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 TrustedDealer.co.uk 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.