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Business Observer Friday, Jun. 29, 2018 2 months ago

Marketing firm, behind its like-heavy Facebook status, dreams big

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Luck, timing — and knowing when a marketplace is on the cusp of a major shift have all aided Dealers United.
by: Mark Gordon Managing Editor

In February 2016, Pete Petersen took the first of several steps that dramatically changed the course of the business he oversees, Dealers United.

That’s when Petersen accepted a next-day invitation to fly from Sarasota to Austin, Texas, to meet with Phillip Rather, then the top executive for Facebook’s automotive advertising unit. Dealers United, back then, was a buyer’s group for independent auto dealers, giving smaller players nationwide buying power on everything from light bulbs to printer paper. Clients had been asking Petersen and his team how they could create Facebook ads that drive traffic to their websites — and sales?

The CEO of Sarasota-based Dealers United, Petersen reached out to Facebook and secured an appointment with Rather. “We thought Facebook had an internal team that did this for auto dealers,” Petersen says, and he wanted to chat with them, starting with Rather.

Petersen flew to Texas with Dealers United co-founder and area entrepreneur Jesse Biter. Inside Rather’s office, the pair made a startling discovery: There was no internal ad team at Facebook that worked directly with auto dealers. And, added Rather, no ad agency had filled the void.

Rather told Petersen and Biter that Dealers United could enter the wide-open market, do well and quickly grab market share. Says Petersen: “He gave us the playbook for Facebook ads.”

Mark Wemple. Pete Petersen was named CEO of Sarasota-based Dealer’s United in 2014.

That meeting was the beginning of Dealers United tipping point. The company, while it maintains a small buying group presence for some clients, is now essentially a digital marketing and ad agency.  

The firm’s focus is Facebook ads, with a little bit of Google and Craigslist mixed in. It creates ads for new and used cars, dealership branding and more, for a host of dealers nationwide. “Facebook and Google are like the last mile of auto advertising,” says Petersen.  

That last mile has been lucrative. The company, since the 2016 meeting with Rather, has worked with at least 1,000 auto dealer clients on ads for Facebook and Instagram.

The past year has been particularly busy, with the firm adding two employees in June and eight more expected to start in July. The software development and new accounts teams have doubled, and the company has added and promoted a few senior-level leaders. Now with 20 employees, Petersen expects to have 40 by the end of 2018. He declines to disclose revenue, only to say private equity firms recently valued the firm at around $20 million.

"The only way to stay ahead of the curve in this industry is to break a few eggs, and they help us break a few eggs." Michael Renaud, on Dealers United

“We have created a system that solves” a lot of the problems dealers have with building a consistent platform of Facebook ads that lead to sustained car sales, says Dealers United COO Phil Anderson, who joined the firm in May 2017, initially to oversee software development. “And no one else in the industry has been able to do that.”

New model

Dealers United dates back to 2011. That’s when Biter and Matt Buchanan, operating partner at Sarasota Ford, founded the company as a way to build a nationwide network of auto dealers that would have combined buying power with vendors. The co-founders spent at least $1 million in a startup phase, on customer acquisition and marketing, with the mission to help dealers sell more, save time and cut costs.

“Our original mission was to provide leverage and help small and family-owned dealerships,” says Buchanan. “That’s still our mission.”

The initial Dealers United model was similar to Groupon. “For a while that worked well,” says Buchanan. “But then it got stale.”  

Petersen, named Dealers United CEO in 2014 after several years in leadership at Sarasota-based LexJet and its now-parent, S-One Holdings Corp., says the 2016 Facebook meeting presented an unseen opportunity to shift models. “It was a little bit of luck and timing — and knowing where market demand was headed,” says Petersen, 39, who has since taken on a partnership role with the Dealers United.

Even with well-documented privacy and regulatory challenges, that place remains Facebook, say Dealers United officials. “Facebook is where people spend their time,” Petersen says. “Facebook allows us to talk to a community. It spans every generation — young and old.”

Getting Facebook users to stop passive scrolling and engage with the ads — and ultimately buy a car — is Dealers United’s secret sauce. Brent Parres, a partner-manager with Facebook Automotive’s Austin’s office, says one of the keys to Dealers United’s success is its ad content has “meaningful messages” that are personalized and succinct calls to action. “While likes and shares are great, that doesn’t necessarily mean a car is moving off the lot,” says Parres, speaking during a recent Dealers United training webinar. “People don’t want to be sold to or sold at.”

‘Not easy’

Anderson says developing meaningful messaging requires a heavy concentration in software development, especially web-based technology that tracks users’ interests and history. The firm has also created its own Facebook-centric algorithms, part of a goal to someday go to a Software as a Service pay model. The company currently charges clients on an account or work basis, but executives believe that model will change as more dealers migrate away from traditional TV and print ads and to digital marketing.

And with the fast start on Facebook ads, Dealers United officials believe they’ve built a strong barrier to entry to stiff-arm would-be competitors. “There are a lot of moving parts in Facebook ads,” says Anderson. “It’s not easy.”

A recent example of Dealer United’s Facebook success comes from Christiansburg, Va.-based Shelor Motor Mile.

Dealers United created carousel ads for Shelor — in Facebook lingo that allows for two or more images and links or calls to action in one ad. Dealers United then built a product catalog of Shelor’s pre-owned car inventory, including ads, descriptions and prices, according to a Facebook blog post. The carousel allowed Dealers United to show multiple listings of the particular style of car each person could be interested in, such as only sedan or truck inventory.

“By placing the Facebook pixel — a snippet of code that allows Facebook to track people’s actions — on its website, Shelor also tracked exactly which vehicle models each shopper viewed,” the article states. That, in turn, allowed Shelor to retarget shoppers with even more ads.

“Personalized one-on-one messaging is everything,” says Petersen, speaking in the June 20 webinar. “This is the holy grail that advertisers have been looking for, to get in front of the right person at the right time.”

Michael Renaud with Leader in Cars Auto Group, a group of Mazda and Hyundai dealers in suburban New York City, says Dealers United also stands out because of its can’t-say-no approach. Dealers United does everything from Facebook and Craigslist ads to online reputation management for Leader.

“When I come to Dealers United and Pete with some crazy ideas, they always try to figure out a way to do it,” says Renaud, head of marketing and business development for the dealership. “The only way to stay ahead of the curve in this industry is to break a few eggs, and they help us break a few eggs.”

Lots of interest

Petersen says the company’s willingness to try new ideas and go in different directions stems partially from his personal deal-making philosophy — listen first. “Anyone I do business with, I always ask, ‘How do you get paid?” Petersen says. “What motivates you?”

That approach translates throughout Dealers United, run out of the BOLD co-work office building in downtown Sarasota, owned by Biter. The company, with plans to expand into virtual reality and augmented reality, is one of several in Sarasota’s small, youth-infused tech-related community. Anderson is one of a few recent hires to come to Dealers United from outside the area, auto industry or both.     

Petersen, overseeing the hiring surge, says technical abilities aren’t the go-to trait he seeks. He instead tries to model his hiring after a line he heard recently from former Procter & Gamble President and CEO A.G. Lafley, now a part-time Sarasota resident. Lafley, at a recent Gulf Coast CEO Forum event, says he looks for “fit and grit” when he hires. “For us, it’s cultural fit,” says Petersen. “I never look at skillset first.”

Beyond hiring and leading the fast-growth firm, Petersen has become something an area Dealers United pitchman. He has spoken at a host of events, lunches and gatherings, telling the Dealers United story, partially in a race to get top talent to work for the company. He talks about the company’s recent shift — and what’s to come, including possibly doing digital ads for Twitter, Pinterest and Amazon, among others.

“If you only know one company in town,” says Petersen, “we want it to be us.”

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