Since the purchase, Gumtree, CarsGuide and Autotrader have been canvassing dealers as they developed what they believe will be a strong new competitor within the online car classifieds market.
The move is the most significant yet taken in the decades-long desire by the nation’s dealers to even up the competitive balance between classified websites.
Under new plans revealed today, Gumtree Cars, Autotrader and CarsGuide will continue to operate as separate web entities from a public point of view. But they will now form a joint dealer proposition called Autotrader Group.
At the same time, the various classified advertising offers formerly made to dealers across the three sites will now, for dealers using Autotrader Group, become a subscription-only advertising model.
Alternative models such as pay-per-view were dropped because budgeting for that model by dealers was difficult to predict; potentially leading to bill shock.
The changes will mean that rather than dealing with multiple advertising methods (pay-per-view and subscription), different billing systems and two field sales teams, dealers will have just one touchpoint and pay on just one invoice from the Group.
The company says that it will continue to operate an ‘open platform’ where the dealers selling a car in an online listing are identified up front. This is a fundamental difference with Carsales which operates a ‘blind lead’ where the buyer does not know the identity of a dealer selling a car until the dealer makes contact.
The new subscription model will have three packages called Economy, Essential and Elevated.
Within each of these three levels are package tiers where a dealer can buy a number of car slots depending on how many cars the dealer wants to list in a month.
A dealer with 100 used cars in stock would most likely choose a 100-car package.
One feature of the package is that it can be topped up on the fly, within the same month. Each time a car is sold in a given month, the dealer can relist another replacement car at no additional cost (within the same month). A dealership theoretically selling all its used cars in a month could replenish all 100 listings all within the subscription price.
The Economy package is a basic listings package of the dealer’s online listings displayed in the manner the dealership chooses.
The medium Essential package brings in additional features and functions including videos, financing leads and the display of more information from the seller.
The Elevated level offers such things as priority top ups and an in-depth integration to a dealer’s own advertising space linking back directly to their social media pages.
Autotrader Group dealer sales director Richard Dicello told GoAutoNews Premium: “Autotrader Group now delivers a unique and powerful ecosystem that leverages CarsGuide’s editorial leadership, Gumtree Car’s large and vibrant shopping audience with Autotrader’s sophisticated automotive buying tools for a combined proposition that creates both efficiency for dealers and transparency for customers.”
He said the Autotrader Group’s purpose is to “shake up the market and offer a genuine alternative for dealers to receive quality sales leads”.
“Think of Autotrader Group as an ecosystem. Autotrader Group is the trade brand that we bring to market for our dealers.
“The ecosystem will still consist of the three consumer offerings in the market; CarsGuide which is the leading editorial site in the country at the moment and we will obviously continue with Autotrader which brings the sophisticated automotive buying tools and the like.
“Then obviously Gumtree as a whole will continue to do what they do, which is bringing seven million Aussies to the site every month. So Gumtree Cars represents a significant part of that ecosystem.
“So we will still have those brands in the market, but the dealer will only see one source of connection with Autotrader Group and one source of lead from us as an organisation.”
“They’ll have one dedicated account manager, they’ll receive one source of connections and leads from the Autotrader Group. They’ll receive one invoice at the end of the month and one source of reporting as well. So these are big, big changes for the dealers.”
Richard Dicello
Mr Dicello said that previously each brand was operating separately.
“The dealers were receiving an invoice from Autotrader and they were receiving an invoice from Gumtree Cars. We had two field teams in the market, two account managers and two sets of reporting. So a significant change.”
Mr Dicello said the decision to move across to the subscription model on all sites followed benchmarking and discussions with a wide range of industry stakeholders.
“We used a lot of data, we did a lot of studies, both consumer and trade, and we spoke extensively with dealers and in particular we wanted to understand what sort of model they would like us to bring to market.
“We talked a little bit about the pay-per-lead model. We discussed the Autotrader pay-per-view model and we discussed Gumtree Car’s subscription model.
“When we spoke to the dealers it was pretty clear; there was a unanimous choice.
“We all agree that the pay-per-lead model is not conducive to a working partnership. At the end of the day, one person wins and the other partner tends to lose. Off the back of that, subscription became the only choice for us.”
The feedback from dealers across the country was that under pay-per-lead it is very hard for dealers to control their costs.
“First and foremost, subscriptions allow the dealer transparency. It’s easier to understand. There’s no bill shock. So they can start to budget. And in effect, they can start to budget up to 12 months within a small variance in terms of the cost per month.
“And ultimately, we believe that the subscription model will give greater efficiency and transparency over the billing schedule and a strong understanding of the return on investment as well.
“In terms of the feedback, the dealers were unanimous in making sure that is what they wanted. So that’s one of the big changes.
“One of the benefits of our offering is that we will continue with an open platform; so creating great transparency for the consumer which is a really important part of this journey.
“In turn, when they’re ready to connect with a dealer, they know who the dealer is, they can do a bit of research on the dealer and they know everything they need to know about the inventory that the dealer has to offer.”
Mr Dicello said that operating under the one umbrella would make the Autotrader Group offering more competitive and that dealers would be able to more readily assess the results the three sites were generating for them.
“When you consider CarsGuide, Autotraders and Gumtree Cars on their own it is difficult to compete. But when you combine the three, and you look at the combined unique audience, and the offering that we’re talking about now, I think we now come a lot closer to Carsales and we start to build a strong, viable proposition.
“When we look at the metrics across all the sites, when you consider the amount of traffic that CarsGuide is generating for Autotrader buy-a-car leads – and Autotrader will continue to invest in that brand as well – when you look at Gumtree in terms of the traffic that it generates through the automotive and the cars category it is a significant audience and we are providing significant value to dealers.”
Asked if it was difficult to measure the value of the open platform because dealers were notoriously poor at tracking the source of walk-ins, Mr Dicello said: “We generate leads as emails and phone connections but, being an open site, we generate additional value that is sometimes difficult to attribute.
“Those are the URL clicks, the map reveals and of course, the walk-ins. And we all know, we’ve been in the industry long enough that the best source of connection or lead to a dealer is a walk-in. They close walk-ins disproportionately higher than they close an email or a phone lead. In fact, at times double.
“So that’s the big part of the offering that we think we’ll be able to work really closely with the dealers and get them to understand the full value proposition that we’re bringing to market, particularly under one brand.”
Mr Dicello said that Autotrader Group was working closely with some dealers to develop ways of tracking the success of the open platform model.
“We are encouraged with work we are doing with a couple of groups around the country that are quite savvy and happy to work with us and run some trials.
“They’re starting to get some insights and learnings around the power of the open platform and they’re starting to really embrace it, because, of course, the walk-ins are so powerful.
“We’ve done our consumer research of recent times and the experience that a customer gets when they walk into the dealership is telling particularly if the salesperson gets it right, and the chance of them getting the business from that customer is upwards of 80 per cent,” Mr Dicello said.
By John Mellor
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