Digital marketing vendors attract capital
For 3 companies, infusion or acquisition
Three vendors that assist auto dealers with digital marketing got cash infusions this month or were acquired.
Fresh cash for the companies is another sign of the growing importance of online auto marketing.
TrueCar Inc. received $30 million from Vulcan Capital, an investment arm of Microsoft co-founder Paul Allen. TrueCar CEO Scott Painter said the online shopping service would use the capital to finance growth and develop products.
TrueCar has rebounded in the 18 months since it was under scrutiny from regulators in several states who questioned TrueCar's advertising and pricing practices. Today TrueCar is in compliance in all states, is profitable and is expecting its 7,000 participating auto franchises to sell a record 400,000 vehicles through the site this year, Painter said.
In other moves, Contact at Once! bought the direct chat business of rival Outsell, while Search Optics, which provides Web site and digital marketing services, got an undisclosed investment from private equity firm Kayne Partners.
The terms of the Contact at Once! acquisition were not disclosed. Direct chat is when an operator offers online help and conversation to a Web site shopper.
Automakers and their dealers are increasing the amount of money they spend on digital marketing at the expense of traditional advertising media, such as newspapers. About 90 percent of vehicle shoppers today do at least some of their car shopping online.
Painter said TrueCar still may add dealers in regions that need more coverage. TrueCar is an online site that provides consumers with a guaranteed price on a specific vehicle from a participating dealer. The dealers compete for the shopper by offering vehicle prices.
The investment by a businessperson of Allen's stature validates the progress the company has made over the past 18 months, Painter said.
Late last month Bloomberg reported that TrueCar is working with Goldman Sachs Group Inc. and JPMorgan Chase & Co. on an initial public offering of stock, citing two unnamed sources. Painter declined to comment on an IPO.
By purchasing Outsell's direct chat business, Contact at Once! will add several hundred dealer clients to the 13,000 franchised and independent dealerships that contract with Contact at Once! either directly or through agreements with third-party shopping sites, said CEO John Hanger.
The Outsell unit is strong at managing chat turnkey for dealers, meaning its employees, rather than dealership staff, interact with shoppers who ask for help by clicking on a chat box on the dealership Web site, Hanger said. Contact at Once!'s strength is the ability to forward shoppers to dealers when shoppers initiate chat on third-party sites or on automaker Web sites.
Hanger said Contact at Once! has room in its two call centers to absorb Outsell's managed chat business and run the operations from there.
Search Optics said the company will use the Kayne Partners investment to develop products and find new customers.
In the past 18 months, Chrysler agreed to reimburse its dealers for a portion of the money they spent on Google and search-engine advertising if they used Search Optics or another of a handful of vendors certified by the automaker. Scion included Search Optics in a similar co-op program recently initiated for its dealers.
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