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Archive for the ‘Social Networking’ Category

Auto Advertising: Dawn of a New Era?

Monday, January 14th, 2013

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.

Chip Perry, CEO, AutoTrader.com

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.

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The More Things Change…

Friday, February 17th, 2012

We’re going to talk about what’s coming – about the future. But to do so, we first have to go back to the past – 30 years back, to be exact. In 1981 Adam Osborne had just unveiled his Osborne 1 computer, the first portable (or laptop) to hit the small but growing PC market. The Osborne computer was indeed portable, but just barely so. Even a strong young man had trouble carrying one more than a few blocks. But this early computer made history in another way.

Back then, the general assumption was that anybody who wanted to use a personal computer would have to know how to program. Osborne aggressively challenged that premise, and predicted that in the future less than one in ten PC users would be programmers. His statement caused furious debate at the time, but these days it’s just limpid fact. Most people happily surf the Web, check their e-mail, compose text, construct spreadsheets, play games, and do a thousand other things – all without writing a single line of code themselves.

Cycle forward to today … and tomorrow. Both Apple and Microsoft have announced big changes to their next operating system releases. The announced changes will make both feel more like tablets than desktops. Both will offer access to apps, those nifty micro-programs that are so much fun to use, so easy to get, and so cheap that nobody minds dumping those no longer useful or used.

Here’s a prediction: by 2016, most computers available to consumers are going to look and act just like today’s iPhones and iPads. That is, they will be able to communicate like cell phones, they will all have built-in GPS, and they will feature cameras and touch-screen interfaces. Most importantly, they will depend on apps instead of expensive, pre-loaded software for the functionality users will want. In fact, what we now call computers will have largely faded from the scene – except for some business and gaming applications. Personal computers will be replaced by mobile devices of one sort or another.

I don’t expect the kind of pushback Adam Osborne got for his prediction. For one thing, what I’ve described is already beginning to take place. Tablets and smart phones are replacing desktop computers and laptops in many homes and businesses. The app business is thriving, with hundreds added to “app store” inventories every month. All indicators point to a post-computer future. Your children’s kids will wonder what a computer desk was for.

The cloud will grow in importance to this new digital world, and that’s another replay of history. Back in the ‘60’s and ‘70’s, we used to call it time-sharing, and it allowed us to search enormous databases without taxing the capabilities of our small computers and dumb terminals. We relied instead on renting computing power from the water-cooled giants of IBM and other industrial firms. Ever wonder why some of the older business parks have big, glassy areas in the fronts of many buildings? They were put there when those buildings were constructed, to show off the resident firm’s computer. It typically filled the room and was a point of great corporate pride. The techs who worked in these glass-fronted rooms often wore white lab coats and gloves.

All that said, some things won’t change – at least not much. The Web will still function much as it does now, as time goes by perhaps more as a foundation for social sites than as an entity of its own. There will probably still be websites for some time to come, although some businesses already question the need for them, choosing to go straight to social sites instead.

The world will change a lot during the next five years, at a faster pace than it ever has before. How much more change will there be by 2020? The short answer: a great deal. We’ll report it to you as soon as it becomes clear to us. After all, at Borrell that’s our job.

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Can Social Media Networks Deliver?

Tuesday, November 23rd, 2010

Can social media networks save your business or your advertisers’ business? The short answer is, no, not on its own.

In order for advertising to motivate an action it is dependent on the level of acceptance granted by the consumer to the medium reaching out to them. And that acceptance varies greatly across the social and demographic strata. What works for communicating with the comic book aficionado may not be suitable for the casual follower of a research firm. Social networks are effective at increasing participation -— by lessening the level of motivation that participation requires. In other words, you can “like” a cause or a firm, and share that with others, but it does not necessarily translate into true action. That action commitment is best achieved by constant outreach to the core clientele through a variety of methods that derive from a central point, or voice.

Email is perhaps the most effective at achieving consumer action because it requires commitment, and Facebook Savesmotivation, on the part of the recipient — they must opt-in for a stated reason or proposition, they must open and read the email and then the consumer must make a decision of how to dispose of it, retain it or take action. Unlike a social network, what matters most is not the size of the list but the “interest level” of the list. It is a fact, increasing an email list does not provide better reach, or even increase action results, because it requires more generalization and by nature this will dilute the commitment-level as the motivators multiply to seek the average. Commonality diminishes in such an environment. To say “we need to double our mailing list” misses the point of effective email. Lists built on narrow and distinct interests, or “rallying points,” are more successful, returning higher open and action rates. The more smaller lists you have, the more effective each will be in motivating a desired effect.

The occasional tweet can be an action motivator but too often it is seen as an intrusion to receive a beeping or chiming “must-see” message that is little more than a marketing gambit. Social networks are limited in their reach because they are not true participation motivators. And often, early adapters and innovators try to cram every stray fact and experience into the new model to ascertain that the new medium destroys the old without looking at the complimentary and distinct behaviors that can lead to a symbiotic marketing approach. Thus the glut of social network success stories (often sans ROI detail).

There is no silver bullet in marketing. It requires a deep understanding of the target customer and the ways that they interact with media in order to leverage the most impact. This is a moving target as new media springs up every few years and the ways people consume and communicate change rapidly. No one approach is valid — it requires experimentation, fine-tuning and an understanding of the unique characteristics and motivators of each medium and how they work in a dynamic integrated fashion to achieve a marketing objective.

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