing 3 - 2008 - one of a series covering the 2008 NADA Convention. Gumiyo was described as...

an urgent new company which did not have a booth, with a system which takes Dealer and Vehicle Web sites, and re-sizes them for display and interaction via any mobile phone with an adequate screen.

It is possible that some of the investors in 5Square are also connected with Gumiyo, which recently announced a new project... Mobile Ready... which it describes as...

This initiative groups vendors to discuss the rules for generation and consumption of leads originating from, or generated by, mobile phones. Our purpose is to share our knowledge of mobile technologies and practices with existing vendors in the automotive space. For example, we work with CRM companies to define how to accept incoming mobile leads, how to design in-dealership workflows to process mobile leads, and how to respond to buyers on mobile phones from the CRM tool. The Mobile Ready initiative is seen as the discussion board that would eventually lead to the definition of standards (e.g. Mobile ADF) in the automotive space.

Comment: The progress of mobile phones as Internet workstations will be interesting to observe. Already the more advanced units appear to be mini-Laptops in capability.

4. More North American snippets

These snippets are not necessarily less important than the other items in the Briefing, but space only allows a short note to put them in context at this time..

Autosoft and GM Having written in a recent Briefing that Autosoft is quite low-key with its PR, a notification has been received that it has connected 400 GM Dealers to the Parts Workbench. Autosofts target is to have all of its 600 GM Dealer customers connected by the end of July, when GMs old RAPID system is scheduled to be closed. It was not long ago that Autosoft announced that it was the first DMS provider to complete its certification for the Parts Workbench, and had connected 100 Dealers. The term low-key is being upgraded to medium-key.

MSN and Dealix Dealix, owned by Cobalt, is one of the well-known Lead Generators and Lead Aggregators in the USA. MSN Autos is one of the popular Web sites used by consumers for New vehicle research.

Woods & Seaton 2008 Tel. 44 (0)1628 525 960 Fax: 44 (0)1628 530 210 E-mail mike@woods-seaton.com Web: www.woods-seaton-com

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No. 20 - 2008 - Page 5

Dealix will be the lead fulfillment provider for MSN Autos. Its function is described as... ... Dealix will integrate its lead distribution technology with the Microsoft network in order to give MSN visitors a seamless experience and help consumers obtain price quotes for new cars from local auto dealers. Dealix will power the MSN quote process during the third quarter of 2008. Comment: This is one of the Web structures which Ford and ADP will wish to optimise for Dealers via their Digital Marketing venture. The announcement is a further confirmation of Cobalts move towards the Internet and Advertising for its primary business.

NeoSynergy on-line progress The company reports that 500 Dealers have signed for its Best Deals vehicle sales Web site which also feeds AOL Autos. At the DMS level, it has gained certification for GMs Parts Workbench, and completed connections to Carfax (vehicle title information) and Paychex (a payroll service provider). It is understood that, when the number of Dealers using Best Deals and related on-line services has reached a target level, resources will be directed by NeoSynergy to promote its offer of a free DMS, which was announced at the 2008 NADA Convention. At present the Darwin XE DMS appears to be hidden in the shadow of the on-line activity.

OEConnection and GM The process of expanding its range of services continues at OEConnection, the provider of on-line systems for Parts and Service which is jointly owned by Chrysler, Ford, GM and Snap-on. It has announced that it will manage GMs National Fleet Maintenance Program... The program was piloted in Chicago with one national fleet maintenance organization and local General Motors dealerships in late 2007. During the first week of June 2008, over 1,000 GM dealerships nationwide were activated on the program and GM fleet vehicle drivers are now invited to have vehicles repaired at their local General Motors dealership to capitalize on this trouble-free repair invoicing. The program and OEConnections technology also supports other fleet management companies. More details of OEConnections operations are included in GMs Global Dealer Systems Strategy, to be delivered in August.

Quorum in the USA Based in Calgary - Canada, Quorum which is one of GMs IDMS providers has been working hard to establish a second base in the USA. It has an office near Detroit. Recently, it announced that the 50th Dealer in the USA has signed for its Xsellerator DMS. That does not quite put ADP and R&R on the rocks, but it represents close to 20% of Quorums total customer base, and is an important milestone. The 50 Dealers are based in 19 States, with businesses in 26 States, which should keep Quorums implementation and support staff on the move. ***** As always, comments, queries and suggestions from Subscribers will be welcome.

Mike Seaton
Woods & Seaton 2008 Tel. 44 (0)1628 525 960 Fax: 44 (0)1628 530 210 E-mail mike@woods-seaton.com Web: www.woods-seaton-com