Tag Archives: online

Measuring Auto Vertical Websites


Most people accept that the number 1 player in each online classifieds vertical makes the money, number 2 can go alright and generally, good luck being number 3 or beyond.

Yes I am generalising but in most countries it’s not far off the mark, particularly in the automotive vertical. So the battle to prove you are number 1 in Listings and Traffic is paramount – all academic really as “you can’t bank wank”, as my former esteemed colleague would remind me (ie money talks, bullshit walks).

…it’s not surprising that almost without exception, every website monitored display the same traits…

Direct Traffic…generally can’t and doesn’t fluctuate materially from month to month but can be built or eroded over time whereas Paid Traffic can and does fluctuate as levers are pulled…

Some time ago I wrote an article asking Who has the No 1 Auto Classified Website in the World after I had developed an algorithm that enabled me to rank the traffic health of auto vertical websites around the world through an Auto Classifieds Traffic Health Index.

I did this because there are so many ways to measure auto vertical websites against each other – number of Listings, total traffic (Visits), Revenue, EBITDA, etc – and given there are inherent problems with each measurement, I needed a way to compare websites on more or less an equal footing.

Number of Listings is ok but the count on the website may not always be what it appears. Visits can be manufactured and not a true reflection on the sustainability of a website’s brand health through its Traffic Sources and User Engagement. Revenue and EBITDA are not always available (ie for unlisted businesses). Then there is comparing websites from country to country where the populations are different meaning Listings and Visits (or even Revenue and EBITDA) cannot be measured on a level playing field.

The factors that push Encar.com and Autoscout24.ch as the two leading websites by a fair way…..

The Auto Classifieds Traffic Health Index algorithm takes the User Engagement metrics of website along with the Traffic Marketing Sources (not all traffic sources are equal), applies an importance weighting factor to each metric individually (either positively or negatively depending on the metric) and calculates an Index value number.

After tweaking the Index and monitoring 86 auto classifieds websites from 38 countries over the past 20 odd months it’s not surprising that almost without exception, every website monitored display the same traits. When traffic that is not paid for is high, User Engagement is high and Bounce Rate low. When sources of traffic that is paid for is high, User Engagement is lower and Bounce Rate higher. There are next to no exceptions.

Total Traffic is not a factor for me (to an extent) as not all traffic source are equal and to protect the integrity of comparing websites between countries and regions (ie Brazil has strong regional players). In saying that, for the purposes of overall ranking, I exclude websites with relatively low monthly visits from rankings and I do value more traffic when doing an overall assessment. This takes the ranked number of websites down from 86 to 64.

The average Auto Classifieds Traffic Health Index score for May 2018 is 37, with 93 at the top and -23 at the bottom. A negative score is possible if a website has a high ratio of Paid Traffic which leads to a high Bounce Rate and lower User Engagement metrics and weights the Index down – 4 websites have a negative index score while another 1 has a zero score.

Here’s the top 10:
1 Encar.com, South Korea (owned by carsales.com) 93
2 Autoscout24.ch, Switzerland (Scout24) 91
3 Autotrader.co.uk, UK (LSE:AUTO) 79
4 Mobile.de, Germany (Private) 75
5 Gebrauchtwagen.at, Austria (Private) 71
6 Seminovosbh.com.br, Brazil (Private) 70
7 Tucarro.com.co, Colombia (Mercado Libre) 67
8 Sauto.cz, Czech Republic (Private) 64
9 Autoscout24.be, Belguim (Scout24) 63
10 Autoscout24.it, Italy (Scout24) 63

The factors that push Encar.com and Autoscout24.ch as the two leading websites by a fair way are high traffic source that are sourced organically, above average User Engagement, very low Bounce Rates and virtually no Paid Traffic. These factors epitomise a strong online Brand Health.

I don’t know a lot about the AutoScout24 group except that it has an impressive stable of auto vertical websites across Europe in terms of Brand health when measured by traffic. 8 of their websites are measured with 3 in the top 10 (see above). In addition there is Autoscout24.de (Germany) at 20, Autoscout24.at (Austria) at 22, Autoscout24.fr (France) at 25, Autoscout24.es (Spain) at 35 and Autoscout24.pl (Poland) at 43. All but Spain and Poland are more than comfortably above average.

Are each of the top 10 clear leaders in their respective countries? Yes they are except for Seminovosbh.com.br which is a regional website in Brazil typifying the Brazilian landscape where loyalties to local players remain, even online. Consumers parochial to regional automotive websites in Brazil resulting in high user engagement and positive traffic sources with others such as the Webmotors owned Blucarros.com.br, Joinvillecarros.com.br, Compreauto.com.br and Meucarango.com.br all with strong Index rankings (albeit under the monthly visits threshold I have set).

Autotrader.co.uk (3) and Mobile.de (4) are the clear traffic leaders from the top 10 in terms of Monthly Visits which, despite not wanting the amount of traffic to influence the ranking, shows how strong these businesses are in their respective countries.

Other websites of note in the rankings are:
11 carsales.com.au, Australia (carsales.com) 60
12 chileautos.cl, Chile (carsales.com) 59
16 Autohome.com.cn, China (NYSE:ATHM) 54
24 Autotrader.ca, Canada (Private Equity) 46
26 Autotrader.com, USA (Cox Automotive) 42
29 cars.com, USA (NASDAQ:CARS) 40
30 Webmotors.com.br, Brazil (carsales.com) 38
42 Cargurus.com, USA (NASDAQ:CARG) 29

It’s interesting watching the evolving nature of these websites and businesses month on month and year on year. For instance Direct Traffic, the most valuable traffic source, generally can’t and doesn’t fluctuate materially from month to month but can be built or eroded over time whereas Paid Traffic can and does fluctuate as levers are pulled or put away day by day, month by month.

Like anything, the Auto Classifieds Traffic Health Index is not perfect but it does give a view that is valuable on a number of fronts for peers, competitors and potential targets around the world.


The Webmotors Journey – Automotive Classifieds & Finance in Brazil


When carsales acquired a strategic stake in Webmotors in 2013, it was more or less a business unit within Banco Santander that was fighting it out with iCarros to be Brazil’s number 1 automotive vertical classifieds website.

Santander invited carsales into Webmotors to help transform its thinking as part of the bank to that of an absolute number 1, legitimate automotive classifieds website that provides an online channel for effective consumer financing.

As we get towards the middle of the 2018 calendar year, the Webmotors business is now run as a nearly totally autonomous business and is the clear number 1 automotive vertical classifieds website in Brazil that is bringing enormous value to the Santander Financiamentos business along with the thousands of car dealers who chose Santander as their finance partner, not to mention the millions of consumers buying and selling their car on the Webmotors platform.

As I talked about in a previous post titled “What Does Brazil Know That We Don’t?“, the three leading automotive vertical classifieds websites in Brazil are owned by banks: Webmotors is owned by Banco Santander (70%); iCarros is owned by Banco Itau; and Meucarronovo is owned by BV Finaceira. This is unique to Brazil (and not the only thing that is unique to Brazil!).

So how do I think carsales has brought increased value to the Santander Financiamentos business? By changing the focus of the business to helping dealers and consumers to sell cars (as opposed to advertising) as the key metric rather than having finance drive the business. Finance can only come about if a car is sold so this thinking isn’t revolutionary but it is a mindset change in Webmotors, in Santander Financiamentos and with the Dealers.

What has been the difference is an unwavering objective of delivering sellers value and helping them to understand, embrace and manage the value that Webmotors is bringing.

This has come about in a number of different forms and there is not one thing that has put Webmotors into the position it is in today.

People – I love visiting Brazil and working with the passionate, smart people at Webmotors. The thirst for learning and achievement is there in each and every visit. We have a great team in place with a fantastic leader. We all know in business how important people are in an organisation. When you can combine passion with smart people across a business of 170 plus people being led by a great leader with a fantastic support team who are smart and engaged, I think you are on the verge of something special.

Product & Technology – Webmotors is an online business that therefore relies on Product & Technology which must be at the forefront of your competitors and peers. One of the first things we had to do in 2013 was create a Product & Technology team by hiring a CIO and to move the technology platform out of Santander. It is hard to believe now that Webmotors did not have its own Technology team some 5 years ago. Development changes would be submitted to the Santander team and prioritised against bank priorities. Being nimble or agile wasn’t in the vocabulary. Today Webmotors Product & Technology is in great shape led by a couple of incredibly talented and passionate people and getting better by the day enabling us to provide enormous value to buyers, sellers and Santander.

Education – This one cannot be underestimated both internally and externally. Internally it is about educating ourselves. Everyone at Webmotors had to understand and believe in our objectives. As I say to the Webmotors team what seems like all the time, “we at carsales are not smarter than you guys, we’ve just lived through this stuff before“. This continued education of Webmotors people of carsales thinking along with their expertise on the local Brazilian market is a formidable partnership.

Santander Financiamentos – One of the great advantages Webmotors enjoys is the support of the Santander Financiamentos business and in particular, the 1,000 odd strong people out in the field visiting and supporting dealers. The association of Webmotors and Santander and the value proposition that exists therein provides for a unique offering to car dealers and in return, both the Webmotors and Santander Financiamentos businesses. As mentioned earlier, the Webmotors focus is on helping sellers sell cars. By having over 1,000 Santander people visiting dealers living the Webmotors focus of helping sellers sell cars, an unparalleled value is created for the dealers and Webmotors.

carsales Strategic Focus – This might be a little self-indulgent but I have no doubt the role that carsales has played in where Webmotors is today. The mindset of everyone at Webmotors had to shift in order to facilitate change, this is why Santander brought carsales into the business and each time I’m there it gives me great pleasure to see that change of mindset in action and continually growing.

What has been particularly pleasing is what has been achieved in the past few years in a Brazilian economy that has been poor at best. Where other Australian companies have seen their interests in Brazil take a hit, Webmotors has bucked the trend to prove that money can be made when value is delivered. Now that the economy appears to be turning a little, we are in great shape to take advantage of it.

While we are pleased with where Webmotors is today, this is still only the start of the journey. Brazil is an exciting, unpredictable place and none more so than in the world of online automotive. Webmotors is primed, ready and willing to take it on.


The Platform Advantage. For who?


The “platform advantage” is something every online business strives for; where your platform becomes the default method in which people use your chosen service.

carsales sells a car every minute (you might have seen the ads 🙂 ) yet doesn’t own a vehicle; Uber is a the biggest taxi company in the world and also doesn’t own a vehicle; and Airbnb is the biggest accommodation provider in the world yet doesn’t own any real estate.

Each of these businesses has leveraged their “platform advantage” primarily through matching people with people in order for them to transact be it to buy a car, get a ride or rent a place. I still have people asking me if carsales has certain types of cars in our stock and when I explain that carsales is “just” the online platform for buyers to find cars from sellers, the concept that “it is just a website” can be hard to fathom for some (how can an ASX100 company be just a website?).

There are, however, many moving pieces in operating an operating online marketplace like carsales and one of them is managing your brand, especially since the primary purpose of the business is relying on a buyer and seller to reach (and execute) a mutually acceptable deal to purchase a car. carsales does not get involved in the transaction but when something goes astray, it is the carsales brand that can take a hit and as such carsales has lots of proactive and reactive measures to stop things that could in any way damage the carsales brand.

“This Airbnb thing is so easy…”

Airbnb is the same. It has a user controlled rating system for vendor and renter as well as a long list of terms and conditions that are meant to protect both parties; until one side takes advantage of those “terms and conditions” that is. We had an example using Airbnb over the New Year period where the Airbnb platform was taken advantage of.

My sons and a few mates were heading down the Mornington Peninsula for New Year’s Eve to join another group of friends who had organised a gathering at a family property. They searched Airbnb and found a place that suited their needs beautifully with the only drawback being that they had to take a minimum of three nights so they thought they’d make a weekend of it. This Airbnb thing is so easy.

They arrive at the property at around 5pm and headed out onto the back verandah to have a few drinks, put some music on and play a little backyard cricket in the confined space. They were living the dream.
Just after 6pm (yes they had been there just over an hour) they receive a call from the person (let’s called her Zarah) they had organized the Airbnb stay with – she had received a call from a neighbor complaining about the noise so she informed them that they were being evicted immediately for excessive noise and hosting a party. WTF? Summer holiday period, late Saturday afternoon, sitting on the back verandah with music on and they were being evicted for this? WTF?

Zarah arrives shortly thereafter with the police. Yes, the police. They inspect the property (nothing had been used, no beds slept in, etc) so obviously nothing is out of place, no damage (heck they’d had an hour there) and the police apologise to the boys saying “this was not what we expected but it is out of our hands, sorry boys”.

This is where an online platform like Airbnb differs from a hotel or caravan park

The boys contact Airbnb to argue their point and at the very least get some if not all of their 3 nights money back; Airbnb should be responsible after it all it was Airbnb who facilitated the rental. Airbnb take the boys version of events and then take Zarah’s version before informing the boys “sorry, there is nothing we can do because you have violated Airbnb’s terms and conditions by having excessive noise and hosting a party”. WTF?

Let’s get this right again. Airbnb rental, summer holiday period, late Saturday afternoon, no request to kindly turn the music down just a neighbour’s word that loud music equals a party and this constitutes a breach of Airbnb’s terms and conditions to which Airbnb wipe their hands of all responsibility and the boys lose their money (and a summer experience).

Was this a scam? This is where an online platform like Airbnb differs from a hotel or caravan park (the traditional alternative) where they would have people that worked for them on the premises to control exactly these types of scenarios. What was stopping Zarah from organizing a neighbor to call to complain so that she could “exercise her Airbnb rights”, take 3 nights income and alleviate all risk by getting them out before they have even stayed?

…my older boy went to a 21st birthday celebration at an Airbnb rented house 3 weeks later…The neighbor came over early in the evening, introduced himself and said “have a great night just turn the music down after midnight if you can please”…

Airbnb were not interested, this was between the boys and a faceless Zarah for them. For the boys yes Zarah is a douche but it is was Airbnb who failed them here in their eyes. The Airbnb accounts were quickly deleted and they mercilessly sprayed Airbnb through any and all of the social media accounts they were active on (read, all of them), letting everyone know just how easy it is to be taken advantage of on the Airbnb platform and Airbnb didn’t care in the slightest.

In reality, did the Airbnb brand take a hammering? Not really, this was not worthy of a TV news grab to cause too much brand damage. No one was hurt, no property damaged, a few kids (and their parents) felt they were “duped” out of $800 odd dollars, a “first world problem”.

Was this Airbnb’s fault? Probably not. They were running their business according to their “platform advantage” that works seamlessly 99% of the time in all likelihood.

Incidentally, my older boy went to a 21st birthday celebration at an Airbnb rented house 3 weeks later back down the Mornington Peninsula. The neighbor came over early in the evening, introduced himself and said “have a great night just turn the music down after midnight if you can please”. That wasn’t hard was it?

This is the new world we live in where using online platforms to find someone willing to rent their house out or drive them from point A to point B or buy their car is the new norm. We still have to deal with people at some point though as the “platform advantage” only goes so far. I wonder for how much longer.


Why Australia was different in online auto


Around 12 months I wrote a post titled “Why Australia was different to the US, UK & Canada”.

Here’s another angle to why Australia was different in the online auto classifieds space.

From an auto, jobs and real estate classifieds perspective in Australia, the old school media giants missed out online, big time.

With the exception of News Limited’s $2.2m acquisition for 40% of Realestate.com.au back in 2002 (which is now risen to 61% of over $8b value at time of writing), the media heavyweights in Australia being News, Fairfax and later Sensis (Telstra), especially with their $636m acquisition of the Trading Post in 2004, really missed the boat.

I can make educated guesses about how/why News and Fairfax failed in jobs and real estate classifieds online but I’ll concentrate now on the auto online vertical where my experience is much stronger.

The way they approached it was different and they did different things wrong.

News were too late to the party with Carsguide. Their first online auto go was Newsmotoring which didn’t even leverage their Carsguide offline brand and when they launched Carsguide online in 2003 it was too late. This should have been done in 1995! Isn’t hindsight beautiful.

Fairfax launched Drive online early but (in my opinion) didn’t leverage offline anywhere near well enough. Maybe this was because they were trying to protect the riches of their offline asset?

To highlight my point, when carsales started it was called Carz.com.au because you couldn’t register a generic name as a domain in Australia back then.

Then one Friday the Drive newspaper lift out had a computer on the front with a car crashing out of it with the caption which read something like “carsales.com.au – the end of the used car salesman?”.

So here we have Fairfax through its Drive newspaper brand brandishing an alertnative auto domain to their drive.com.au brand on the front of their lift-out and worse, no one owned the carsales.com.au domain – for long……the guys at Carsz.com.au saw the lift-out, checked the status of the domain, registered it and carsales was born.

Additionally, in both News and Fairfax’s cases, they had opportunities to acquire carsales early and didn’t. Again, I think they were trying to protect offline.

Sensis did a few things wrong. The number one thing was that an online classifieds site was way out of their core competency (I would have thought that they learnt that lesson 5 years earlier in 1999 when they spent millions trying to launch an auto online classifieds site and failed).

The second thing was that with Auto being the biggest part of Trading Post, by 2004 it was too late to win Auto online, especially with their lack of online expertise.

But from an operational point I actually don’t think they did too much wrong in terms of execution except that their thinking was protection of their print legacy rather than online first.

Could they have really done anything more than they did? Maybe but I’m not really sure what; the horse had bolted very, very quickly and before they knew it, the game was over.

The fact is that each of them did what has been done in virtually every other country but they ran into the perfect storm that carsales created.

As soon as carsales moved from the “pay per listing” model (which was/is used by 99% of online classified players) to the “pay per lead” model the game was up for News and Fairfax’s online auto transition from offline and Sensis’ new foray into online classifieds (even before they had started).

carsales made changes to its website to drive leads to dealers, at the same time the model encouraged dealers to put all their inventory online and the inventory was always refreshed because dealers didn’t want to pay for leads on sold cars.

In the same year carsales moved its private seller to pay until sold which saw a sharp increase in private sellers which in turn drove traffic and brought more buyers of dealers cars. The perfect storm.

For dealers, leads quickly became the way that online automotive websites were measured and no site could get near carsales for the number of leads a dealer would receive.

The reality was that no matter what the competitors did at that point and moving forward, the horse had bolted, carsales had won.

Traffic kept on growing as did leads and as a result, revenue just kept growing too.

Don’t get me wrong, it wasn’t all roses for carsales and did not come easily. They were incredibly smart and worked incredibly hard, after all the business decisions they made are what made them!

If the big media players did anything wrong (apart from the acquisition thing) it was not realizing earlier that the game was up; each of them kept throwing good money after bad thinking they could win.


Which carsales moves were most critical?


After an article I wrote a little while ago (6 moves that drove carsales) I was asked by a number of people “were there any one of these moves that if not made, could have been terminal for carsales?”.

The 6 moves I talked about were introducing Private Sellers, adopting the Sell Your Car Until Sold model for Privates, moving to the Lead Model for Dealers, Acquired Trader Assets (cars, bikes, boats, etc), creation of Mediamotive and the implementation of an All Car Search, all in chronological order.

It’s a really interesting question and really who knows; I’ll have an educated guess nonetheless remembering I was not in the carsales business for ANY of the 6 moves I talked about although I was very close in running DMi, an independent technology/data services provider working with carsales’ competitors.

I can safely say that if carsales hadn’t have introduced the Lead Model in 2002 they would have been in a lot of trouble and most probably terminal.

At the time they were one of 3-4 auto vertical sites with the same business model trying to make a dollar; none were profitable and carsales was the only business whose sole focus was the online auto vertical space.

Almost immediately the currency for ALL websites listing dealer cars online was the number of leads they delivered and because of this model and the actions around it (like the mandated use of Autogate Lead Management), carsales were delivering a minimum of 4-5 times the leads of their competitors.

They had differentiated themselves from their competitors with a profitable business model and had created the ultimate barrier to exit for dealers – they become an integral part of the process for dealers to sell cars.

carsales made the car buying process all about the car and not about who was selling it. This flew in the face of virtually every dealer at the time who were convinced it was their brand, the dealership, that drove the sale.

Do people really care who they buy a used car from? No, they care about getting the right car at a fair price. This was true then and holds true today.

So what about the other points? Well, there could be an argument mounted that if they hadn’t have introduced private sellers in 2000 they may not have made it to 2002 for the next two important moves.

When they introduced Sell Your Car Until Sold (also in 2002), there is no doubt that this pushed their private seller business to relative levels no other auto classified vertical site in the world has reached.

But the fact that this was done in the same year as the Lead Model makes it hard to say that if they hadn’t had made the move it could have been terminal. In isolation, yes.

As for the last 3 moves, no they would NOT have made carsales terminal had they not been made. These moves just helped to accelerate the business.

Acquiring the Trader assets was very nice, gave the company added breadth and strengthened their offering but if it wasn’t done, carsales was going nowhere.

Establishing Mediamotive has been fantastic for the business in terms of diversifying and maximising revenue but again, the business wouldn’t have been terminal.

Same with All Car Search; excellent differentiator and driver of sustained growth but not terminal if not done but did have high risk in terms of potentially reducing dealer leads in favour or private leads (this did not happen).

All 6 moves weren’t without a high degree of calculated risk even if they all wouldn’t have risked the company.

To reiterate, I wasn’t working with carsales for any of these moves but I was working with carsales’ competitors at the time and saw first hand the impact each move had on them.


carsales – if it was easy, everyone would do it


The carsales story is a tale of many things coming together to create the business it is today.

One of those things is foresight; fundamental to building a successful dot com into an ASX Top100 company.

I have watched the business start and grow from near and at times little further away. Right at the very start my first business trip overseas was July 1997 to the US to review two new technology products with a view to make a recommendation on which path to take.

I was working with Reynolds & Reynolds Pty Ltd (R&R) and had just been giving the job of getting their E-Commerce business going.

Over the previous 3-4 years I had been designing and developing software to that utilizes the new DealerLink private network that would revolutionize the dealer management software services in Australia.

The software products I were to review were touch screen kiosks; a new technology showcased by a few vendors at the NADA convention earlier that year in San Francisco.

A dealer had seen the technology at NADA, immediately saw some benefit in helping his dealership and grabbed the CEO of R&R to show him.

The value he saw was the ability to have his inventory from all three locations available to be viewed at each location complete with photos. At the time, this was ground breaking.

The first place I had to visit was the Reynolds & Reynolds Inc head office in Dayton, Ohio. As they still had a small strategic stake in R&R and had a kiosk solution, it seemed prudent that we considered their software.

Their kiosk software was slick and worked well with the only downside being that each kiosk was standalone meaning the only way to update each kiosk was to load the inventory by disc each time.

The second stop was to Austin, Texas where Digital Motorworks Inc (DMi) had built the kiosk software our Australian dealer had been wowed by earlier in the year.

Whereas the Reynolds kiosk solution was standalone, the DMi solution utilized the Internet to update its inventory automatically.

Remember this was 1997; using the Internet to drive your business solution was somewhat new and deemed to be somewhat risky.

What this did was not only fed the kiosk solution, it also immediately enabled an internet strategy for the dealer – their inventory could be searched online within the dealer web site and it enabled individual dealer inventory to be aggregated together.

This was groundbreaking stuff back in 1997, especially in Australia and my mind was made up so I started preparing my recommendation paper.

The one hurdle was the cost of each – the DMi solution was over 4x the Reynolds solution up front and considerably more ongoing. I didn’t know how this would work as I put together my findings and recommendation.

Well on my return the decision ended up being clear cut – the Internet driven DMi solution, despite the relative cost, was chosen very quickly without too much debate – The leaders at R&R had bigger plans.

The last software piece I had developed before heading over to look at the kiosk software was the automated aggregation of dealer inventory direct form their dealer management system to a centralized database with a view to creating a wholesale vehicle sourcing system we called StockLink.

We used this software to populate the kiosk inventory database automatically and within months had kiosk systems running in each of the dealer’s three locations and searchable on the dealer’s new website.

Little did we know (or maybe we did) what this was the start of what would become carsales.

We thought touch screen kiosks would be a big hit, be in every dealership, shopping centers, airports, etc so people could find the car they were after, wherever they were at the touch of their fingertips.

Well the touch screen kiosks didn’t last but the Internet did, carsales was born through this technology and we are where we are today.

So, who had the greater foresight here?

Was it me for creating the software to automatically aggregate inventory and recommend the internet based solution? Hell no, I was merely following directions from my esteemed leaders at the time although I can take solace in that I didn’t hesitate in recommending the Internet based DMi solution.

Was it the car dealer who had the foresight to see the value of a networked solution? Yes he has to have some of the credit as he had a vision and whilst it ended up a little different to what was originally envisaged, he saw some value at the start.

Was it the leaders of R&R? Yes most definitely. They saw the vision of what this could bring to R&R, dealers and consumers.

It would have been much easier taking the Reynolds solution to fill a need. It was far cheaper and developed by trusted partners but it didn’t provide a platform for the future.

The fact that they took the harder, more expensive option was not the first time they would a similar road. They had the foresight to be brave in their business decision making.

If it was easy, everyone would do it. Amen.


Before you can help me, please sign the NDA


I’ve come to see you about a new business venture I have because I think it could be a great opportunity for your business.

This is usually code for “I’ve got a great idea but need your help to make it a great outcome”.

The next thing they usually ask for is for you to sign a NDA.

But hang on, you’re asking for my help and I have to sign a legally binding document before I can help you?

It’s a funny concept when you think about it in the context above; well I reckon it is.

I regularly see entrepreneurs, startups, etc coming in to get advice on and/or present the next big thing that is going to help “make carsales a lot of money”.

The first thing they want is a NDA signed to protect their idea and fair enough I suppose, I would expect the same thing but that’s not to say I can’t help but ask myself “Really; aren’t you asking for my help?”

There is, however, a very good chance that a large online player – not just carsales, I’m sure this applies to all leading online players – has already explored ideas very similar and/or has plans to execute on similar ideas at a point in the future. They wouldn’t be doing their job if they have not.

Of course the online company is not at liberty to say at the time if they have or haven’t looked at similar concepts (this would be commercially sensitive) and in order for them to pursue anything there would need to be documented proof before that meeting and/or signing of the NDA.

Therefore any NDA has to cover this off which can be difficult to understand for the entrepreneur!

I am sure this scenario would be pretty “standard” in any online company of a reasonable size especially with teams of people charged with the responsibility of keeping the company “ahead of the curve”.

I had an example recently where a couple of guys came to see me about their new business. They took me through the plans for their new business showing me their point of difference to anything else out there – “they had done their homework”

“This is leading edge; no one is doing it online and it is waiting to be exploited”, they said.

Before we went to the next step of doing some due diligence on the concept, they wanted me to sign their “standard NDA” which was fine and I explained that it needed to be looked at by our legal experts first.

“But this is a standard NDA that everyone uses”, they said. I countered that “there is no such thing as a standard NDA and I need the right people to look at it first”.

We made a couple of changes that are somewhat mandatory for our business; the changes were pertaining to protecting the business from doing something similar. To them this implied we were going to steal their idea.

What they didn’t realise was that we had looked at a similar technology process some time before – whether we were going to implement the same or a similar process hadn’t been decided but the business reserved the right to do it themselves not remove that right because someone came up with the same idea and wanted to make money from it!

I’ve been a party to literally hundreds dozens of NDA’s and never seen two the same, the other side always needs something changed although the end result sees them usually have the same meaning. They may not though.

Of course getting a NDA signed off before giving away too much detail on your idea is seen as an important step for entrepreneurs and startups; just make sure you always have a legal representative working for you, give you advice before signing one and most importantly, understand that not all ideas are “new”.


Moving into Jobs Classifieds from Auto


When we started Digital Motorworks (DMi) in Australia in 1999, our total focus was the automotive industry.

This made sense since our experience was automotive and the DMi technology base out of Austin, Texas was developed for the automotive space aggregating inventory data from over 6,000 car dealers in the US at the time.

So how then was our revenue split 35% auto and 65% jobs classifieds just 3-4 years after starting?

It was about pivoting our niche core competency and getting out of our comfort zone, quickly.

Within 6 months of incorporating the company in Australia, we had signed a significant sized contract with a leading Australian media company giving them exclusivity over our data aggregation and normalization services in the automotive classifieds space for the next 3 years.

We were precluded from working with other major media players in the automotive space although there was still scope for more expansion in auto.

Pretty soon after this, we learned that News Limited’s new digital arm, News Interactive, was keen to get all the job ads advertised in all News newspapers around the country seamlessly into their Careerone.com.au website.

Could our data aggregation and normalization services be used outside of automotive? There was no reason why it couldn’t but it was big change to the business focus and to our head space.

We were given some sample job feeds to test and the results were encouraging but News threw another curve ball – the vast majority of ads are encapsulated in a pdf, image or an image in a pdf. Can we extract the jobs from these file types as opposed to a more logically formatted text file?

Long days and nights followed experimenting with OCR (optical character recognition) software to integrate into our systems and the results started to come slowly at first but the samples were encouraging.

Before we knew it, The Times of London newspaper group (a News International company) had heard about our technology and sent us samples to send back. It was starting to move.

Fast forward a couple of years, thousands of man hours, lots of perseverance and DMi was processing display and lineage job ads from every News Limited newspaper in Australia, The Times of London, the UL’s largest educational group TSL Education (UK) and Emap (UK) for display online in searchable formats.

Was this in our detailed business planning that we used to underpin financing and starting the company? Not even close.

It would have been very easy for us to not try our hand at this new business and stick with automotive, after all we were automotive people with automotive technology.

Sometimes stretching your niche core competency is ok as long as you have a handle on the effort versus reward and more importantly, a handle on what it might do to your business good and bad.


6 moves that drove carsales


With carsales turning 20 this year, everyone seems to forget or fail to realise that for the first 5 or so years, carsales was not profitable and was fighting for the number 1 position with a number of (much bigger) players.

carsales had a (seemingly) unique advantage from the outset in terms of access to dealer inventory by virture of starting out of the number 1 dealer management system provider, Reynolds & Reynolds.

This is a snippet from the carsales’ website in February 1998 when there were just 9 dealers online (1 from South Australia, 4 from Western Australia, 4 from New South Wales):

But this wasn’t the silver bullet everything thought it was (some still think it is today funnily enough), things didn’t just happen for carsales though – they happened as a series of good, calculated business decisions that weren’t necessarily popular or seen as the best way forward at the time but each of them were winners.

Who have thought the “I’m Interested” Form would have been so influential:

Here’s 6 influential moves that drove carsales to where it is today:

Private Listings (2000): Despite having a seemingly huge advantage with unparelleled access to dealer inventory, carsales needed to find a way to drive traffic to the dealer’s cars especially since it didn’t have the seemingly huge advantage it’s competitors had – offline marketing presence. It’s leaders understood that “buyers are sellers and sellers are buyers” so if they could attract private listings on carsales these sellers would also be buyers (of dealer cars). Of course the dealers did not agree with this thinking as they were worried that nobody would look at dealer cars if cheaper private cars were also available for sale. We know who was right.

carsales September 2000:

Sell Your Car Until Sold (2002): Most automotive websites around the world are products of media groups, usually newspapers migrating online. Their model for selling was/is “pay me now for this edition, if it doesn’t sell pay me again to advertise again…and so on”. Translated, this means if I do a bad job helping you sell your car, pay me again. This makes sense for a newspaper as there are costs associated with re-publishing each edition but there is no (cost) reason for this model online. When carsales introduced a flat fee to sell your car until it was sold, private sellers lapped it up. It now made sense to sell your car where you are looking to buy.

Lead Model (2002): Like the previous point, the media groups and their online automotive off-shoots were all about sellers advertising their cars “for sale”. If carsales followed this lead, it would be tough to compete as there was no differentiation to its competitors who being propped up by their offline assets. The carsales leaders decided to change the paradigm by moving from “fee per listing” to a “fee per lead” model. Almost instantly carsales changed the currency of online automotive to leads and created a differentiation that helped propel the business. For dealers, the proposition was now not about “advertising” online but it was all about “selling” – the better they worked the leads they were paying for, the better their closing ratio and more cost effective their online “advertising” would be. It was a true win-win-win for dealers, consumers and carsales.

Acquired Trader Assets (2005): For a number of years there was speculation about “who was going to buy carsales”. Yahoo was the first to take a small stake in carsales in late 2000 which they on-sold to Fairfax in early 2005 but for the carsales’ leaders, each inquiry for acquisition was a takeover bid, something they did not want. The approach from PBL and the end result was different as it was about merging the complimentary assets for both sides to get a win-win (one plus one equals three…or ten as the saying goes). carsales acquired the Trader online assets in the deal in return for 41% of the business giving it the number 2 online auto player as well as number 1 online assets in bikes, boats, trucks, machinery, etc. adding an unparalleled depth to the business.

Mediamotive (2009): The move by carsales to create its own direct corporate sales presence was pivotal in the growth of the business around this time. By taking control of the display sales and recruiting seasoned experts, carsales was able to take its product directly to the buyers using analytical data to ensure a premium marketplace. The Mediamotive business has been a show point for carsales to all automotive classified marketplaces around the world such has been its effectiveness in delivering in a results driven environment.

carsales May 2009:

All Car Search (2009): This may not seen significant to some but by including all cars in the one user search was a great success for carsales. Once again they were ahead of curve in understanding that “all car buyers are new car buyers, it’s just some of them are used” (credit to Greg Roebuck for that quote). For the first time a user could search dealer used, private used, new cars in stock and new cars available in the one search meaning consumers who thought they couldn’t afford a new car, were presented with new cars directly comparable to used cars. There was a fear by some that leads on dealer cars would go down if a consumer could directly compare dealer and private seller cars in the one search given dealer cars are usually a little more expensive (to cover warranties, overheads, etc). Well the opposite was true, interest on dealer cars (new & used) increased and a whole new consumer experience was the result, another win-win-win.

Finally
Running an online business like carsales doesn’t just happen, it takes hundreds if not thousands of constant decision making moments (big and small) to ensure it first of all gets ahead of the curve and then stay there.


The Hard Decision carsales had to Make


Very early in in the founding of carsales.com.au, it’s founders had a pretty big business decision to make which had an easy option and a hard option; the answer would have a material effect on its life span.

Here’s a little snippet that I believe is a great example of sound business decision making.

The rise of carsales.com.au was no accident and showed how the leaders at Dealer Management System provider Reynolds & Reynolds (R&R and now Pentana Solutions) were/are extremely astute business people who used business nous and previous learnings to make the right decision to forge what has turned out to be an incredible journey.

carsales grew out of R&R back in the late 90’s leveraging the DealerLink network between it’s dealers to seamlessly collect used car information.

R&R had a choice to make between two alternatives very early in the life of carsales:

The Easy Decision
Was to partner with one (or more) of the biggest media players in Australia to supply inventory as the infrastructure was already in place to collect the inventory and it really was just incremental revenue for not doing a real lot as well working with some of Australia’s largest and most well known brands, which could have been attractive to a small(ish) software house in Mt Waverley.

The Hard Decision
Was to go hard with carsales.com.au which was going into the unknown of competing against these media giants (at what they considered was their “bread & butter”) as a small software services provider.

Here’s my take on two important decision points that drove R&R to making the Hard Decision to turn their back on the media giants and compete against them with carsales.com.au:

1. “If it is this f&@king hard for us imagine how f&@king hard it is for them.”
This quote has stayed with me for nearly 20 years now. R&R had been trying to get dealers to list their cars on carsales.com.au for a little while and the process was a difficult sell even though there was a seamless, automated inventory feed from the dealer’s computer system to carsales.com.au. So when the big media players and newspapers came looking for (exclusive) inventory data deals, the leaders at R&R realised that if it is so hard for us to get inventory with our setup and relationship with the dealers, just imagine how hard it is going to be for them. They realised they had something of real value to build on.

2. They were quick learners.
R&R US acquired DealerNet.com in 1995 and was one of the first automotive sites in the US list used cars (cars.com and Autotrader.com started in 1997). In 1997 R&R sold DealerNet.com to The Cobalt Group so that it could focus on it’s non-equity strategic partnership with Microsoft’s Carpoint.com which was launched in 1996 (an excerpt from Automotive News, 1 December 1997DealerNet was a pioneer in providing dealers with Web pages in the early 1990s. But Reynolds wanted to sell it to focus on its relationship with its new partner, Microsoft CarPoint. ‘With CarPoint, we’re better able to fulfill our mission of linking dealers to buyers,’ said Kevin Distelhorst, Reynolds director of online services).

Fast forward a year to 1998, R&R US knew they had given up something that was potentially huge and missed their first mover opportunity (imagine their grief now, 20 years on when they see carsales.com valued at ~$2.6b). Generally speaking the US market is 2-3 years ahead on the take-up of new technology and/or processes which gives us in Australia an opportunity to learn.

Hindsight is a wonderful thing and it’s easy to say now that the right reign was pulled when the wrong one could have been so easy had the media companies in Australia actually got their act together.

I take my hat off to the leaders of R&R who made it happen.

Note: All views are my own and not those of carsales.com Limited or Reynolds & Reynolds (now called Pentana Solutions)


A Trade In Price is not a Retail Price


One thing the Internet has done to the car sales industry is (even further) blurred the line between a consumer’s view of a wholesale (trade in) price and a retail price.

When I say “blurred the line” I really mean “created an even greater divide”.

What do I mean here? Well, a consumer now has at their finger tips a proliferation of information on cars for sale, not only in their area but all over the country. Even more, this data is updated multiple times a day.

An important part of this information is the price of their car. This is where it is blurred as the car owner can easily see retail prices of the their car but rarely the wholesale or trade in price.

So when a consumer is buying a car from a car dealer and a trade in price is provided for their car, they are hit with “sticker shock” as they are conditioned on a retail price, usually the asking price and not even the sold price, further increasing the gap.

The end result is the consumer chooses to sell the car privately online and the dealer misses out on acquiring a good car to on sell.

carsales‘ Instant Offer goes a way to plugging this gap in bringing trade in cars to dealers as an option for private sellers selling privately.

Instant Offer is a great alternative for a consumer looking to sell their car quickly without the private seller process where our partner, a reputable wholesale buyer, will inspect your car to check that it matches the details submitted online and meets the offer conditions and will then offer you a wholesale price for your car (similar to the price a dealer would offer as a trade in).

While you may be offered slightly less for your car than you would selling through private channels, this is a quick and convenient method of sale which offers you next business day payment. From there the car will usually find itself for sale through the dealer network just like a trade in would.

It’s important to remember that wholesale prices (including trade in prices) will never be retail prices – they can’t be – but like retail, wholesale is negotiable and doesn’t have to be accepted.

At the end of the day it is in an auto verticals interests to ensure buyers and sellers (dealers and privates) have efficient methods to transact on cars in a retail and/wholesale environment.

Dealers and privates need to take advantage of the “network effect” a good online auto vertical brings. That is, the more sellers, the more buyers.


Take 2: Who has the No 1 Auto Classified Website in the World?


carsales is the number 1 auto classified website in the world.

Ok, there, that’s my answer to the common question of “where is carsales?” after my last post Who has the No 1 Auto Classified Website in the World.

How do I make this assertion now? (note: no I wasn’t told or advised to and I don’t feel obliged to!)

The best way I can answer this question is to quote the last paragraph of my last post:

At the end of the day, all of these websites are businesses and we all know that, as my esteemed former colleague used to remind me, “you can’t bank wank” – in other words, making money has to be the overriding measurement.

There you go, carsales is the number 1 auto classified website in the world because of the financials it delivers compared to the size of the opportunity, ie Australia’s comparative size in population & cars sold compared to the UK, US, China, etc.


A close second would have to be Autotrader.co.uk (although it is number 1 in terms of market cap) which has done an incredible job in the UK with others such as Autotrader.com (probably number 1 in terms of revenue), cars.com and Autohome.com (number 1 in terms of traffic) probably there abouts, all being great online businesses.

I could write another dozen posts with a different website in each post putting up a claim to be the number 1

Three areas where carsales is very strong compared to the before mentioned businesses are in private sellers, display advertising and adjacency businesses. These three business units help to make carsales the incredible business it is today.

The private seller business in carsales is an absolute standout compared to the majority of other online auto vertical businesses around the world. This is an area where large general classified business (horizontals) have really taken the space but carsales has managed to get and maintain a strong holding with the Australian consumer because “it works”.

The display advertising business of carsales has been a unique success story that has been able to deliver quality, premium audiences to automotive focused businesses, particularly OEM’s where a proliferation of data from consumers going right through their car finding journey has made it the most qualified advertising medium available.

The adjacency businesses are the newest of the three with the sale of tyres online through Tyresales.com.au, vehicle finance through Stratton Finance and car inspections through Redbook Inspect the standouts. Each of these businesses are partnerships carsales has entered into that leverage the carsales audience while still keeping an entrepreneurial style to ensure they grow as standalone businesses in their own right while delivering value to carsales through smart integrations.

Let’s not forget too that if carsales is doing well then it’s dealer clients must be doing well as it’s business model for the biggest part of its business is directly tied to what it delivers its dealers – leads which leads (pardon the pun) to sales.

The truth is, I could write another dozen posts with a different website in each post putting up a claim to be the number 1 auto classified website in the world.

I won’t do that but it does show one of the reasons to why this is a fascinating space to be involved in.