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It's a War out there... A SEM war!

Discussion in 'Websites, SEO, SEM, Display, Social, Marketing' started by joe.pistell, Jun 13, 2018.

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  1. joe.pistell

    joe.pistell
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    Uncle Joe

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    Note: This is a work in progress, in no way is it a final research work. Grab a cup of coffee and feel free to add or challenge what you see.

    Summary:
    1. The Big Classified Sites are in a face-ripping SEM war.
    2. CarGurus aggressive SEM work is noteworthy
    3. Dealer SEM spending needs a deep review.
    4. The car dealer SEM vendor biz could be at risk.

    Overview:
    I've been hearing complaints from Dealers about SEM costs going higher and SEM traffic getting lower, so I looked into it. I was prepared to blame it on bad SEM Vendors, but, I've found a far bigger cause. The Big Classified Sites are in a SEM war. CarGurus has outspent ALL of the other classified sites... COMBINED (e.g. AutoTrader, Cars.com, TrueCar, Edmunds, CarFax, etc...) From a biz strategy POV, 'Gurus competition must react. So... SEM costs that dealers pay are already high AND the trend to continue higher looks real.

    It's easy to conclude that this war is real and it the trend of SEM costs are going higher. Dealer's need to place a wary eye on SEM spending. As time passes, it's logical to expect Classified sites to pass thru these costs to dealers. Should this happen, Dealers used car SEM and the Dealer SEM vendor biz could be at risk.

    Details:
    Using SEMrush*, it shows SEM spending by Auto classified sites like CarGurus, TrueCars, Cars, AutoTrader, Edmunds, Carfax, etc is about $10MILLION A MONTH and the historical growth rate looks to be accelerating.

    "So what?" you may ask. Let's look at some of the evidence and connect some dots.
    • $10mill a month divided by 20,000 dealers is ~$500 a roof per month. This is a 'pass thru' cost that dealers will pay for.
    • Why would Classified Sites spend more SEM money than today?
      • As New Car SAAR rolls over, dealers' sales and marketing dollars move into Used Car Arena
      • CarGurus, the new 800lb gorilla, is smashing the SEM gas pedal to the floor. CarGurus is outspending EVERYONE COMBINED (~$6mill a month) See below.
      • Wall Street Likes CarGurus model (the winner gets more cash to work with)
      • 'Guru's competitors may want to close the gap & shift dollars into SEM (consider AT's TV spend)
    "and... So what?" you mutter. SEM is an auction-based system, so, as Classified Sites move more dollars into SEM, SEM costs for ALL go higher.

    "How does CarGurus play a role in this?" As of June 2018, this SEM arms race among classified sites looks to be dominated by CarGurus. The gap in spending is so significant that It's easily possible that this SEM war between the Classified Sites has just begun. CarGurus has a Wall Street war chest AND they have lower costs (gurus scrape your website for inventory data & they don't pay your DMS to get your data).

    I'm looking forward to your thoughts...

    *Some SEMrush screenshots FYI

    upload_2018-6-13_13-12-52.png
    CarGurus $ is 4:1 mobile to desk

    upload_2018-6-13_13-7-30.png
    AutoTrader $ is 1:1.5 mobile to desk


    upload_2018-6-13_13-12-21.png
    TrueCar $ is 2:1 desk to mobile

    upload_2018-6-13_13-8-57.png
    Cars $ is 2.5:1 mobile to desk

    upload_2018-6-13_13-8-12.png
    CarFax $ is 2:1 mobile to desk
     
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    #1 joe.pistell, Jun 13, 2018
    Last edited: Jun 13, 2018
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  3. joe.pistell

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    Dealers buying SEM from CarGurus?

    That's like giving your checkbook to Darth Vadar :duel:
     
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  4. joe.pistell

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    Uncle Joe

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    SEMrush.com says CarGurus $6million a month spending is 4:1 mobile to desk.

    #Mobile1st
     
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  5. joe.pistell

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    Uncle Joe

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    In 2008 I wrote:
    "...Look out AutoTrader.com, Cars.com. The Guru is building its empire, one city at a time and if they go national, your iron grip on our marketplace will diminish."
    "Look-Out AutoTrader and Cars.com, There’s a new Guru in Town"

    10 years later... now whats coming?*
    KEYWORD INFLATION -AND- MORE CAR DEALER MARGIN COMPRESSION.
    Guru's GIGANTIC SEM spending reveals a master plan that is concerning, it looks to be outspending all of its competitors... combined. This SEM war is a zero-sum game, it brings NO new business into the industry, its simply a fight over Google's traffic. AND, as CarGurus takes more classified traffic share, the dealers with the lowest prices will see more and more turns.

    As the SEM war progresses, CarGuru's CEO Langley Steinert [DR forum link] knows that more and more car dealers and classified competitors will give up on SEM and it's Mr. Steinert's task to boldly pass-along CarGuru's SEM ad costs to dealers.


    CarGurus leader, Langley Steinert is now the big fish -and- he's got Wall Street funding (and Wall Street accountability). He sees the best car-shopper demo's cutting cable TV and living inside their small handheld screen. Reverse-engineering the CarGurus CEO work, shows us how strategically important he feels it is to dominate SEM positioning. Langley Steinert knows his SEM carpet-bombing will be seen by his smarter competitors and I'd assume he's prepared his investors for an SEM war in the hopes that this will lead to a giant shakeout (kind of like Ronald Regan outspending the Soviet Union into financial collapse ;-).


    Bottom Line for Car Dealers?
    More car dealers will reduce and/or abandon SEM -and- 'Guru's domination in the classified space will create new dealer powerhouses who have undergone the painful process to fully execute the Velocity business model.
     
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  6. joe.pistell

    joe.pistell
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    Uncle Joe

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    NEWS: CarGurus Earnings
    EPS of $0.06 beats by $0.02
    Revenue of $110.32M (+ 44.7% Y/Y) beats by $6.62M
    Transcript, CEO speaks to investors
    https://seekingalpha.com/article/41...-2018-results-earnings-call-transcript?page=2

    A few takeaways:
    • "CarGurus is now the leading U.S. automotive marketplace, as measured by comScore unique monthly visitors and minutes spent on our site."
    • "CarGurus had 60% more unique visitors to our U.S. site than our nearest major automotive marketplace competitor, according to comScore"
    • "...our audience spent more time on our site than the audience of the next three major U.S. automotive marketplaces combined."

    Be afraid, be very afraid, CarGurus is killing AT and Cars and that only leads to one thing (brash, eye-popping price increases)


    C'mon Cars and AT. Get to innovating! We need you to bring balance to our marketplace!
     
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  7. Alexander Lau

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    They have innovated and disrupted the market. All while under the noses (sleepy, lethargic) of Cars, AT, Edmunds, etc. Far better SEO; far better Paid Search.
     
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  8. joe.pistell

    joe.pistell
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    8 yrs ago on DR: "Look-Out AutoTrader and Cars.com, There’s a new Guru in Town"
    https://www.dealerrefresh.com/look-out-autotrader-and-cars-com-theres-a-new-guru-in-town/

    "...So, from my seat, CarGurus.com site architecture has no equal. Top rankings on Google are a zero sum game. Look out AutoTrader.com, Cars.com, the Guru is building its empire, one city at a time and if they go national, your iron grip on our marketplace will diminish. CarGuru’s model promotes lead gen & its “price-visibility marketing hook” helps reinforce the confidence a shopper needs to submit a lead. Cars & AT, your dealers will notice truck-loads of leads from CarGurus.com and comparatively little from you. To maintain share, you’ll need to spend more on marketing and wrestle with growing dealer unrest as the new comer’s platform is eating into your dealer’s budgets."

    The new 800 lb gorilla has taken over. Stop bashing the old gorillas, this new beast has a master plan and it's NOT dealer-centric.
     
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  9. Alexander Lau

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    Keep in mind, Steinert was co-founder of TripAdvisor (he knew how to market and beat competition, beforehand). Again, he caught the others sleeping.

    ----------------

    Langley Steinert founded CarGurus in 2006 with a vision for helping automotive shoppers better navigate their car search. Since then, the company has grown to become a leading global automotive marketplace, helping millions of shoppers find great car deals and connect with top-rated dealers. Prior to founding CarGurus, Steinert was co-founder and Chairman of TripAdvisor, Inc. an online travel marketplace. He also held management roles at Viaweb (sold to Yahoo! Inc.), Papyrus, and Lotus Development Corp. Steinert holds an MBA from the Tuck School at Dartmouth College and a BA from Georgetown University.
     
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    #8 Alexander Lau, Aug 9, 2018
    Last edited: Aug 9, 2018
  10. joe.pistell

    joe.pistell
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    Uncle Joe

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    "Keep in mind?" Ahh you young ones :baby: you invite a one-upper from the old dude :unclejoe:
    From that post 8 yrs ago "Look-Out AutoTrader and Cars.com, There’s a new Guru in Town" I wrote:

    "...But this lil’ start-up looked different... I looked into it’s About-Us Page where I found an eye-popping list of 21st century Internet Kingdom builders including the founders of eBay Motors and TripAdvisor! Woa! To say I was impressed was an understatement. From the Board of Directors on down, its pedigree drips with MBA’s and Computer Science engineers from Harvard, MIT, and on."
    https://www.dealerrefresh.com/look-out-autotrader-and-cars-com-theres-a-new-guru-in-town/

    Shortly after, Langley Steinert came to the forum, signed up and posted a reply to my dislike of their dealer UX:
    "Joe,
    My name is Langley Steinert. I'm the ceo/founder of CarGurus. I wanted to get back to you with some thoughts on your post above. You raise some interesting points..."
    https://forum.dealerrefresh.com/threads/used-cars-cargurus-com-vauto-and-the-travel-industry.916/page-2#post-7685

    I have used my honorary DR OneUpper credit. No more OneUppers for me for one calendar year ;-)
     
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  11. Alexander Lau

    Alexander Lau
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    That's wonderful... I'll send you some geritol and prune juice! :-)

    Definitely has a smarter than most crew under him, which gives him a competitive advantage.
     
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