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.
Consolidation & 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 big hole; CRM. Let’s start the egg timer and see when Dealer.com delivers the missing piece of their integration puzzle.
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.
Fall-Out From Acquisition?
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 Ahead
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!
