Yahoo Finance How Cars.com Aims to Build a Better Automotive Marketplace
Cars.com (NYSE: CARS) completed its spinoff from Tegna last June and has been moving forward independently with the goal of a providing the leading platform for automotive e-commerce. I recently had the opportunity to interview the company's CEO, Alex Vetter, to discuss some of the business's recent moves and key opportunities on the horizon.
With automobile ad spending migrating to digital, Cars.com is operating in a growth industry – but one that also looks highly competitive. Winning in the space seems like it will hinge on having the best tech solutions to make connections between auto sellers and buyers.
Here's a look at how the company is aiming to improve the reach and functionality of its web platforms and capture growth in the online auto space.
Image source: Cars.com.
The good kind of traffic
Increasing traffic across its platforms will be central to Cars.com's ability to drive overall growth. In its full-year earnings report published March 3, the company reported that year-to-date traffic in 2018 had increased 6% compared to the prior-year period, and unique-visitor traffic was up to an even greater degree. These gains came on the heels of a 3% decline in overall traffic and a 1% uptick in unique visits across fiscal 2017, so it's worth examining what's behind the rebound in order to get a better picture of whether growth is likely to continue.
Here's Vetter on the driving factors behind the recent uptick in web traffic:
Our gains in traffic and SEO are being driven by a combination of deliberate changes we have made to our marketing strategy, combined with product improvements and innovations that are delivering a more solid user experience for consumers. Outside of our own business, we're experiencing a fundamentally strong and steady 2018 auto market for both new and used cars.
Ramping up experimentation and product launches
In order to keep pace with shifts in the online auto space, Cars.com has adopted a methodology that, according to Vetter, "encourages experimentation, testing and learning, failing fast, and testing again." The CEO said this shift has led to a more entrepreneurial environment at the company and helped it move from roughly 30 product launches a year to roughly 300 per month.
Cars.com is also making investments to improve the tech that powers its platforms. Vetter outlined his company's initiatives in the analytics and artificial-intelligence (AI) fields in the quote below:
Our Big Data and Data Science teams have each more than doubled in the past year. AI is at the core of our work across Cars.com companies to solve complex problems and build products that are more accurate and predictive in nature to improve the car shopping and selling experience. Our recently launched "Hot Car" technology, which leverages our 20 years of data and a custom machine learning algorithm, considers more than 50 factors that contribute to how quickly a car will sell. This is just one of many examples of how we are using AI and how our incredible tech talent is innovating in this area.
Expanding features through acquisitions
In February Cars.com acquired Launch Digital Marketing and Dealer Inspire -- two Chicago-based tech companies specialized in the advertising and e-commerce spaces. With the integration of Dealer Inspire, website creation and upkeep are now services that are being offered to dealers through Cars.com. So more than ever, it seems like the company is aiming to bridge the divide between first-party and third-party advertisers.
Here's Vetter's take on the recent acquisitions and how they're giving auto dealers more advanced tool sets for reaching customers and generating sales.
Dealer Inspire's and Launch Digital Marketing's technologies are squarely situated in the fastest-growing segments for dealer investment – their own brands. Their suite of products broadens our current capabilities, and when fully integrated with the Cars.com online marketplace, will offer dealers the most sophisticated and sought-after digital solutions to grow their business and improve operating efficiencies. These products will create a unique end-to-end car shopping experience for consumers, and an even smoother transition from research to transaction.
Vetter said that these added features improve the company's ability to chart the impact that its online platforms have on sales at the dealership level. This should help demonstrate that Cars.com platforms are connected to sales that they're currently not getting credit for and should help drive growth for the company's advertising business. He also indicated that adoption for these new offerings has been fast and is expected to accelerate and that the company expects to continue rolling out new features for its dealer partners that will increase the value of the Cars.com platforms.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
