IMV49: AutoTrader.com

The following is a transcript for IMV49: AutoTrader.com. The original podcast is located here.

Announcer:

Welcome to the Internet Marketing Voodoo podcast, brought to you by MindComet. And now, here’s your host, Paul Lewis.

Paul Lewis:

Welcome to Internet Marketing Voodoo. I’m your host, Paul Lewis, and today’s topic is moving from being a traditional print publication to being an online publisher. Our special guest today is Don Dixon. He’s the Senior Director of Promotion and Sponsorship at Auto Trader. Welcome to the show, Don.

Don Dixon:

Thanks for having me. I’m excited to be here.

Paul Lewis:

Great. Can you start out by just giving us a little background? I’m sure most of our listeners are familiar with AutoTrader, but give – give a little background on Auto Trader itself and something about yourself.

Don Dixon:

I’ll give you my background first. I started out running golf tournaments, cause I played golf in college. Did that for several years and then went on to Dancer Fitzgerald Sample Advertising in the Promotion and Media department. Then, of course, that company was eventually subsumed by Saatchi and Saatchi.

From that point, I went on and I was the first director of Sports Marketing at Anheuser-Busch, back in the late 70’s and early 80’s, and then went to New York and just kind of started my own firm with some partnerships with some folks, and we eventually sold to Saatchi and Saatchi, and I became Chairman of Saatchi Marketing Services. I ran what they called, the bridge called Below the Line, if you will, for a number of years, then bought that company back, and in 1996, I sold my company, Lifestyle Marketing Group, to Cox Enterprises, which now owns AutoTrader.com and actually started the company and Auto Trader magazine, and became an internal corporate consultant for them for 10 years. And then in January, I moved over here at AutoTrader.com as my current position. AutoTrader.com is – is kind of a fascinating story. The genesis for the company came out of a company called Manheim Auto Auctions, which Cox Enterprises owned. And that is a company that 80 percent or so, right around – right around that percentage of the wholesale automobile of the United States run through these auctions, which dealers take their cars to the auctions and resell them. Finance companies, rental cars, auto manufacturers, when they have more company – more cars than they can deal with, if you will, they take them to the auctions.

So we have about 14 million cars a year that go through the auctions. One day a couple of gentlemen were sitting around and they said, “You know, we’re about to offer our auctions to the dealers online.” They launched that business, it went for a couple of years, and then somebody said, “You know, why don’t we go ahead and – and really list these cars online? Go to the dealers and say, ‘How would you like to list the cars online?’ and then you guys can market them to consumers that way?”

The business was started, and when everybody was searching around for a name to call it, the first name they came up with was Auto Connect, and after about, I want to say a year, somebody from the newspaper division came over and said, “Hey, guys. You know, we own Auto Trader magazines, or we’re 50 percent partners with the folks at Landmark. Why don’t we rename it Auto Trader and leverage that brand, because that’s what most of the consumer America who’s looking for a used car knows as the brand?” And henceforth, it was changed to AutoTrader.com, and now in partnership with Auto Trader magazines, which Cox bought the remaining 50 percent of the business about a year and a half ago.

So we have a macro Auto Trader brand; AutoTrader.com online and Auto Trader magazines. AutoTrader.com has about 13 and a half million unique visitors a month. Three million cars are listed on the site, both new and used. The company size is well north of a half a billion dollars, from a zero start up eight years ago, and our Auto Trader magazines, we print somewhere in the neighborhood of, I want to say, two and a half million magazines every two weeks, and there’s over 150 different titles. And we also have a collector car business as well, which focuses on aficionados who collect hot rods or high end or collector cars or antiques. So that’s the background on me and Auto Trader and AutoTrader.com.

Paul Lewis:

Well, it’s a very diverse background for yourself, and an interesting background of how Auto Trader got started. I’m sure a lot of listeners weren’t aware of some of those aspects. It struck me that there could be some internal, I’ll use the word rivalries, between a print publication and a growing online market. Did you encounter that or was it a fairly smooth transition as those two very different media formats came together into a single entity?

Don Dixon:

It’s funny, because they’re not a single entity. There are indeed still two lines of business. There is the publication line of business, the Auto Trader magazines, and AutoTrader.com. To the general public, it is in essence one product, because you as a consumer, who’s looking for a car, find your car as we call it, you’ll go to AutoTrader.com and do the search, or you’ll go pick up a magazine and do a search.

However, where the revenue meets the road, which is advertising sales, AutoTrader.com and Auto Trader magazines are, for all intents and purposes, in competition. So they actually – we go to the dealers with two completely separate sales forces at this particular juncture. We don’t knock each other, we don’t really sell against each other, but both of those lines of business are seeking the advertising dollar from the dealer, or the OEM, or the dealer organization. So to our dealer facing messaging, we try and keep a separate message, if you will, a separate B to B marketing message. But to the consumer, we’re trying now to integrate it and become more of a single message to the consumer.

Paul Lewis:

Are there some unique challenges that have come out of that, or as you’ve obviously had significant growth, what are some of the unique challenges that you’ve encountered in this period?

Don Dixon:

Well, one of the unique challenges was for the wonderful folks on the AutoTrader.com side to not knock the print product, which normally you would think they would do. They would suddenly say, “Oh, you don’t want to be in that – that magazine anymore.” I mean, you want to put all your dollars online. And we also have another unique challenge in the fact that we own 87 radio stations and we own 22 newspapers and we own 23 television stations. So when AutoTrader.com is in essence out there, quote, “selling against traditional media,” they’re selling against the companies, which in essence generated the money to fund the start up for AutoTrader.com. So we – there’s a little bit of internal, I don’t want to say politics, but chuckles, if you will, because in reality, our newspapers have been competing for years against the newspaper and TV, so we’re kind of used to that.

But on the magazine side, it was a little bit startling suddenly to – to have to tell the AutoTrader.com folks, hey, don’t go knock the magazines. They are kissing cousins, if you will. That’s been in essence the biggest challenge.

And also, from a brand image standpoint, here you’ve got – if you know Auto Trader magazine and you know the type of newsprint it’s own and it is really almost newsprint, and some people may say quality, and I don’t say that in a pejorative sense, but the type of quality it has, versus this high tech super fast million cars at a fingertip AutoTrader.com product, there’s somewhat of a dichotomy, image-wise, there. We’ve had to try and figure out how do we begin to look at bringing Auto Trader magazine’s image to a little bit more contemporary tone, if you will, because when we now go to the consumers, like yourself, if you had a car to sell, we’re actually offering a dual package. So on a for sale by owner or private seller ad, your advertising will be placed both in Auto Trader magazine and on AutoTrader.com. So a little bit of a tonality – not conflict, but somewhat of a clash there over a period of time, but we’re working through that now.

Paul Lewis:

Sure. And it sounds like that there are some areas where it’s two totally different camps when you’re working with dealers, and then from the end consumer’s standpoint, for individual cars, both buying and selling, it’s a more synchronized approach to how that happens.

Don Dixon:

You’re dead on, yep.

Paul Lewis:

How have you seen sponsorship change with the online presence? How are things changing in that area?

Don Dixon:

The magazines didn’t do sponsorship for all intent purposes. I think there were only two or three markets, because there were a combination of wholly-owned businesses, if you will, and maybe some franchises. The Auto Trader magazine, there were actually some franchises out there. They really didn’t do sponsorship. They just went out and beat the heck out of the retailer and said, “Put the magazines in and make some money by selling the magazine,” and they went out and scourged the marketplace to get people and dealers to advertise.

So they didn’t do sponsorship. Really, once the dot com came on board, that’s when sponsorship was launched, and – and really, AutoTrader.com didn’t really step into the sponsorship marketplace, per se, ‘til the end of 2005. Every – all of their sponsorships were really tied back to media buys. There was somewhat, the company is somewhat novitiates in the sponsorship business.

Paul Lewis:

What types of promotions and/or sponsorships have been successful for you, and what things haven’t worked as well?

Don Dixon:

Well, since we’re very new, we haven’t had a lot of failures.

(Laughter)

Don Dixon:

We’ve – everything we do is tremendously successful. Well, or at least relatively successful. And since we’re – I control the measurement, it’s always great.

Paul Lewis:

It’s always open to the right.

Don Dixon:

It’s always open to the right – but here’s the – the real, real, I want to say, focus on that. At the end of the day, the things that work best for us are where there’s an online component. With our Major League Baseball sponsorships, we sponsor six Major League Baseball teams, and this is primarily a local – it is a local sponsorship activity. We sponsored the New York Yankees, the Atlanta Braves, the L.A. Angels, the Texas Rangers, the Philadelphia Phillies, and the Chicago Cubs. In all of those, we advertise and do promotions on the team websites through a deal with Major League Baseball advance media. If we couldn’t have that, we wouldn’t be there, because we’re an online product.

So we need to be able to take you, promotionally, to Braves.com/win and play our current turn-to promotion, and ideally you’ll be convinced enough by going through this game that, you know what? Next time I’m looking for a car, I’m gonna go to AutoTrader.com. In fact, I might go right now, click here, and go visit our site. So all of the sponsorships that we do, there has to be an online component to it. That’s absolutely critical. So that’s working well for us.

In the auto show side, for example, the first year we sponsored four major auto shows. This coming year we’ll do nine or 10. We just did branding at the show. We actually put our site at the show, where you could come in and interact with a kiosk and kind of go through the Auto Trader site and peruse it. Frankly, it was a dismal failure, and the reason was is people who go to an auto show, they want to go see the cars. They don’t want to stand there and spend 15 to 20 minutes on a website, which is what our average visitor, that’s how long they spend on the site.

So we had to adjust dramatically, and what we’ve done now with the auto shows is when you go to the auto show, you’ll actually come in and you have an opportunity to play a game, which will take no more than about two or three minutes on a kiosk in our display at the auto shows, and then we give you a game card that says you can continue to play this game when you go home, which, again, will drive them back through to our site. So we’ve had to change strategies there to get them to go to the site, because at the auto shows, having somebody stand there and do a car search, it’s – it’s just arduous and disrupts their whole reason they’re at the auto show.

Paul Lewis:

You make really good points, in that when you are looking for sponsorship, you want to make sure that there is an online component or a direct driver to an online component. I know when we talk to our clients, that’s a big factor, of saying it’s not enough anymore just to get the brand awareness and exposure. You really want to see a direct correlation.

So I love your idea of there’s a takeaway from the show that drives people back online, or that you’re sponsoring things that have a very specific online audience and web presence. So you’re just a click away. It’s a very easy move, as opposed to going from a traditional media sponsorship at a baseball game, where we’re on a sign. How many people are going to go home and remember to key in that website?

Don Dixon:

Yeah. The other thing that we did is when we went to auto shows, and we do the big ones. We do the New York show, the L.A. show, Cleveland, Seattle, Washington D.C., St. Louis, et cetera, et cetera. And in looking at those shows, what we found was that we don’t have cars in our booth, and people are there to see cars. So what could we do at the show to make people stop at AutoTrader.com? The second year in, we – we did a sweepstakes, which was kind of interesting, and then we came up with the online game, but what we did to really make it come to life is we did a bunch of consumer research of people who went to auto shows, and they said, “You know, we like to be entertained.”

So we created a television studio that is on the floor of the show, and when you go to the auto shows, you will go up to the AutoTrader.com TV studio, and we stage a live game show every hour and a half, that looks much like Jeopardy. We pull contestants in and we have a contestant registration process and we have an MC who’s fabulous at doing this, and folks actually come forward and they play this live game. Well, there are television cameras there, that in essence put their faces on monitors, so folks think they’re on television, and –

Paul Lewis:

Right.

Don Dixon:

And it has been absolutely incredibly successful, and our research after the New York auto show showed that 63 percent of the people who went to the New York auto show said that our display was better than the OEM’s. So I think we’re doing a pretty good job there.

Paul Lewis:

Wow, that’s great, and that probably explains your expansion to going to more shows this year.

Don Dixon:

Exactly. It’s working. As I was reminded by a young lady who works for me, Kimberly Cooper, who’s MENSA. As we were looking through how do we change this in ’08, she put a big sign on the board and she said, “We have 97 percent consumer satisfaction with what we’re currently doing. Let’s not change for change sake.”

Paul Lewis:

Right.

Don Dixon:

I went, “Ah, okay.”

Paul Lewis:

There’s a point at which you need –

Don Dixon:

In other words, Don, stop thinking.

Paul Lewis:

That’s right. What you need to know, when to say stop.

Don Dixon:

Exactly. So we’re doing – as my team has said, “Don, we are doing moderate modifications next year. It’s working. Don’t change it.”

Paul Lewis:

And when you say that it’s working, how do you measure success? I mean, one way obviously is a consumer satisfaction survey. What are some other measurements of success, that when you’re looking at these different promotions, obviously you looked at some level of online conversion. Could you tell us a little bit more about that?

Don Dixon:

Yeah. We research everything. We research everything to death. We pre-search everything to death, because I know I’m a genius and I know the folks who work for me are even smarter, but at the end of the day, sometimes you end up talking to yourself and you can convince yourself that that purple shirt’s really cool looking. And at the end of the day, nobody else thinks so. So we did a lot of research up front of the design of the game, in the pricing, the format, how it works, what they’d respond to, how long it should be, how long they would stop to make sure that we gave ourselves the best chance to engage with consumers.

And then on the post end, we have specific objectives, and one of the key things that we want to communicate to people, on the auto shows and with our baseball sponsorships or anything else, is that we are the best local site. We have done a tremendous amount of advertising. We’ve been the only national advertiser in this category, so I think people recognize the fact that we’re the biggest nationally.

But when I’m looking for a used car, what I might want to do is really look for a car that’s relatively close to where I live. I don’t care if you’ve got three million cars, cause 2.2 million of them are probably more than a two hour drive. So we want to say that we’re the biggest local site, and we do that locally by imagery in our sponsorships, by advertising communications. So the – the post-research, we want to find out did the local takeaway message get out. And our research has shown that yes, indeed, it has and it does get out. We are communicating that message.

And over 75 percent of the people who go to the show say, yes, AutoTrader.com is the best local site, when our market averages are somewhere in the neighborhood – in the high 40’s. So we’re moving the needle in that regard, and we have yet to do our baseball post-research. In fact, we just had a meeting this morning on that, so come back to me probably in about three weeks and I’ll tell you how well our baseball program is doing.

Paul Lewis:

Fair enough, fair enough. As we close out, can you give marketers any advice on how they can maximize, or what are the key factors they should pay attention to when trying to do sponsorships to drive visitors and results for their web properties?

Don Dixon:

Number one is you’ve got to remember we’re in the entertainment business. You shouldn’t expect a consumer to want to be involved and interested in your brand, especially if you’re doing a promotion. You have to be entertaining. You have to cut through. They have to want to come to there, whether or not your brand ID is on it or not.

In fact, how we test promotions is we test promotions with no brand ID on them, and we test them against general entertainment type property. And if consumers come on board and say, “Hey, I want to play that,” or, “I want to participate in that,” or, “I’d like to do that,” that’s the benchmark, then we lay in our advertising on top of it. And what we found if we do that, that we’re easily able to lay in a lot of commercial messaging without, quote/unquote, “Getting people mad,” if you will. Our online game for AutoTrader.com on baseball right now, we know for sure that 96 percent of the people keep playing after they have gone through a one minute really, really, really intense interstitial – it’s kind of a game, but it’s all product knowledge.

Paul Lewis:

Mm hmm.

Don Dixon:

But it’s the environment that we frame the message in. So when you’re doing promotions, is make sure that the first thing, it’s a fun thing to do. It’s entertaining, it’s engaging and it’s interesting, and it provides them with some facts and figures that they might now know about.

Our advertising, what we do with baseball, is we try and give them some information about the team or history of the team that’s at least interesting, intriguing. We don’t do 100 percent brand sell, because we’re never gonna capture the attention of a consumer that way. The NFL’s got studies, MLB has studies, NASCAR has studies, ABC has studies that show you that if you’re contextual in your messaging within the programming, you get better recall. And I can’t reinforce that enough.

And secondarily is obviously 360 it if you can, four wall it across many different fronts. Don’t just do advertising on television, don’t just do radio, don’t just do outdoors, in stadium. And also look for, if you’re in a sports sponsorship, look for the local media that the real fan begins to follow and spends some dollars there. It might be the local sports talk station and sponsor the Braves, you know, report, which is not on the Braves station that carries the games, because you want to remind the consumer, the fan, that you’re a sponsor of that property when it’s out of somewhat context, if you will, than the context of a game. And you’ll get better long term recall and better long term payoff that says, hey, we’re – we are indeed a sponsor and here’s what we’re about, and you get better brand message recall over time. So – so if there’s a – a lesson to kind of teach, if you will, or information to pass on, that’s really it.

Paul Lewis:

Excellent points, Don, and I like your points at the beginning when you talked about make sure that you’re making something that’s entertaining and engaging and has a draw back for consumers to learn more about your brand naturally, contextually, within that. I know that we have created a poker game for some of our clients, and the average time engaged is, like, 30 hours, that the average person is spending inside this game, and we have elements of their branding and key points that we constantly drive home over that. So when you compare that time engaged compared to other types of mediums, it’s just a very powerful use of this Internet technology. Well, are you ready to move on to truth or marketing section of the show?

Don Dixon:

I am indeed, and I’m not hooked up to a lie detector, so you’re in trouble.

Paul Lewis:

All right. But we could attach electric shock, is – is the next step.

Don Dixon:

I do that with my – nope, just kidding.

(Laughter)

Paul Lewis:

All right. So, my first question is going to be the shortest question truth or marketing that I’ve ever asked. It’s one word. The question is ethanol. Truth or marketing?

Don Dixon:

It is truth.

Paul Lewis:

All right.

Don Dixon:

And the reason I say that is because I’ve been around the auto shows for the past year and a half, and I – and I see all of the manufacturers talking about it. So I guess, you know, they’ve poured the ethanol down me. I’ve been drinking the ethanol.

Paul Lewis:

You’ve been drinking the ethanol Kool-Aid.

Don Dixon:

Exactly.

Paul Lewis:

No, that’s – that’s great, and you would be the person to know. Next question: the price of gas. It’s $4 a gallon within a year after the 2008 elections.

Don Dixon:

What happens when it hits $4 a gallon is the general public begins to write to their Congressman. And there is a real upswelling that says, “This is B.S., and the oil companies are just ripping us off.” And they’re – you need to do something about this, because if it’s $4 a gallon, you’re gonna see triple digit growth in oil company profits, and that’s really what it is, in my view. And I think that’s what’s gonna happen.

Paul Lewis:

I think that’s a pretty accurate forecast as well. All right, last question. Printed publications become a novelty by the year 2020.

Don Dixon:

No, absolutely not. That’s false. There is still something very, very, very – I guess I want to say almost visceral about a printed publication, and a portability related to the publication. And also, an ability to save a publication that you just can’t have with something that’s online. It’s not as satisfying.

You have a – something very satisfying about being able to look through a product, pick it up, touch it, carry it with you, take it on vacation, take it to the beach, wherever you want to go. And I just don’t see a lot of people sitting at the beach running through their – their iPods and looking at content. I still think that there’s a certain amount of things that are overrated in relationship to that. So I – no, I don’t think magazines go away at all. I think they continue to become more niche –

Paul Lewis:

Yes.

Don Dixon:

Or niche, depending upon which school you went to, and I – I think that’s where it becomes – I think they become more fragmented, you have smaller audiences, but I also think, then, the advertisers will learn how to use these magazines better and you’ll see more advertorial type content in them than just straight – straight advertising. And there’ll be much, much more blurring between what is advertising and what is actual editorial content in magazines.

Paul Lewis:

I think that people also like to possess things and information. There’s a difference between reading an article online and owning a magazine. There is an emotional commitment that I think readers are very into. So I think that definitely there will be a significant change in the publication industry, but I believe that magazines are going to be with us long into the future. So I agree with you on that, and Don, thank you so much for joining us on the show today.

Don Dixon:

Not a problem. I’ve had a good time. Thanks so much for having me, I appreciate it.

Paul Lewis:

Okay. For you listeners, if you’d like more information on Auto Trader, it’s AutoTrader.com. I think most of you know that, hopefully. And if you want more information on us, obviously we’re at InternetMarketingVoodoo.com. Thanks again for joining us.

Announcer:

For more information on this week’s topic, visit Internet Marketing Voodoo.com. This podcast has been brought to you by MindComet, the relationship agency.

[End of Audio]

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