Jon Christensen of Palo Alto, Calif., likes the idea of an Internet showdown.
When the dust settles, Christensen said, his small and profitable company will be left standing. 'There is value to having everyone think we are all going out of business,' said Christensen, CEO of InvoiceDealers.com. 'It removes the competitive landscape.'
InvoiceDealers is one of the few national online car-buying services that claim to be making money. You don't hear much about these companies because they have never tried to lure the millions in venture capital it takes to purchase Super Bowl ads and sign deals with America Online.
Christensen believes in slow, steady growth. And he has company. Buying services Stoneage.com of Troy, Mich., and Vehix.com of Salt Lake City say they also are in the black. Their business strategies are much different than the shooting stars that have sought to make a fast fortune through a public offering.
InvoiceDealers.com, which has annual revenues of $4 million, and Stoneage.com, which says it has annual revenues of $18 million, have generated traffic by forming alliances with other automotive Web sites.
'We are profitable for a couple of reasons,' said Bud LaCombe, COO of Stoneage.com. 'Our customer acquisition cost (or cost per lead) is very low relative to the ones who did large portal deals and spent lots of money building a brand.'
Vehix.com, which says it has annual revenues of $2.8 million, lined up a powerful equity partner in AT&T Media Services, of Salt Lake City. AT&T has a 50 percent stake in Vehix.com and has committed $70 million worth in advertising on its cable TV network to promote the buying service this year alone.
Unlike other buying services, dealers do not pay a fee per lead or a monthly subscription to receive referrals from Vehix.com. Dealers are offered Vehix.com referrals automatically when they buy commercial time on AT&T cable TV stations. Vehix.com is a premium given to advertisers. AT&T pays Vehix.com an undisclosed fee every time a dealer signs a contract for cable advertising.
The buying service boasts that its name is well known in AT&T's cable markets and AT&T's network is growing.
Said John Garff, CEO of Vehix.com: 'Many of our competitors have to write big checks to brand themselves. We don't.'