There has been a manner of thinking in internet sales to focus only on first party leads. Many dealers are conflicted about whether to decrease or even discontinue the use of third party lead providers altogether. Other dealers have made third party leads a valid and beneficial part of their marketing mix; however, they often lose sight of the importance of first party leads. Both have value and positively affect sales and profit opportunities, but it’s worth the time it takes to explore the differences.
Third party lead generators usually collect their data by bidding on keywords in your market, they create SEM (search engine marketing) campaigns, then they sell you the leads. But that’s the same method used by dealers who are generating leads from their own website. Third-party lead generators don’t do anything different than you could be doing on your own website. They are often intercepting traffic from your own backyard, leads that should be yours to begin with. And dealers are paying more to purchase the same results that they could be generating themselves. Another factor to look at is that your provider may be sharing the leads you paid for with other dealerships who are competing for the same customer.
The positive news about third party leads is the industry has seen refined efforts by lead providers to improve the quality of their leads; and, there is still a need for third-party lead sites because they give shoppers a passage to numerous brands and the information they need to make more knowledgeable buying decisions. But even though third-party leads continue to be useful, they are taking a backseat to OEM (original equipment manufacturer) and dealership websites which are becoming more independent, able to stand on their own and attract their own leads.
Wikipedia defines 1st Party Leads as sales leads that contain the contact information delivered from prospective customers directly to the potential seller. These prospective customers’ original connection with the potential seller is the result of a direct action by the merchant, advertiser or marketer. In other words, you generate the lead yourself, and far more cost effectively.
First party leads are in the market consumers, ready to purchase a product and are actively engaged with your website. These are leads you generate yourself using your own website traffic and conversion tools associated with your site, such as pay-per-click, SEO, email, video, etc. And these self generated leads have plenty of advantages. Their quality is much higher because the visitors are ready-to-buy, reaching out to YOUR dealership to fill their needs. Also, while first party leads beat all other lead 
generators at conversions, they do so at a fraction of the cost. There’s no commission or mark-up for services you could easily be performing on your own. Self generated leads cost about three to six dollars each, as opposed to upwards of $20 for an independent internet lead. And because first-party leads come directly from your specific marketing, potential customers naturally feel a connection to your dealership from the beginning. This is why they tend to close at rates about 3 times higher than all other types of leads combined.
Today’s market lead conversion success depends more on access to better leads and better lead handling. Studies have shown that a mix of both first party leads and third party leads, both with their own intrinsic value, when in the right balance, is the most profitable formula. However, it’s paramount that dealerships make the best use of their website to pull in first party leads, implementing a “call to action” mechanism on their site to convert a consumer into a lead. Once you have captured these leads, it is imperative that they are properly handled and are contacted quickly and often.
Sources:
- 2011 Automotive Internet Study and the Role of Independent Internet Leads, A Kain Automotive.com Study, April 17, 2011
- http://dealer-communications.com/lead-management-and-crm/digital-marketing-independence-%E2%80%93-growing-first-party-leads/
- http://www.dealermarketing.com/internet-marketing/online-marketing/1136-third-party-lead-providers-are-still-key-but-lead-handling-skills-still-need-improvement
