||Auto Advertising: The Dawn of a New Era?
I just got off the phone with Chip Perry, the CEO of Autotrader.com, and my head's spinning.
Autotrader is out to conquer the world. Well, the automotive world. And though I'm generally a skeptical guy, I'm almost convinced they'll do it. "We think we're in the dawn of a new era," Chip told me.
Chip and I spoke as we were prepping for his presentation March 4 at our 2013 Local Online Advertising Conference. The last time he addressed our conference, the audience was enthralled by the Autotrader story from hundreds of print books in the 1980s and 1990s to all online today. Chip's 2010 presentation remains the most-downloaded of the 100+ we've had over the years.
This time, he's got a different story to tell. Autotrader aims to fill the awkward gap between the time when consumers stop researching cars online, shut down their PCs, and walk into a dealership to buy.
"Autotrader has been a disruptor for 15 years," he said, "but the biggest wave of disruption in the auto industry is still to come. If you can enable people to actually shop for cars -- to buy them from home -- that's huge. When you can enable marketers to much more surgically target prospects, that's huge."
What Chip is talking about is becoming the Amazon.com of the auto industry, where car-shoppers' habits are learned and the process of buying things becomes, well, enjoyable.
Think it's a bunch of hooey, that Autotrader can't pull it off? Consider the assets: At $1.2 billion in revenue last year, Autotrader was in the elite billion-dollar club of companies making more than a billion in online advertising from local businesses. Google certainly is in that category, and perhaps YP. But I really don't know of any other company near that level in local digital ad revenue. Their net income (EBITDA) was well north of $300 million, so they have a lot to work with. Autotrader now has tentacles into 20,000 dealers -- about two-thirds of all franchise dealers in the U.S. And it's by far the most-trafficked automotive site.
Will the car dealers go for it? Will car buyers merely use dealerships for test drives, and actually go online and sew up the best pricing and financing through Autotrader?
"We actually have puzzle pieces that we're working on today," Chip said. "You can get a liquid offer on your trade-in on Autotrader today." But he also admitted it'll be "a messy transition," and that transparency with both consumers and dealers is going to be vital.
What might that mean for traditional media, like radio and TV broadcasters, or newspapers?
"It's a tough message for them that's going to get even harder," he said. "The superficial way they've approached (digital advertising) is with banner or tower ads. They've touched the car buying process so superficially they're not able to hold their place at the marketing table today. It's going to be harder to forge a place given the depth."
I'm looking forward to hearing details in March. I'm not sure Autotrader can pull this off anymore than someone can get people to go online and purchase other pricey and complicated things like a house or medical services. But I do know that Autotrader has systematically built a formidable billion-dollar company that dominates the online automotive marketing arena. And I suspect if anyone can bridge the online-offline buying gap, the Autotrader geniuses are the most likely ones to do it.
For information on Borrell's 2013 Local Online Advertising Conference, visit www.borrellassociates.com.
(Source: Gordon Borrell, CEO, Borrell Associates)