Due Diligence and Strategy for Entering a New Market
AutoTrader.com is a leading resource for car buyers and sellers that aggregates millions of new, used and certified pre-owned cars from thousands of dealers and private sellers and provides expert articles and reviews.
AutoTrader.com, which also operates the AutoTraderClassics.com auto marketing brand, is wholly owned by AutoTrader Group. AutoTrader Group owns Kelley Blue Book as well as four other companies that provide a full suite of software tools to help dealers and manufacturers manage their inventory and advertising online.
To grow advertising revenue across its digital product portfolio for dealers, AutoTrader needed to understand the potential impact of offering search engine marketing (SEM) services to its existing base of auto dealers. AutoTrader also wanted to forecast the revenue benefit of adding SEM to the client’s current product mix.
“BIA/Kelsey developed a strategic vision for AutoTrader while painting the positive and cautionary aspects of moving into this space. Besides providing supporting material for the board decision to acquire a company, BIA/Kelsey also provided actionable steps that needed to be addressed post acquisition.”
AutoTrader utilized BIA/Kelsey’s Media Ad View, a proprietary forecasting tool, to evaluate market opportunities across multiple dimensions: by market, media and business category. Leveraging Media Ad View, the company was able to forecast the five-year revenue opportunity for SEM from current and future auto dealers.
BIA/Kelsey then presented a comprehensive strategic view of the SEM market, weighing the impact of mobile and identifying key opportunities and threats to AutoTrader’s success. In addition to assessing current and future market conditions, BIA/Kelsey conducted a full review of SEM companies currently providing services in the automotive segment that could be acquisition targets. Utilizing dealer surveys and competitive intelligence, BIA/Kelsey highlighted how a potential acquiree offered a differentiated, strong vehicle for entering the SEM market.
AutoTrader decided to offer SEM to their dealers. The company made a strategic purchase of Haystak, a digital advertising solutions provider focused on the automotive segment. The acquisition further enhances the products that AutoTrader can offer dealers to advertise and merchandise their inventory and dealership services.