Irvine-based Kelley Blue Book Co. got tired of making money for other companies.
So the automotive research Web site, which provided prices for used vehicles and directed prospective buyers to auto sellers, launched its own online classified network for autos last week.
It’s a twist for the company that until recently had made money through a lead-generation fee by driving about 13 million monthly visitors to its site onto online classified leaders Atlanta-based AutoTrader.com LLC and Cars.com, a unit of Chicago-based Classified Ventures LLC, a venture of several newspaper companies including Tribune Co., Gannett Co. and others.
“We were sending 13 million to 15 million people a month away from Kelley Blue Book and saw the opportunity to maintain those visitors and provide them with an additional service,” said Robyn Eckard, director of media relations at Kelley Blue Book.
The company is betting on its reputation to grab market share as online auto buying grows. A recent online automotive shopping study found that 75% of vehicle buyers used the Internet during their shopping process. More than six in 10 used-auto buyers bought a vehicle that they found online, according to the survey.
Kelley Blue Book’s online classified network—called The Trusted Marketplace—allows shoppers to do their vehicle research, conduct new- and used-vehicle searches and find their next auto on the same site.
The company in the past had provided consumers with vehicle information and then routed them to its auto sales partners.
“We provided people an opportunity to come to our Web site, figure out what their trade is worth and figure out what new car to buy,” Eckard said. “And then we sent them off to finish the purchase cycle with our partners at Cars.com and AutoTrader.com.”
The company’s network will use a different method of organizing used autos and search results than its rivals.
Performance Model
Kelley Blue Book is using a pay-for-performance model, where sellers—including dealers and wholesalers—pay nothing upfront, but get rewarded for quality of their listing and competitive pricing.
Companies like Cars.com and AutoTrader.com normally use a traditional pay-for-placement model where dealers who pay more get their autos listed first.
The cost to market a used vehicle on average is about $300 to $500, depending on the dealership, Eckard said.
With other inventory sites, dealers are paying high monthly fees, whether they get two leads or 100 leads.
“Our model is pay-for-performance, which in these tough times allows for dealers to keep their costs down for marketing,” Eckard said.
The program also optimized listings based on price, thoroughness of content, authentic photos versus stock photos and distance from prospective buyer.
Listings with more information, photos and sellers’ notes sell their autos the fastest, Eckard said.
“It’s a combination of the dealer’s desire for you to see that inventory, but mostly we’re going to provide you the best match for what you’re looking for,” Eckard said.
The company has also signed deals with Germany’s Audi AG, Irvine-based Kia Motors America Inc., part of South Korea’s Hyundai Motor Co., and Lexus, part of Japan’s Toyota Motor Corp., to feature their dealers’ certified used vehicles at the site.
The site launched last week with about 1 million used vehicles.
Cars.com and AutoTrader.com on average have around 1.3 million to 1.5 million vehicles listed on a monthly basis.
Kelley Blue Book is expected to have about 1,300 franchisee dealers for both used and new autos at launch.
The company also is working with CarsDirect.com and AutoUSA.com.
Kelley Blue Book partnered with Silicon Val-ley’s Vast.com Inc. to create a search platform for the online classified section of their Web site.
“Vast provides the back-end technology for the site,” Eckard said. “It is a unique technology that allows us to be different from the competition.”
Kelley Blue Book has a long history with used autos.
The Blue Book started in 1918 as a newsletter put out by used-auto dealer Les Kelley about prices he was willing to pay for vehicles. It was named the “Blue Book of Motor Car Values” in 1926 and in the late 1950s became a bimonthly subscription trade publication called Blue Book, listing used auto prices according to their makes, models and conditions.
New-auto dealers relied on it for accurate values for the used autos they were taking in as trade-ins.
In 1995, the publication went completely online and in 2002 began offering new-auto selling prices.
Kelley Blue Book anticipates that within the next six months the company will expand dealerships to include consumer listings.
“The plan is to open this up to the consumer with for-sale-by-owner by midyear next year,” Eckard said.
The online classified marketplace has expanded in recent years with companies such as San Francisco-based Craigslist Inc. and others also offering online ads for consumers and dealers.
“I think there is room for all of us in the marketplace with today’s generation, with consumers who shop online expected to reach around 90% in the coming years,” Eckard said.
