T.J.: By making the comment "Big Deal," I was not at all insinuating that the DealerRefresh resource is a waste of time. Far from it actually, I think it is great that people from all over the industry now have a forum, thanks to Jeff.

When I say "Big Deal" I mean that is how I suspect the folks at ATC look at it. They know that the worst possible reaction by the majority of their dealers is a gripe on this thread. Dealers need to make the decision that AutoTrader is either worth the asking price or is not. And then stick to their guns in order to affect any chance for a policy change.

They'll need to hire at least 1000 because 200 of the folks already there will be out the revolving door by then. They have turnover like no other company you've ever seen before, it's like a disease that nobody in the company ever speaks of.

I have google alerts set up for many things I want to keep track of.

Here is one that just hit.

Link:

Friday, November 2, 2007
AutoTrader.com revs up its expansion plans
Atlanta Business Chronicle - by Justin Rubner Staff Writer

Atlanta-based AutoTrader.com Inc. is undergoing a major expansion.

The company, an online automobile marketplace owned by Cox Enterprises Inc., plans to hire 800 workers next year, 400 in Atlanta. Positions sought run the gamut from customer service and marketing to sales and tech-related positions.

AutoTrader CEO Chip Perry says AutoTrader has been expanding organically since being founded in 1997. But increased demand for Internet advertising -- especially from car dealers -- is leading to rocket growth, he says.

"There's an explosion of interest in online shopping," Perry said. "We're fortunate to be working in a category that's exponentially growing."

Erica,

I'm ready to take your challenge. We just had a meeting about how our past and present ROI with AutoTrader stacked up, based on our numbers - not theirs, and the "proof is in the pudding". They've priced themselves out of our threshold.

I guess I can add to the "tick tock..."

Phew....what a post and comments! I just spent a good 45 minutes scrolling through and reading everything! (Just don't tell my boss!) As I peruse through point and counterpoint (most of it being point, point, point) - I can't help but see the tiny tip of the iceberg poking out from the ocean of discontent. The question remains - will the iceberg surface or just sink due to fear.

Tim Morris hit the nail on the head - sure, ATC will read through this (as I know many of their head people already have) and be annoyed that some of their clients are complaining and then they'll look at each other and say what should we do? They will check their recent cancellations that are minimal in number and say - "Let's go get a drink! Woohoo!" Most all of those who complained suggested a solution - "cancel." Yet, I wonder, after your complaining - will you? Will you take your own advice or just hope the others posting will do it to help you out, so you don't have to worry about losing a few sales each month. Or waiting for Google Base to come along and squash the competition like a little bug and then they will run for President and then World Ruler for All-Time. (Google is evil - I am sure of it, but I can't wait for their phone) It's a bit like volunteering or donating - many of us assume the "nicer" people out there will do it, relieving us of the time commitment or dollar drain.

Perhaps this blog will do something more than just cause me to procrastinate doing work - perhaps it will cause a movement and cause dealers to take action instead of just feeling better by venting. It could be planned like the immigrant "work strike" where everyone cancels on the same day - that would really send a message. (Hopefully better than the poor immigrant work strike - that was a complete bust! They're still getting carted back to Mexico by the truckload) Just think of the article Cliff will write in Ward's "Hundreds of dealers cancel Autotrader.com- prices slashed"

I can't wait to see who really goes through with it and who slinks off the comment thread knowing they will not...tick tock

Along the same lines as TJ "Long story short: AutoTrader knows that the worst thing to happen to them from their rate hikes is that a bunch of dealers show up on DealerRefresh to complain about them. Big deal":

The insane rate increases year after year work for Autotrader because the increased revenue from dealers who stick it out will always outweigh the loss of revenue from cancelled dealers. After the dust settles, some of the cancelled dealers inevitably go back and voila: Autotrader is even further ahead in recurring revenue than before.

Case in point: I worked at TraderOnline (owned by Trader Publishing) when BoatTraderOnline.com literally doubled their rates across the board. Even dealers who signed up a week prior got a letter in the mail saying they had to pay twice as much as what they signed up for last week. The thinking was the same: the site does generate enough business to justify the costs, and although some dealers cancel because they're ticked off, the number of dealers who stick with it outweighs the cancellations and there is still a net gain for Trader.

The difference between Autotrader and BoatTrader though is that at the time BTOL doubled their rates they did not have any competition. Autotrader DOES have competition now, and from the dealers I've been examining lately the other classified sites are producing a better ROI for half the cost.

As I mentioned earlier, imagine if Google improved the Base site features, pushed it out of Beta phase and actually decided to market & sell the sites features for half of what autotrader.com's rates are, it could crush them. Some autotrader execs have got to be reading this and wondering why there are these concerns regarding their price structures. It's because were tired of paying inflated rates for an audience size that really hasn't grown in pace w/the rate increases nor have the features paid off in delivering more eyeballs to our vehicles hence haven't done a hell of alot with ROI for us. We are basically salivating for the better mousetrap at half the rate, build it and we will come!

If you think AT has more of an audience that Google does, you are sorely mistaken. I work for a dealership website company and I can tell you jumping on googlebase first was one of the best decisions we ever made. Guess how much we charge for googlebase? That's right, absolutely nothing.

To stay in the game these days, you have to move away from 3rd party lead providers and start getting your website with easy to find inventory placed well on search results. If a customer sees your name in the pay per click area and on the organic results, you are almost assured to get a click at the least.

The price of doing this compared to paying AT or any other lead provider a ridiculous sum of money plus the cost of the lead is a no brainer.

I agree and have also made other dealerships we have relationships with aware of this thread. Alot of dealers I've spoken with in the past year or so all mention the absurd percentage of price increase from this company, be the dealer a wholesaler we deal with that has a small retail lot to the enormous multi franchise dealerships we trade with, everyone mentions the enormous price percentage increases and the lack or little service they ever receive from them. If we saw 50 to 80% increases in ROI we wouldn't mind paying for it but this is hardly the case. If I was a gambling man I'd also be willing to venture they're going to be put up for sale soon because based on what I've seen & read on here it certainly seems they maybe heading that way.

RE: Long story short: AutoTrader knows that the worst thing to happen to them from their rate hikes is that a bunch of dealers show up on DealerRefresh to complain about them. Big deal.

If we get the word out to as many contacts in the industry about dealerrefresh.com as we can it will become a big deal.

I have spread the word as much as I can. I think Jeff has created one of the best forums in the industry for ISMs, GMS, GSMs, and anyone working in the industry to express their thoughts, opinions, offer advice, and share industry information for all of us to be successful in any aspect of the auto industry business.

We plan on cancelling autotrader.com in mid November and will not entertain getting back on until they begin their national advertising campaign again next Spring. They've brought little or nothing to the table for us in the Winter months, just based on past performance. Do we pay more every year? you bet, but it washed out when we don't pay them for a 4 or 5 month period when they don't do alot for us. Just our experience. Do they get us back? Yes, but on our terms not theirs. Also, hold out for price, I drag them until the last week of the month and have gotten where I needed to be with them, timing is what it's all about. If more dealers did this they would feel the pressure eventually, it would bury them for the fourth and critical quarter. Hold out on price they will cave eventually.

What everybody in this thread seems to be missing is this: AutoTrader is comfortable raising their prices because they are confident (and correct) that the majority of their users will simply post a negative reaction on DealerRefresh.com but continue to pay their increases rather than drop the service.

AT has stakeholders to worry about, same as any for-profit company. When they raise rates, I am sure they don't do it arbitrarily...they conduct market studies to gauge what the net effect of a rate raise will equal. If they determine that they will lose an insignificant portion of their customer base by raising rates, and that the additional revenue will exceed any losses, then it's a good idea to raise them!

Long story short: AutoTrader knows that the worst thing to happen to them from their rate hikes is that a bunch of dealers show up on DealerRefresh to complain about them. Big deal.

By the way, I am on the side of the affected dealers in the room...I have seen the rates increase each year, and I think it is highway robbery in most cases. The way to change it, though, is to drop AT before the others have a way to justify their own rate hikes across the board.

If Cox hadn't privatized all divisions I'd think you were on target w/the sale of Autotrader proposition. Too much revenue for them to give up on so easily esp w/out the investment banking speculation driving stock pricing up or down on them since they're private. Most everyone I've known who's been with the company since the early days is long gone, must've got options & rolled elsewhere.

If I were Cox, this is EXACTLY why I'd get AT ready for sale.

AT has reached it's zenith.
-"1st to market" leverage...GONE.
-Competition growing exponentially.
-AT Brand loyalty stressed
-Sales methods, programs and support causing high turnover.

It'll need a fresh new vision and a total overhaul to remain "relevant".

"It's Elementary, my dear, Watson..."
Fatten the calf just before you take it to market.

Gotta love DR!
Joe

So I guess I should sell vehicles with one year leases and renegotiate the deals with payment increases of anywhere from 30% to 80% for my customers every year on the same vehicle? Great analogy, totally apples & oranges. You get what you pay for simple as that, many aren't getting what they pay for from Autotrader.com anymore. Anyone seen my Rep? Haven't seen one in the dealership in about 8 mos? Would be out third Rep in under two years.

Lightnup,

A few of us are commenting with our real names, links to where we work....we're completely transparent. How do you explain yourself? Why are you hiding?

To respond to your last comment, I'll admit my first thought was: is that the best he's got? You're right though. As an industry we are all about profit. We are the industry who is more exposed for this than any other. Yes, I have to respect AutoTrader for maximizing their profit on lip service. I don't respect your argument though. I think it is weak - you're stereotyping all dealers together in one bunch while this entire thread has been about one single company. You're trying to shift the argument.

Since it may be escaping you, here's the point of this thread: the Internet has created individual power. It gave everyone a voice. It is turning traditional media on its nose, and the media companies can't figure out how to make sustainable profit on it. Distribution isn't as much of a factor anymore, so the costs of doing business are less and competition is coming from every corner. But, there is a standard of living people are used to. I believe AutoTrader is battling with this right now. They're raising prices to see if they can sell their Internet package on the same level as their publication package. Nobody has figured this whole Internet thing out yet, but one thing we have from it is a voice. A few of us are using Dealer Refresh to be a voice for dealers. For better or worse, it is something we've never had before.

Sure is a lot of self-righteouness about reasonable pricing coming from folks in an industry known for $1,295 "Environmental Protection" packages ($10 worth of undercoating plus a quickie wax job) and $799 "Dealer Fees."

Like you wouldn't dance through your showroom after putting a car over the curb at M.S.R.P. plus fees plus a big back end? Home run, baby, high-fives all around! It's what car salespeople and sales managers dream of. Or the ever-popular "over-sticker" price of a hard-to-get hot new model. So don't begrudge a company for recognizing that they are entitled to maximize their pricing in the marketplace as long as they are providing value that customers are obviously willing to pay more for.

Does it make everybody happy? No. But then neither does hearing, "Oh, you must pay our dealer fee, it's printed right there on the buyers order."

AutoTrader is just like the Public Utility Companies: We pay to create, improve and sustain their infrastructure - increasing their value, allowing insiders to reap millions of dollars in profits though nifty stock option schemes... then once we do that - they rake us over the coals with exorbitant listing fees. In addition to that, they reap huge profits by selling ad space on their websites. I'd rather see an honor system in place, so when we sell a car listed on AT - they get a flat fee. Let's say $50. It's just going to be a matter of time, when someone click on your car for sale on AutoTrader, a flash ad will pop-up over the vehicle, forcing you to watch a 20 second ad for Progressive Insurance showing you how much this car will cost you to insure... then it will auto-minimize and you get to look at the vehicle...

Without the dealers... there would be no AutoTrader. Without AutoTrader, there will something else.

Then explain why AutoTrader.com Internet inquiries end up in my CRM. Why does the phone ring with a pre-recorded "Please wait for another quality lead from Autotrader.com?" And explain why I get neither of those things from any traditional media. It is also strange to me when I see those "Contact Seller" boxes all over Autotrader.com and Get a Free Price Quote on the ATC new car listings. Maybe I'm just confused?

Alex wrote: " .....Yep, that’s right, I called AutoTrader.com a “third party lead provider”. Newsflash AutoTrader: you’re playing on the Internet, you’re trying to get customers to call and email dealerships, and you’re trying to deliver traffic to a dealer’s website. Yes, you’re also putting customers on the lot, but we all know that cannot be tracked effectively. At the end of the day you fit my definition of a “third party lead provider”, so accept it and let’s not have that argument ever again. Yes, that also means I’m going to rank you against Cars.com, AutoUSA, Dealix, and all those other things we have allocated to the…..drum roll please….”INTERNET BUDGET”...."

Newspapers, magazines and radio ads try to get customers to call or email the dealer and try to deliver traffic to the dealer's website. Guess they're third party lead providers too? ATC doesn't ask for any contact info from the customer, doesn't provide any contact info to the dealer. That's a lead provider? Hmmm. Sounds like an advertiser to me.

"Google Base will eventually migrate into something bigger that's why we're perfecting the ad words move away from lead providers, and focusing on jumping right inside the ring where the action is"

Bingo. Eyeball audience is where the future lies. Autotrader has grown their audience enormously I'll give them that, but the search engine behemoths w/50 times the audience of Autotrader could eventually eat them for lunch. Name recognition id fine for Autotrader but think about this, Google has the capacity of a gargantious audience and has products like Google Base in their pipeline (been in Beta a while now) that they really haven't even publicized or marketed, if they did and decided to ever put a sales force on the street, Autotrader would melt from the heat.

P.S. All Google has to do is upload a dealers inventory for FREE, new and used, and by matching their inventory with vehicle images they can get in their voluminous image database, they can easily populate a search query based on a geographic IP match, to a users request. Google is going to crush auto trader with this sort of concept which I myself created in my mind, and now in digital form - or maybe, it's already in the works. But like someone said, Google Base will eventually migrate into something bigger that's why we're perfecting the ad words move away from lead providers, and focusing on jumping right inside the ring where the action is.

AutoTrader.com is enjoying success but you will see other successful sites come along. Most car dealership managers had old habits such as thinking autotrader is a must, and big expensive newspaper ads are a must. Part of the problem is that many of these sites like autotader are all own by corporate giants (cox) who buy all the good sites, and since most traffic is flowed through these sites, you can't help but see an autotrader, edmunds or KBB link everywhere. Myspace.com is another place people should post vehicles. We post on craigslist.com and like myspace.com, it's free. Today we signed an agreement with http://www.autoonemedia.com to manage our Google Adwords campaign, and they have a awesome landing page. My quick quote links everywhere will now go to my landing page. We are also thinking about doing videos and posting them on YouTube. They host it for free and now you can watch youtube movies on cell phones. I say stay creative and think outside the box. This is a fluid medium. The best car websites and process have yet to be created.... and anyone here can become a billionaire! Even me.

The purple elephant in the room that Autotrader.com is deathly afraid of is Google. Whenever Google begins to market their Google Base site Autotrader will have to rethink their rate structures. They are coming late to the game with pushing new car ad products. The manuf's in conjunction w/dealer websites have been able to market new vehicles pretty well w/out them. Used vehicle advertising they are ok but have priced themselves out of the market around us for the premium listing contract at least that what everyone I speak to at the auctions thinks the past year.

JL,

What flavor is the Kool Aid over there? If we decide to stay with AutoTrader, I'm going to need some of whatever you're drinking.

However, I need your help in some other areas:

1) "ATC works, the dealer must do his part by taking great photos, marketing the cars through comments, and being a price competitive as possible. Garbage in.....Garbage out!"

Okay, I'm with you 100% here. Many products fail because we (the dealer) do not give it the effort it deserves. However, when it comes to AutoTrader it is typically given more of an effort than any other third party lead provider gets because it is such a larger investment than anything else. Please tell me why ATC's competition trumps ATC in leads even after the extra effort?

2) "We all know like any other advertising medium ATC doesn't work in all markets."

Again, I agree with you 100%. Why is AutoTrader still selling in those markets like they're the greatest thing since sliced bread?

3) "if the dealer doesn't have the right inventory, inventory consumers are looking for the results will not be as rewarding either."

You're absolutely right! But....hold on a minute....if I always had the right inventory, what would I need ATC for?

4) "Also, the dealer has to take responsibility by making sure you have the right person responding to phone calls and emails and have a good system in place for those walk up consumers to be sourced and the sale contributed to AutoTrader.com."

Yep, yep, yep. This certainly needs to happen everywhere. I'm not going to argue with you, nor bring up the costs of accomplishing that in a perfect world - the costs don't matter, this needs to get done. I wouldn't base ATC's success around this. You all know what the industry is like, work with it - don't preach this over and over again...we know.

5) "Also, haven't we seen a nationwide decline in auto sales? It isn't ATC's fault we have seen this decline."

Unfortunately, auto sales haven't been as great as they were only a few short months ago. Learn this word: "relative". ATC, as a third party lead provider, has fallen off the relative radar screen more than any other third party lead provider since the volume of vehicle sales went stagnant.

6) "Continue advertising on the internet, ATC, Cars.com, dealer website and forget the rest, like newspaper, radio, tv and I promise you when consumers start buying again, you will start selling again and most of your sales are going to come from your internet advertising."

Please tell me that flavor of Kool Aid again. I'm an automotive Internet guy to my bones. I couldn't imagine a world without the Internet. I stopped subscribing to the newspaper last year, and haven't watched a commercial since DVR came to consumers. I love my Sirius Radio....I am the anti-traditional media guy! However, I am not the norm. I still want to sell Jaguars, Porsches, Audi's, and BMW's to well-established citizens. I still want to sell cars to people who might need a little financial help. The traditional medias are not as strong as they once were, but they are still very relative. Don't forget who pays your paycheck: Cox Media.

JL,

Take none of this personally. I have nothing against you, my local rep, and not even that guy who made those outrageous claims last Friday. I was able to spit this post out in 2 minutes because I've been having the same argument with every single AutoTrader.com rep for years. Trust me, the best thing you can do is not respond in this thread again.

We all like Autotrader. We just don't like paying the prices ATC is demanding. We're also sick of the BS ATC spits in our faces as reasons for being on the product. If you want to do something to really help your clients, tell ATC they need to get real with their prices. At the same time, I don't mind letting the market determine where things should fall - I'm actually hoping I can influence it.

Lastly, I'll make a warning to the dealers reading this thread. If ATC continues to collect this raised rate from us, the rest of the third party lead providers are going to follow AutoTrader's example.