Fine-tune your message
in down market
January 21, 2002
BY MICHAEL KRAUSS
marketplaces are pretty confusing. Marketers don't know whether
to trim advertising budgets, initiate promotional pricing or change
communications strategies, or hone their marketing messages.
I spoke with
Mitch Golub, general manager of Cars.com, recently. Chicago-based
Cars.com is the online automotive information site that lists
288 different models, and Golub knows something about changing
circumstances in an industry: The auto industry moved quickly
last autumn to offer 0% financing and kept sales moving, if not
I asked Golub
about how his pitch was changing, whether he was adjusting his
marketing message and other ways that his marketing approach was
changing. And it turns out that Golub isn't changing much. He
doesn't think his marketing needs an overhaul, just a tune-up.
He's still focused on building his brand and recently retained
advertising gaint DDB to help him become the predominant online
automotive information source for consumers in every local market
Golub says, 65% of all consumers are "going online to information
sites like Cars.com before they purchase a vehicle. Next year,
that's expected to grow to 70%." And Golub wants to be the
on his way. In 146 markets -- 90 of the top 100 markets in the
United States -- Cars.com has a site cobranded with the local
affiliate newspaper. That is, Cars.com provides an online advertising
and direct marketing package that the local affiliate newspaper
resells to local auto dealerships. In return, the local newspaper
pays Cars.com a fee and promotes the Cars.com site, providing
Golub with what he estimates is $ 25 million in free promotional
advertising. It sounds pretty complex, but it works.
we're able to do is take the two biggest expenses -- marketing
and sales -- and (use) the local newspaper to leverage us,"
All in all,
Golub's approach is pretty practical, especially compared with
the cash-burning approaches of two years ago.
years ago in the online world everyone was spending money like
they were going out of business," Golub says. "Guess
what? They did go out of business. They were just throwing money
at problems isn't Golub's approach. He's pragmatic and consistent
and takes incremental steps. He speaks logically and practically
without the bombast or hyperbole of yesterday's dot-com chief
no market leader yet in the automotive online space," Golub
says. "Because of Cars.com's relationship with local market
newspapers, I'm in a great position. I'm the local online leader
in a business (the car business) . . . (that) is a local business."
speak esoterically or in concepts. He's not a business revolutionary.
Where others preached that the Internet would eliminate the middleman
and the offline world should shudder, Golub preaches prudence.
disintermediate the automobile dealer. I wed buyers and sellers,"
he says. "I get paid through the affiliate newspaper. The
dealer is on my Web site because he's bought a package through
my affiliate. As I get more traffic through the dealers, I'm going
to raise rates."
Car dealers pay between $ 1,000 to $ 2,000 per month for Cars.com's
services. In return, they get detailed feedback on the number
of leads they've received by e-mail, phone and in person in the
showroom. Cars.com also provides an ROI Calculator that reports
to the dealer the return on the Cars.com investment. "Our
average ROI is 900%," says Golub, "Our product is underpriced."
this practical steward has marketing challenges.
come to my Web site. They do their research. They pick their car.
They print out their materials. They go into the dealer. They
buy the car," he says. "There's just one problem: They
don't always tell the dealer they used Cars.com or the dealer
doesn't record the referral when they do." That means the
ROI Calculator can't count these sales.
winter, Cars.com users will be able to configure a car exactly
to their own specifications on the site. Then the user can print
out the specs in a car window sticker format on their home printer.
Take the window sticker to the dealer and it becomes a shopping
aid for the customer and informs the dealer of the source of the
lead -- that is, Cars.com.
It might work.
Golub knows a cash incentive to the customer or the dealer probably
would stimulate better reporting, and he's thinking about these
options. But it's a first, incremental, pragmatic step.
you have a solid business model and are playing for the long-term,
the best time to invest in your business is in a downturn,"
Golub says. "That's when you can most take advantage of your
a plan for coping with a declining marketplace.
Michael Krauss is a partner with Chicago-based DiamondCluster
International. He can be reached at firstname.lastname@example.org