Larry,

Thank you for bringing this up. It is a common misperception.

VDP is the point of accountability separation in these participatory models. The number of contacts per VDP is almost entirely a function of the dealer's inputs (photos, seller's notes, video). Yes, a dealer needs to understand how well their VDPs convert into phone, email, chat, and walk-in contacts. In order to determine the break-even point for cost per VDP, it is also important to know the close ratio from these leads. However, those things can be dealt with in aggregate.

The discussion here is about determining the value of one listings service compared to another or the value of a basic service versus a premium package. For this it is best to hold constant as many variables as possible that are attributable to dealership activity. Professional research attempts to isolate the measurement to that which impacts the decision. If your pricing, merchandising, and lead handling are the same for all services, there will still be variances from VDP to sale due to statistical variation and small sample sizes.

Temporarily, my analysis is somewhat unfair to Cars.com because they offer chat and AutoTrader.com does not. This is a downstream variance caused by differences between the services. However, AT will soon have chat and we will be back to cost per VDP as the best metric for deciding which service or level of service provides the best value. This is the number dealers should hold their services accountable to. If a vendor is coming in to raise rates 20%, they better have raised VDPs 20% since the last agreement, fair and simple. However, if the inflated cost per VDP is still cheaper than the other listing services, then the decision is whether to pay the increase or buy none of the services at all. That decision is where your analysis comes in.

Ok you are wasting your time if you are trying to use VDP as a measurement for success or any type of value with ATC or Cars.

1. Just because someone views a vehicle page on either of these sites means absolutely nothing, because if they don't act on that view you can’t change the page to get an action anyway.

2. If ATC and Cars are like most dealerships website, and I would tend to believe they are 80% of the visitors there never leave the listings area so you are looking at the smallest portion of the traffic.

3. If you think that somehow you are branding your dealership with the VDP inside ATC or Cars look again, you are the smallest part of the branding on that page and the visitor has forgotten you in the time it takes to click the back button.

The only ways you can measure these sites that I know of are the following:

1. Referrals back to you website that result in a lead – of coarse ATC and cars make it almost impossible for the customer to get to your site as they view the customer as their customer not yours, even though they have nothing to sell them.

2. Calls or leads that come directly from the listing

3. Sales and you can directly attribute back to ATC or Cars – put an offer in the listing that the visitor can only get from that listing. Free car washes for life, 2yrs free maintenance ect. make that offer compelling, something the visitor would be crazy not to act on and ask them to print the listing to get it. This notion of the mystical customer that just shows up on the lot is CRAP, you can and should track and hold ATC and Cars accountable.

Tracking VDP is and exercise in futility, you will only succeed and pissing yourself off and not being able to do a damn thing about it.

A VDP is a specific page view. That is a pretty simple metric that needs to be comparable across every listings service, from AT and Cars.com to the local newspaper with a thousand listings on their website. Combined, these companies take in over $1 billion from dealers each year under the banner of internet transparency for consumers. They need to provide the same level of value transparency to dealers.

Cars.com clearly lists the website transfers, map views, and ad prints as separate metrics in their reports. I was a Vice President at Cars.com for three years and if what Lightnup says is true it is news to me and I'd insist the practice be stopped immediately. Cars.com does not separate used from new and AT does. I've told Cars.com they need to change to be like AT, and they assure me they are working on it. I've also heard Cars.com people say AT inflates their VDPs. I don't buy that either.

SRPs are slightly different because Cars.com has twice as many vehicles on this page as AT does. However, when I approached Cars.com on the exact claim made by Lightnup above, I was assured that this is not how SRPs are measured. A Search Results Page is a single page of search results. I can't even find anyone who knows how to attribute a page view to a vehicle that is not on that page.

My claim is that the appropriate value comparison is cost per VDP. What makes me suspicious of all these claims of difference is that there absolutely cannot be any difference between VDPs from AT Featured and AT Premium. The same people who don't want value transparency between AT and Cars.com don't seem to want it here either.

Cost per VDP will vary from dealer to dealer based on pricing strategy and the types of vehicles stocked, but when you put the same vehicles and prices on all listings sites, the comparison at the dealer level is absolute.

Here is the deal. I've enjoyed a very good relationship with both companies over the past ten years, but I am sick and tired of watching dealers spend this kind of money in a cloud of bull crap. I am willing to meet with the experts from both companies who can demonstrate how their metrics are derived. I'll pay my own way to wherever this meeting needs to take place. To me, Louisville, KY looks to be pretty close to the middle between Chicago and Atlanta. I'm laying it down here and now, cost per VDP is the best way to compare the value of any listings site that charges on a subscription basis. Anyone who thinks this is not fair can post a date for when they are willing to meet me in Louisville. Alex and other independent marketing experts are welcome as well.

Alex,

Lightnup explained it for me. ATC only counts the click into the vehicle as 1 VDP. However, it is my understanding (although the answer varies depending on which Cars.com rep you talk to), Cars.com counts not only the click into the vehicle but also every click that happens within the actual VDP as well. I have never been able to get Cars.com to give an official explanation of this. Maybe you can help Alex. It makes sense. It is my understanding that ATC has 35% more traffic, their visitors spend more time on the site, and their visitors view more pages. If all of that is true, then if when a dealer is looking strictly at the data, ATC activity should be higher if everything else is equal. Am I missing anything here? Thanks

BTW...Now that Cars.com is testing Premium Listings and their version of ALPHA, does anybody know the price?

I think it is interesting how this latest purchase by AT has become the straw that broke the camel’s back. It is obvious that there is a lot of pent up frustration with AT and it didn't just appear out of the blue when they began flexing their wallet. Is it due to AT being such an expensive product and the perception is that they are expanding their reach on the backs of dealers?

The AT conundrum has been a mind game for dealers for years. You use them, you pay big! You don't, and feel like you are missing something. Are you really? AT probably has the highest cancelation and re-sign occurrence in the automotive industry.

Regardless of any of the conversations that are taking place here, dealers need to carefully evaluate where they are allocating their marketing budgets. Is AT the best place for a dealer to spend between five and twenty thousand dollars each month? There was a time when a dealer would be scared to death to pull their newspaper advertising, Is it because AT is an online service that we feel they are a necessity?

I am in the process of evaluating my AT ROI for both stores. This will involve reaching out to my company rep. I suggest that all dealers concerned do the same. Dealers shouldn’t base their decision to use or not use AT on whether or not they are becoming an evil empire, but simply whether or not they help you sell cars and make a fair profit.

Jeff is correct, the ATC and cars SRP/VDP counts can't be compared side by side, particularly when calculating cost per VDP. Here is how it was explained to me. I'll leave it up to a cars.com rep to refute it.

When a cars.com shopper who is already on a vehicle details page (thus, 1 VDP count) clicks any additional links on that details page (view dealer details, see our inventory, view our website, view map, etc.), they are counted as additional VDPs by cars.com. ATC only counts the original click to get to the vehicle details page.

Additionally, when a dealer's car is on page 3 of the search results but the shopper never gets to page 3, cars.com still counts it as an SRP. ATC only counts it as an SRP if the shopper actually viewed the page that the car is on.

Same question as Alex here (and btw, VDP is vehicle details page...)

Jeff - would you mind clarifying the differences between a Cars.com and ATC VDP?

Dennis,

A dealer can't accurately compare the cost of VDP's between ATC and Cars.com. Cars.com counts their VDP's much differently and over states their VDP's in relation to how ATC counts theirs. What is your suggestion to be able to compare these two side by side objectively. Dealer are confused on this matter and Cars.com does a great job of pushing their numbers side by side. However, it really is smoke and mirrors. If the 2 counted their VDP's the exact same way, it would be a much different story wouldn't it.

I have not talked to executives at AutoTrader.com in the past six months, but here is what is not speculation:

1. AutoTrader.com and Cars.com are not just websites, they are listing services. They spend many millions of dollars putting the inventory of their customers on other sites for added exposure. Getting AT listings back on kbb.com will mean more phone calls, emails, and walk-in traffic for their dealers. Did they pay too much? What are the other parts worth? I don't know those answers. What I do know is they bought more audience. As to the timing, Kbb was going to sell to someone.

2. At Cars.com, I paid DMI to do what AutoTrader.com pays HomeNet for. I doubt AT has very many suppliers they are more dependent on. The technology integration is so complex it is not easy to switch vendors. It would be scary for AT to watch someone else buy HomeNet.

3. Neither AT nor Cars.com have ever been satisfied with their ability to help dealers help themselves. Both models are participatory, and most of their dealer customers don't get but a fraction of the value from the service that they could or should. Poor merchandising lowers the rate of leads per VDP. I oversaw the dealer training effort of Cars.com, and it's pretty obvious Dale and vAuto helped dealers get more value from their listings than my team or the AT team ever did.

I don't know what new products or new financial structures may come of this, but these are the kinds of businesses a company like AT would like to own. It's not the same as vertical integration, but some of the justification is similar.

For those looking for a way to hold AT accountable on rate, cost per VDP is the answer. You absolutely must know your current cost per VDP before deciding to add features, scale back, or buy alternative listings solutions. In most regions, two of the best buys are AT Featured and Cars.com. I have yet to find a dealer who received a marginal cost per VDP from going to Premium that was as good as Cars.com or Featured. Premium is a good buy in many cases and not in others, but AT is not going to crunch the numbers for you.

@Joe, What are you talking about!? How am I locked into anything? Joe how the exit for the investors in ATC is all just mental masturbation, the exit means nothing to either of us. What is going to be happening over the next few months or years to get to that exit does mean a great deal to dealers however.

Joe I give the people in this room a lot more credit to be able to read what I write look at their own situation and view of the facts and make their own decisions. I don't think anyone is taking my writing as gospel. We’ll know in the next few months where my reading or the “Tea Leaves” was right or wrong and you know what in either case it won’t change a thing.

I have been very transparent on my current business model; it has nothing to do with Homenet, VAuto or KBB. Although I have said dealers should look at alternatives to both Homenet and VAuto (Diversify). I have said and still maintain that dealers should look at eBay as an alternative to ATC, the customers there are higher quality and more engaged among other things and my business model has nothing to do with eBay or listings in general.

I have however been a long time critic, longer than you have been in this business Joe, of companies that work diligently to get between the dealer and the customer 3rd party lead companies in particular, but for the last 4 years ATC has fallen in that bucket.

I have shown with UserTesting.com that ATC doesn’t have near the footprint they would have a dealer believe they do and that a dealership can and should compete with them online particularly in their local market. My new business absolutely could be an alternative to ATC along with eBay as I have described above. I will be happy to say it so you maybe will feel better:

“Yes I believe a dealership spend with my company would produce more than a spend with ATC and I would show them data that would support them moving that spend or a portion there of to my company”

Feel better now?

I have been following movements of ATC for some time now but I wouldn’t say I have all of what you are describing above I would say as a hobby I have been pretty accurate over the years at connecting the dots to what might happen and I have been more right than wrong. IPO or not it is ATC’s motivation that’s in question not their exit.

ATC do you intend to grow by making good innovative products that we are happy to pay for?

OR

ATC do you intend to leverage these companies into a higher price point and margin to get to a goal of exit whatever that may be?

Their actions over the next 12 months will tell the tale, I bettin on the latter.

Larry writes: "...It just is what it is and dealers need to prepare now for it and diversify."

Larry, could it be that you sell something that fits a dealers need to diversify?

We all know it's Yes.

Is it possible your opinion gets colored by your business mission? I am sure you'll reply that your beliefs were not shaped by your business model. I'll roll with you on that. Here is a little intellectual test.

To arrive at a "best guess" decision you must fully explore the opposite side of the coin.

Based on what little evidence that we all see, construct an outcome where the acquisition of these properties fits the Cox Enterprises business history and it's profile. Also, list all joint ventures that Cox has made in the last dozen years AND list out all joint ventures that have produced an IPO.

Larry, I know you won't produce this. All I am saying is you nor I have no idea if this will end in an IPO. Even if it is designed to become an IPO, it won't become one unless the stock market is healthy. And what if it did become an IPO in 3-5 years, Google maybe "so last year" by then!!

Larry writes:

"...While I am sure Cox as no plans of going public private equity doesn’t get involved at this level without a clear exit strategy, in this case IPO. "

Larry, Look at how you lock yourself into a position with no facts what so ever. C'mon Larry, this is tea-leaf reading. This is conjecture. Where in the hell does conviction come into play here? All anyone has is shallow "arm chair QB" evidence to connect the dots, but somehow you have locked on to your "best guess" and are treating it like gospel.

@Joe

Innocent Bystander, whoever that may be, is providing that key piece of the puzzle.

While I am sure Cox as no plans of going public private equity doesn't get involved at this level without a clear exit strategy, in this case IPO.

You’re right this isn't your typical Rollup but it is one just the same. Time will tell if they can execute to get the right multiples for exit.

To get them they will need to keep expenses low and raise top line revenue IE there is a price hike coming and no innovation or value to go with only new sales spin.

It just is what it is and dealers need to prepare now for it and diversify.

@Joe, a private equity firm acquired a 25% interest in ATC earlier this year, and provided the capital that has funded these acquisitions.

While COX may not be looking to go public, a spin-off of ATC isn't out of the question in 3-5 years.

Larry,

I spent 7 years as a wall street stock trader. The financial process you are describing is called a Rollup. Your idea has merit, but, like my idea, we're just taking our best guess.

ATC is not buying the properties, Cox Enterprises is. Cox Ent. is privately owned MEDIA EMPIRE that includes newspapers, television, radio, cable television, CEllular Service and other businesses. ATC is one small part of the Cox Empire. Cox has no active history of rollups, but, the primary owner of Cox Enterprises is Anne Cox Chambers and she's almost 90. A IPO from the Cox Empire would be historic indeed.

If your roll-up scheme is true and Cox is looking to go public, then this isnt the only buy Cox has made. You'll get confirmation in seeing Cox buy up many other smaller properties to improve it's diverse portfolio. If you then see other buys, you have to factor in the Tax bonus sellers are getting that would fuel this wave of acquisitions.

That being said, if this is a Rollup, it sure is a strange one. Rollups often bring many small players together to share common resources to inflate profits. I don't see a lot of overlap as all three are really unique models.

Lastly, the Cox's are no different than Mr Biter. The tax impact that helped force Dale P and Jesse B to sell is what the Cox family will be dealing with.

If I were called out to make a bet, given the Cox history and it's gigantic empire, I see this as further diversification in the massive Cox Empire.

Joe in my opinion the motivation of the "Fat Finger" is pretty clear. Cox has tried selling ATC before with no luck. This buying frenzy is a rollup of top line revenue to get to an IPO.

ATC has no strategy or idea what they will do with these companies except raise rates enough to get a revenue rate over $3 billion, IPO and exit.

No doubt Google has a habit of taking the inefficiency out of consumers searching for relevant items and content and that the car finding process may be on their radar, this maybe the driver behind the push to go public but make no mistake these acquisitions are a part of an IPO strategy.

A New Spin on the AutoTrader Buy-a-Thon

Why in the world is 'Trader (Cox Enterprises) buying up gigantic Automotive Internet properties like KBB.com, vAuto and HomeNet? Obviously, sellers are driven by possible Tax law changes, but, what's motivating the "fat finger" at 'Trader HQ?

It's very possible that Goolge's going to eat their lunch and render them a 2nd class citizen. It's happening in other verticals, take a look...

http://forum.dealerrefresh.com/f21/new-spin-autot...

Gimme a break…Really?

First of all coming into a room hiding your identity makes you suspect right off the bat.

Secondly make no mistake every venture I have done has been for profit, there is nothing evil about profit when you provide value that is equal to that profit, and therein lies my issue. ATC has continued to raise prices adding no more value. ATC has continued to try and establish themselves between the dealer and the customer even going as far has siphoning off the dealers own traffic from their websites and making the dealer pay for it.

Provide value consummate to your price and you will never have an issue with me, you can make as much profit as you like as long as I am getting to make a fair profit too.

As for ATC threatening my business well, I don't think we are in any danger of that so no I have no worry about ATC, Homenet, VAuto or Kelly from that perspective.

Give them credit, I would certainly give them credit for trying if that’s what they were doing, their actions in the past and as of late say to me they are not trying at all. However as I have said, I could be wrong and for the dealer’s sake I hope I am, so go ahead ATC prove me wrong no one will be happier to admit it than I will if you do.

Larry,

I'm willing to bet that all of your business ventures were profit driven. Or were they philanthropic? It sounds to me like you hsve an axe to grind and are afraid of what the partnerships might do to your business. ATC might be doing this strictly for profit. Does that make them evil? Don't be mad because somebody is trying to build a bigger and better mousetrap. Better...maybe not but only time will tell. You at least have to give them credit for trying.

Thanks Dave and unfoutunately you're right on the money with your numbers and the layoffs.

I have to agree with Larry here. It does seem very disingenuous for a representative of one of the companies involved to jump into this discussion with the "thanks for the support" and "we are looking forward to great things" corporate talking points. To assume that the driving force behind this, and the other acquisitions, was anything other than profit driven is extremely naive. With regard to the comments on the job security of the newly acquired personnel; following the Honeymoon period (9 months to a year) there will a significant number of layoffs. Typically the new ownership looks to keep 10-15% of the original staff - and that's usually the younger, talented, and lower paid employees.

@Tammy – I see now, thanks for clearing that up. I am with you Tammy I hope the employees that worked hard to get Homenet where it is today don't get the shaft, however that is inevitable. Some will get let go some will move on that is the nature of things, good luck to all of them.

I appreciate you optimism although I don't share it.

@Todd – Thanks for the support, it is much appreciated although I don't like being right about things that hurt dealers so much I rather be wrong here, unfortunately ATC’s actions support me being right in this case.

Dealers need to limit their exposure with ATC and now the companies they own as much as they can. Better to do that now and have options than to be deep with this company and have your bill go through the roof and service through the floor then have to scramble put new strategies in place, the name of the game here “DERVISIFY”.

Move some of your budget to eBay and start leaning what it takes to be successful there while you can make mistakes if you are already there put a bigger focus on it.

Look and talk to new inventory export providers while you have time to make the right deal.

Look and talk to new inventory management companies while you have time as well.

Don't wait until the hammer drops be proactive and put yourself in the right position to make a good decision.

I apologize for the redundancy on my part here, but it's has to be echoed that again and again. This is move to drive an IPO or in the case of many other large Corp companies is to drive stock prices. I really feel for the folks in the companies being acquired because as in the case of Homenet, they are a first class company with a first class leader in Jesse Bitter (I have know Jesse personally for many years) and we want to believe the honeymoon speeches of how this is good for everyone etc. But my experiences tells me a whole different story and again please just approach it all with your eyes wide open, in the end you may thank me.

Larry Bruce; let's look back at your comments in 2 years within the post and it will prove how on the money you regarding this topic. If anyone wants to bet on that, my money is on Larry.

Larry,

I should have been more specific instead of replying in general. I was referring to comments "their employees who have gone above and beyond to exceed my expectations time after time dont get shafted","I hope only the best for my many friends at Homenet thru any changes". It was not my intent to infer that everyone supported the acquisition or even HomeNet in general. I completely understand the frustration and speculation of changes, but as I've said, I'm optimistic some great innovative changes could be introduced into the automotive space with the combined resources.