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News International to Launch Online Classified Site for Luxury Cars

News Inter­na­tion­al is seek­ing to bol­ster its prof­its with falling print sales by enter­ing the lucra­tive online clas­si­fied car ads sec­tor, as was revealed ear­li­er this year.

The pub­lish­er of The Sun, The Times and The Sun­day Times aims to cre­ate a car clas­si­fied web­site (cur­rent­ly unnamed) that focuss­es on the high end of the auto­mo­tive spec­trum, mix­ing togeth­er motor­ing con­tent and edi­to­r­i­al with clas­si­fied car adver­tis­ing to gen­er­ate rev­enue. We all know of Auto­Trad­er, a long-run­ning print and dig­i­tal motor clas­si­fied com­pa­ny who have enjoyed mar­ket dom­i­nance and heady prof­its, adver­tis­ing hun­dreds of thou­sands of cars and earn­ing prof­its of over £100m in 2010. This move will be a direct chal­lenge on a mar­ket cur­rent­ly dom­i­nat­ed by Auto­Trad­er, and is no doubt a sig­ni­fi­er of increas­ing com­pe­ti­tion with­in the used motor market.

The Rise of Online Classifieds

The com­pe­ti­tion is cer­tain­ly heat­ing up for the online clas­si­fieds mar­ket, and this is main­ly due to the fall of local news­pa­pers and oth­er print that fran­chised and inde­pen­dent car deal­er­ship groups for­mer­ly used to adver­tise their used cars. With this tra­di­tion­al way of get­ting used motors across to the pub­lic dis­ap­pear­ing, the inter­net has been the clear place to turn, and many new sites such as crop­ping up. But why isn’t every deal­er sim­ply going with Auto­Trad­er? Their online plat­form is cer­tain­ly the most pop­u­lar, with over a bil­lion month­ly page impres­sions and just under 400,000 motors adver­tised at any one time, but the fact that Auto­Trad­er has high adver­tis­ing costs is enough to force many deal­ers to look elsewhere.

A Recipe for Success?

Whether or not there is room with­in the used car mar­ket for new ven­tures, the fact that the online dig­i­tal rev­o­lu­tion has seen a rapid drop in expo­sure for all com­pa­nies that use print to adver­tise, and an equal­ly large drop in rev­enue for print pub­lish­ers such as News Inter­na­tion­al, is evi­dent­ly leav­ing such organ­i­sa­tions with no choice. This is why oth­er major pub­lish­ers such as Dai­ly Mail Gen­er­al Trust DMGT and Guardian Media Group have increased their stakes in online trad­ing (GMG has a 50.1% stake in the group that runs Auto­Trad­er), but will this UK media giant be able to prof­it with such a direct push into the market?

It is always risky to enter a mar­ket already dom­i­nat­ed by anoth­er enti­ty, but the real ques­tion mark comes from News International’s less than amaz­ing ven­ture his­to­ry. Take for exam­ple their half-stake pur­chase of Prop­er­tyFind­er in 2005; they spent £14.3m, expe­ri­enced heavy loss­es, and then even­tu­al­ly sold it to Zoopla for only £700 thousand.

It is hoped that their exper­tise in media con­tent deliv­ery, the ‘lux­u­ry car’ angle and cheap­er adver­tis­ing costs for the trad­ing site will carve out enough of a mar­ket to remain prof­itable, though it is clear that much will need to be done to sway those already loy­al to AutoTrader.

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