AutoTrader Taking Offensive Against eBay Motors

AutoTrader is expanding beyond “new” and “used” car ads into “auto services” and “used parts.” The move promises to put a lot of pressure on other online auto sites, especially eBay Motors, which is preparing a relaunch that will move it beyond used parts to include services, local ads and other e-commerce.

CEO Chip Perry, a keynoter at The Kelsey Group’s ILM conference in Philadelphia last week, said eBay and other car portals haven’t really caused any problems for AutoTrader. While the Cox Enterprises-owned 1,600-employee site doesn’t release specific data, Perry claims it gets “four times” the usage of newspaper consortium-owned Cars.com and is bigger “than the next two car sites combined.” Moreover, the site is “easing in on the top 10 list of Internet sites and is one of the top 2-3 fastest growing sites.”

Perry said AutoTrader’s advantage has been its exclusive focus on advertising, as opposed to lead generation and other forms of e-commerce. Some car sites get lead fees of $25 per car, but only 5 percent to 10 percent of those leads convert into sales, he said. That translates to $500 per car sold. Advertising on AutoTrader costs closer to $100 per car. “Why would we de-volve ourselves to a pay-per-click model?” he asked.

Pay-per-click models and the need to fill out lead forms also hurt the customer experience, said Perry. Since the site isn’t counting leads, “we don’t care if consumers pick up the phone or send e-mail.” Eight of 10 consumers, in fact, like to call the dealer directly.

Free classifieds don’t cut it either  although AutoTrader offers a free tier to advertisers, just below its “premium” and “featured” tiers. “We have a noticeable statistical difference between tiers” said Perry. He also noted that even his free tier gets heavier lookups than free sites like Craigslist. “Free classifieds don’t bother us.”

All this  plus the power of a 300-person sales force and a commitment to plow 20 percent to 25 percent of revenues back into marketing  results in the site outpacing its rivals in terms of listings. In Philadelphia last week, for instance, Perry noted that AutoTrader had 425 listings for a Chevy Suburban within 25 miles of the city. Meanwhile, Cars.com had 92, CarsDirect had 38, Autobytel had 11, Craigslist had six, eBay had two, and the newspaper also had two (although most of the actual “newspaper” ads are probably mixed in with the Cars.com total).

Perry, in fact, comes from a newspaper background, having helped develop the Los Angeles Times’ digital efforts under Times Mirror. He anticipates that newspapers will eventually find their way. But newspapers “generally have a defeatist attitude” when it comes to cars and just aren’t the right mix for the car business  partly because newspapers are still defined by their local circulation area. “More than 50 percent of the time, people search more than 100 miles,” he said.

Ultimately, Perry also doesn’t anticipate that Cars.com can provide a lift, a la CareerBuilder in recruitment, by bundling print and online together. They haven’t changed their car advertising in 75 years, he noted.

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