Part I: Inside the quarterly results & overarching trends at online auto marketplaces
This piece, the full version of which appears in the upcoming Dec. 15 print edition of Auto Remarketing, delves into the recent quarterly results and developing trends at publicly traded online auto marketplaces CarGurus, Cars.com and TrueCar.
Each of these companies released their third-quarter results in November and held accompanying earnings calls.
Here are some of the top-of-mind trends at each company, beginning with CarGurus as Part I.
Goal to deliver better experience driving CarGurus
CarGurus senior management speaking during the company’s third-quarter presentation to investors pledged continued priority on improving the customer experience on its car-lead platform over short-term revenue opportunities.
“For instance, we may forego revenue in our OEM ad business if instead, we can deliver a better consumer experience, more quality consumer leads and connections, walk-in traffic, stronger dealer ROI and incremental recurring subscription revenue down the road,” said Langley Steinert, CarGurus founder and chief executive officer.
“We always have focused on traffic acquisition efforts on down-funnel consumers and, in turn, we provide users with a robust platform to conduct their car shopping process, premised on three tenets: more inventory, more information and transparency, sorted in a more consumer-oriented way where our U.S. audience can choose from an average of over 5.5 million listings from our more than 40,000 dealers — an experience that they cannot find from any of our major competitors, which we believe obviate the need to use other car shopping sites,” Steinert told investors.
He said the company grew its U.S. audience by generating three times the visitor “visits” as it nearest competitor — and increased leads to U.S. dealers by 13% in third quarter, compared to year-over-year.
“This is providing strong value to our dealers and aiding growth in our core listings business, and our brand investments are driving more traffic from direct and our own channels, with year-to-year leads from these channels having grown by 20%,” Steinert said.
The company’s “My Car, My Deal” campaign, which launched in the quarter highlights CarGurus’ unique consumer benefits,” Steinert said in a press release reporting third-quarter results.
The company also added Westlake Financial Services as a second lending partner to enable CarGurus users to apply for and get pre-approval for credit online.
The third-quarter news release reported the following performance results:
- Total revenue of $150.5 million, an increase of 26% compared to $119.1 million in the third quarter of 2018.
- Marketplace subscription revenue of $135.5 million, an increase of 28% compared to $105.9 million in the third quarter of 2018.
- Advertising and other revenue of $14.9 million, an increase of 13% compared to $13.2 million in the third quarter of 2018.
- As of September 30, 2019, CarGurus had cash, cash equivalents and short-term investments of $164.3 million and no debt.
“We have substantial opportunity to continue increasing our total audience and growing our brand,” Steinert said. “While we have the largest audience already, we also have a large opportunity to gain unique visitors share since we have roughly 40% share of total de-duplicated visitors to all major U.S. auto listing sites as measured by ComScore (media measurement service).
He said commitments to brand initiatives have improved leads by 20% year over year, driving an “even more robust traffic mix and enabling greater efficiency in its traffic acquisition efforts. In fact, our year-to-date costs to acquire a U.S. lead is lower in 2019 than it was through the first three quarters of 2018,” Steinert told investors.”
In October, CarGurus introduced dealers to its new RPM multi-channel digital marketing suite. This tool incorporates a social product for Facebook campaigns. It also allows dealers to target CarGurus users who have viewed vehicles like those the dealer inventories, “leveraging the power and industry-leading scale of our deep data sets and unlocking more engagement with our unique audience,” Steinert said.
Auto Remarketing correspondent Arlena Sawyers reported on these initiatives when attending CarGurus’ inaugural Navigate conference in October. There, CarGurus president and chief operating officer Sam Zales said the company’s “real-time performance marketing” products are to be debuted in January.
“Our company is focused on more than a billion keywords in our algorithmic traffic acquisition efforts — we’re providing that same toolset to our dealers to allow them to find a consumer in their local market to come directly to their website using paid search,” Zales told 400 dealers and industry pundits from the U.S. and Canada attending the Navigate event.
Elaborating with investors about the RPM product, Steinert said it will help dealers improve their spend allocation to drive clicks, impressions, SRP (search results page) and VDP (vehicles detail page), leads and unit costs, all embedded in the CarGurus’ dealer dashboard.
The company said it finished its third quarter having 28,600 paying dealers, up 6% year-over-year, and an increase of 261 dealers during the quarter. In second quarter of 2019, the company reported 370 new dealer additions.