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Autotrader Purchase Signals An Interesting Future For Automotive Marketing



Autotrader's decision to purchase VinSolutions has created an interesting dynamic in the automotive advertising industry. The acquisition further reinforces industry predictions that Autotrader wants to create a comprehensive integrated marketing and advertising solution for car dealers. CEO Chip Perry, in a letter to VinSolutions customers, confirmed that:

"This acquisition of VinSolutions nicely complements the vAuto, CDMdata and HomeNet acquisitions, enabling us to eventually provide you with a one-stop, single-sign-on software solution."

In the past 12 months Autotrader has been on a buying spree with purchases of Vauto, HomeNet, Kelly Blue Book, and CDM Data. Already industry bloggers are predicting what future Autotrader purchases would look like! For the record, Cox Enterprises, which owns Autotrader, also owns Manheim Auctions. When you step back and look at the roles that each company plays in automotive wholesaling, pricing, valuations, advertising, marketing, and sales of cars the lineup is very impressive.

VinSolutions Will Operate Independently


There are many ways to view this latest transaction so I will share mine. First let me say that Chip Perry also stated that: "VinSolutions will continue to operate independently and function as it does today under current CEO Mike Dullea." What this actually means one year is anyone's guess; this industry is far from predictable.

The purchase of VinSolutions is a win for existing VinSolutions customers in many ways. Before I present my opinion, some background information is needed. In the past year VinSolutions has been a marketing juggernaut. Bravo to Mike Dullea and Sean Stapleton. Their booth at the recent Digital Dealer Conferences and NADA, for example, has been buzzing with activity. Some would say that they have had the most active booth in the website niche for the past year.

The VinSolutions marketing buzz promises dealers an fully integrated platform which reduces the number of vendors dealers need to contract to deliver a robust digital marketing platform. I have to congratulate their marketing team for taking their brand to the next level, which obviously caught the attention of Chip Perry.

The Cash It Needs To Smooth The Pavement


VinSolutions' aggressive sales program have created a surge in new dealer accounts and brand visibility. This growth has not come without hitting some bumps in the road on customer service and technical support. Since I speak with dealers across the country, its not uncommon that people share with me their vendor aches and pains. No dealer platform escapes criticism so this is not unique to VinSolutions.

The feedback I received from VinSolutions customers is that the promises of product integration are really impressive but the installation, training, and technical support was a bit frustrating. Some components were not as seamlessly integrated as promised and needed extra calls to work out the kinks. Any company that is growing as fast as VinSolutions often faces cash-flow constraints. These practical constraints can result in not having enough trained back-end staff to handle growth. Without specific internal knowledge of VinSolutions, I would predict this is close to reality.

The cash-flow from the Autotrader.com purchase plus the expertise the AT management team can offer will be near term benefit from this acquisition. I'm sure the Executive Team at VinSolutions is aware of their opportunities to improve platform support which will make VinSolutions an even stronger competitor to companies that include Dealer.com, Cobalt, and Dealerskins.

Will Sales Synergies Be Realized?


One of the potential benefits of this acquisition will be a more robust, local sales presence to introduce dealers to VinSolutions products. Selling Autotrader advertising solutions is much different that selling a comprehensive marketing platform so I would predict that field representatives would be best utilized for appointment setting and not product demonstrations.

Also, for the most part, Autotrader sales representatives are not replacing a product or service when they close a deal; most dealers use both AT and Cars.com. So it will be interesting to see how field representatives can maneuver the politics and emotions that come up when a conversion about a website change emerges. This sales channel will also be a benefit to existing VinSolutions customers because it will provide more real-time feedback on what dealers want in their marketing platform. This should feed and enhance their product development cycle.

It will also be interesting to see if the Autotrader hook-up will accelerate OEM preferred vendor endorsements for VinSolutions technology. With automotive website providers jockeying for "preferred vendor" status, it is clear that a big piece to profitability will be OEM co-op funding to dealers using specific website providers.

Will website vendors that fail to secure "preferred" OEM status slowly fade in their value proposition to dealers?

Integration Will Accelerate


This acquisition will trigger further consolidation in automotive marketing and advertising platforms space. The VinSolutions marketing team hit a nerve in the auto industry. If given the choice, dealers would prefer NOT to deal with 6-8 vendors to handle websites, ILM, CRM, Social Media, SEM, SEO, Chat, Analytics, and DMS. Stand alone vendors you are forewarned!

The push for companies to provide fully integrated data and marketing products will be accelerated by this transaction. The coming year will be very interesting indeed! I'm very glad that PCG Digital Marketing can serve dealers regardless of their marketing platform choice. I fear that smaller, single solution website vendors will be forced to merge or eventually shut their doors.

If you haven't noticed, Dominion Dealer Solutions has already started to jointly market their robust independent marketing solutions to car dealers. Their message is clear; we also have end to end solutions for car dealers. One decision I fully endorsed was the consolidation of the XIGroup and Dealerskins website technology. We'll have to wait and see how their companion products to the new Dealerskins platform for CRM, Social Media, etc. will be packaged.

I am sure that this acquisition will inspire Dealer.com to deliver an integrated CRM solution sooner than later to complete their award winning comprehensive advertising platform for car dealers. Dealer.com recently released the Social Relationship Manager (SRM) and improvements to their paid search platform called TCD which are leading edge products with virtually no peer. These advances leave just one hole: CRM.

The Cobalt/ADP merger is another example of consolidation and coming innovations. I recently had a demonstration of the new Cobalt platform and the speed of change and focus to deliver a powerful platform to dealers was confirmed. You might remember I wrote about my optimism with this merger after visiting with the Cobalt design team right after the merger was announced. I am glad to say that the team did not disappoint! I'll have a comprehensive report published shortly.

Will There Be Fall Out?


Now that Autotrader is in the dealer website business, how will this impact their product portfolio with industry players like Dealer.com, Cobalt, ADP, and Dominion. Will this trigger less favorable product recommendations like Vauto in favor of DealerTrack AAX? Will Cars.com benefit from new alliances formed by this new competitive stance? It will be interesting to see what the industry players have to say about this; privately of course.

Chip Perry wants to head off potential concerns about anti-competitive behavior in his letter which states: "As we evolve and grow our suite of software solutions, we want you to know that we recognize your need for choice and flexibility in the tools you use. Therefore our vision is to offer open platform solutions that provide you that flexibility to work with our and other vendors’ tools as much as possible."

Looking Toward The Future


The entry of Autotrader.com into the car dealer website business will produce more innovations in integrated advertising and analytics. I've stated a number of time that the ADF 1.0 specification, which defines how data passes between marketing partners, is outdated. Now that Autotrader has all the pieces of the data stream, I wonder if they will pioneer the equivalent of a ADF 2.0 specification for these own products to give them an Analytical Data advantage?

It will also be interesting to see if the larger website platform providers will seek to integrate an offer an automotive advertising solution to compete with the synergies that Autotrader will offer VinSolutions customers. Will new alliances be formed with Cars.com, Automotive Advertising Network, or EveryCarListed?

ADP/Cobalt already has a strong marketing platform in their sister company Dealix with UsedCars.com but Autotrader has made a major push to brand itself as a new and used car marketing platform. Dealer.com has the best integration with Google Adwords of all platforms and one could argue that this technology is superior to Autotrader.com for generating leads and sales.

I congratulate Chip Perry and the Autotrader executive team for taking a bold step to create an integrated automotive advertising and marketing solution for car dealers. This is good news for VinSolutions customers. The industry will be closely following these developments because consolidation and integration are long overdue. Dealers can truly benefit from seamless integration of data and better business intelligence tools that are based on this data.

Looks like I'll have to be expanding our dealer training classes on some new marketing strategies this year!

 

Download Copy Of Article


You can download a copy of this article as a PDF on this link: http://www.slideshare.net/brianpasch/autotrader-purchases-vinsolutions

Views: 65

Tags: autotrader, car dealer marketing platforms, integrated website solutions, vinsolutions

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Comment by Jason Manning on May 23, 2011 at 6:16pm
I'll take one sweet product over a suite of products any day of the week.
Comment by Tom Gorham on May 21, 2011 at 6:22pm

January 2010, I received a call from a fellow named Christian who wanted to demo a new product to me online.  My first thought was, "How long is this going to take?"  I get ALL the calls from companies and if they call the GM, he forwards them to me.  Needless to say, I get quite jaded.

 

But this day in January, I said, "OK, let's go."  An hour and a half later, I took a deep breath and said, "Can we do this again for the owner?"  I had just watched an exhaustive demo of Vinsolutions.  I was convinced.  My only concern was can I get it past the powers that be....

I did.  And now I am sooo glad. As Brianhas said, there are tough patches along the way... growing pains.  And I ran into those too.  But I know a great product when I see it (and use it) and this was it.

I am sure now that AutoTrader saw it too.  And I'm really glad they will continue to operate it independently.  The people at Vinsolutions made it great, and they can make it greater.  Good luck to this arrangement!

Comment by Keith Shetterly on May 21, 2011 at 7:11am
Thomas, I love the "war chest" example.  Exactly.  Congrats again to A/T and Vin Solutions!
Comment by Mike Warwick on May 21, 2011 at 7:05am
Silly comments that ATC makes on occassion aside, there has been a true commitment to become more dealer-focused in recent years.  There was a time when I was very unhappy with the ATC product and sales team but they have made impressive strides in improving the value that they deliver to dealers. Congratulations to the VinSolutions team, they are true innovators in our business.
Comment by Thomas A. Kelly on May 21, 2011 at 3:59am
It will be interesting to see how AT handles the walk back from previous statements as Keith points out one of many "consumer facing" articles out there. Quotes like this could give Rey-Rey,DDC and others plenty of ammunition when making a case of their consistent dealer facing services......But...... as any worthy politician understands, having a healthy War Chest can be almost magical in re-writing the pages of history.
Comment by Keith Shetterly on May 20, 2011 at 7:34pm
I think the merger is good for Vin Solutions' customers, but I don't expect A/T's consumer face to stop this with the merger.  VS will be "independent", I think, just because of things like this.  Regardless, congratulations to both A/T and Vin Solutions!  Great merger.
Comment by Brian Pasch on May 20, 2011 at 6:07pm

Keith

That's a wild comment and not dealer centric.  This merger will impact those signals from AT once they start hosting dealer's inventory on dealer owned websites.

Comment by Keith Shetterly on May 20, 2011 at 4:49pm

Here's an interesting quote from AutoTrader in a business story.  I realize this is from a consumer-facing piece of A/T, but . . . it's definitely not dealer-centric to advocate cutting the dealer out like this on private sales at the same time that we pay to list our cars on their site for sale.  Private purchases can be a great help to inventory.

 

1 of '7 Ways to Wreck a Used Car Sale:  "Sell Your Car to a Dealer

It's hard to beat it for convenience, but selling or trading your car at a dealership is a good way to lose out on $1,000 or more, says Melanie Kovach, senior director of private seller sales for AutoTrader.com, a website that hosts used-car classifieds.

"Generally, across all cars, it's about $1,000 to $2,000, but you can get more than that depending on what car you have," Kovach says."

Comment by Todd Mathews on May 20, 2011 at 8:46am
All this has been tried for years with the big boys (ADP, Rey Rey etc)..the trick is the commitment to integrate all these individual companies(and EGOS) together..will be fun to watch

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