1. Views on the Autotrader Purchase of
VinSolutions.com
By Brian Pasch
PCG Digital Marketing
2. 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 for example, at the recent Digital
Dealer Conferences and NADA, has been buzzing with activity. Some would say that they have had the
busiest 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 has 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. A company that is
growing as fast as VinSolutions will often face cash flow constraints. These practical constraints can result
in not having enough trained backend 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.
3. 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 endorse 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 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.
4. Fall-Out From The 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!
