When it comes to business inefficiencies, technology holds a search-and-destroy quality. Google devastated encyclopedias. Amazon pummeled bookstores. Digital photography walloped Kodak.
And now Autotrader.com is aiming a giant tech missile at the automotive marketplace.
“We think we’re in the dawn of a new era,” CEO Chip Perry told me a few days ago.
Chip and I spoke as we were prepping for his presentation March 4 at our 2013 Local Online Advertising Conference. (See agenda here.) The last time he addressed our conference, the audience was enthralled by Autotrader’s mediamorphosis from a parent company that published hundreds of Auto Trader books in the 1990s to an all-online business today. Chip’s 2010 presentation remains the most-downloaded of the 100+ we’ve had over the years. It’s an amazing story.
This time, he’s got a different story to tell when he takes the stage. It’s the story of how Autotrader aims to close the time gap between the moment when car buyers finish researching online, shut down their PCs, and head to a dealership to make the purchase.
“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 the technology studies shopping habits, improves the buying process, and optimizes prices for the consumer.
Can Autotrader pull it off? Consider the assets: At $1.2 billion in revenue last year, Autotrader was in the elite club of companies making more than a billion in online advertising from local businesses. Google certainly is in that category, as is
YP. But I don’t know of any other company near that level in local digital ad revenue. Autotrader’s net income (EBITDA) was 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. If the company proceeds with its IPO, it’s likely to wind up with the war chest to become the Amazon of automotive.
Will car dealers go for it, or will they resist? Will car buyers embrace it and merely use dealerships for test drives, then go back home and get online to 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 will be vital to making it happen.
What could it mean for traditional media, like radio and TV broadcasters, or newspapers?
“It’s going to get tougher for them because the auto websites are continuing to raise the bar,” he said. “It’s going to be harder for them to forge a place given the increasing depth of the vertical specialists like Cars.com, AutoTrader.com and Kelley Blue Book.”
I’m looking forward to hearing Autotrader’s plan in March. I’m not sure Autotrader can pull this off. I have a difficult time believing that people will go online to purchase pricey and complicated things such as a house, a car or medical services. But I do know that Autotrader has a solid track record while systematically building 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 brilliant and tenacious crew at Autotrader are the most likely ones to do it.
For a bio on Chip Perry and information on the 2013 Local Online Advertising Conference, visit www.borrellassociates.com.