Views on the Autotrader Purchase of VinSolutions.com By Brian Pasch PCG Digital Marketing
Autotraders decision to purchase VinSolutions has created an interesting dynamic in the automotiveadvertising industry. The acquisition further reinforces industry predictions that Autotrader wants to createa comprehensive integrated marketing and advertising solution for car dealers. CEO Chip Perry, in a letterto 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-onsoftware solution."In the past 12 months Autotrader has been on a buying spree with purchases of Vauto, HomeNet, KellyBlue Book, and CDM Data. Already industry bloggers are predicting what future Autotrader purchaseswould look like! For the record, Cox Enterprises, which owns Autotrader, also owns ManheimAuctions. 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 IndependentlyThere are many ways to view this latest transaction so I will share mine. First let me say that Chip Perryalso stated that "VinSolutions will continue to operate independently and function as it does today undercurrent CEO Mike Dullea.". What this actually means one year is anyones guess; this industry is far frompredictable.The purchase of VinSolutions is a win for existing VinSolutions customers in many ways. Before I presentmy opinion, some background information is needed. In the past year VinSolutions has been a marketingjuggernaut. Bravo to Mike Dullea and Sean Stapleton. Their booth for example, at the recent DigitalDealer Conferences and NADA, has been buzzing with activity. Some would say that they have had thebusiest booth in the website niche for the past year.The VinSolutions marketing buzz promises dealers an fully integrated platform which reduces the numberof vendors dealers need to contract to deliver a robust digital marketing platform. I have to congratulatetheir marketing team for taking their brand to the next level which obviously caught the attention of ChipPerry.The Cash It Needs To Smooth The PavementVinSolutions aggressive sales program has created a surge in new dealer accounts and brandvisibility. This growth has not come without hitting some bumps in the road on customer service andtechnical support. Since I speak with dealers across the country, its not uncommon that people share withme their vendor aches and pains. No dealer platform escapes criticism so this is not unique toVinSolutions.The feedback I received from VinSolutions customers is that the promises of product integration are reallyimpressive but the installation, training, and technical support was a bit frustrating. Some components werenot as seamlessly integrated as promised and needed extra calls to work out the kinks. A company that isgrowing as fast as VinSolutions will often face cash flow constraints. These practical constraints can resultin not having enough trained backend staff to handle growth. Without specific internal knowledge ofVinSolutions, 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 willbe near term benefit from this acquisition. Im sure the Executive Team at VinSolutions is aware of theiropportunities to improve platform support, which will make VinSolutions an even stronger competitor tocompanies 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 introducedealers to VinSolutions products. Selling Autotrader advertising solutions is much different that selling acomprehensive marketing platform so I would predict that field representatives would be best utilized forappointment setting and not product demonstrations.Also, for the most part, Autotrader sales representatives are not replacing a product or service when theyclose a deal; most dealers use both AT and Cars.com. So it will be interesting to see how fieldrepresentatives can maneuver the politics and emotions that come up when a conversion about a websitechange emerges. This sales channel will also be a benefit to existing VinSolutions customers because itwill provide more real-time feedback on what dealers want in their marketing platform. This should feedand enhance their product development cycle.It will also be interesting to see if the Autotrader hook-up will accelerate OEM preferred vendorendorsements for VinSolutions technology. With automotive website providers jockeying for "preferredvendor" status, it is clear that a big piece to profitability will be OEM co-op funding to dealers usingspecific website providers.Consolidation & Integration Will AccelerateThis 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 preferNOT 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 bythis transaction. The coming year will be very interesting indeed! Im very glad that PCG DigitalMarketing can serve dealers regardless of their marketing platform choice. I fear that smaller, singlesolution website vendors will be forced to merge or eventually shut their doors.If you havent noticed, Dominion Dealer Solutions has already started to jointly market their robustindependent marketing solutions to car dealers. Their message is clear; we also have end-to-end solutionsfor car dealers. One decision I fully endorse was the consolidation of the XIGroup and Dealerskins websitetechnology. Well have to wait and see how their companion products to the new Dealerskins platform forCRM, Social Media, etc will be packaged.I am sure that this acquisition will inspire Dealer.com to deliver an integrated CRM solution sooner thanlater to complete their award winning comprehensive advertising platform for car dealers. Dealer.comrecently released Social Relationship Manager (SRM) and improvements to their paid search platformcalled TCD which are leading edge products with virtually no peer. These advances leave just one bighole; CRM. Lets start the egg timer and see when Dealer.com delivers the missing piece of theirintegration puzzle.The Cobalt/ADP merger is another example of consolidation and coming innovations. I recently had ademonstration of the new Cobalt platform and the speed of change and focus to deliver a powerful platformto dealers was confirmed. You might remember I wrote about my optimism with this merger after visitingwith the Cobalt design team right after the merger was announced. I am glad to say that the team did notdisappoint! Ill have a comprehensive report published shortly.
Fall-Out From The Acquisition?Now that Autotrader is in the dealer website business, how will this impact their product portfolio withindustry players like Dealer.com, Cobalt, ADP, and Dominion. Will this trigger less favorable productrecommendations like Vauto in favor of DealerTrack AAX? Will Cars.com benefit from new alliancesformed by this new competitive stance? It will be interesting to see what the industry players have to sayabout 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 needfor choice and flexibility in the tools you use. Therefore our vision is to offer open platform solutions thatprovide you that flexibility to work with our and other vendors’ tools as much as possible."Looking AheadThe entry of Autotrader.com into the car dealer website business will produce more innovations inintegrated advertising and analytics. Ive stated a number of time that the ADF 1.0 specification, whichdefines how data passes between marketing partners, is outdated. Now that Autotrader has all the pieces ofthe data stream, I wonder if they will pioneer the equivalent of a ADF 2.0 specification for these ownproducts 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 anautomotive advertising solution to compete with the synergies that Autotrader will offer VinSolutionscustomers. Will new alliances be formed with Cars.com, Automotive Advertising Network, orEveryCarListed?ADP/Cobalt already has a strong marketing platform in their sister company Dealix with UsedCars.com butAutotrader has made a major push to brand itself as a new and used car marketing platform. Dealer.comhas the best integration with Google Adwords of all platforms and one could argue that this technology issuperior 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 integratedautomotive advertising and marketing solution for car dealers. This is good news for VinSolutionscustomers. The industry will be closely following these developments because consolidation andintegration are long overdue. Dealers can truly benefit from seamless integration of data and better businessintelligence tools that are based on this data.Looks like Ill have to be expanding our dealer training classes on some new marketing strategies this year!