Net toddler CarsDirect.com rolls $20 million campaign

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Carsdirect.com will launch an aggressive off-line campaign designed to prove it means business even if the company is only 5 months old.

"We want consumers to know us as a company, an organization, an entity that is here to stay for the long-term," said VP-Marketing Lou Weiss.

The $20 million fourth-quarter advertising, from Think New Ideas, West Hollywood, Calif., breaks Nov. 1 in Los Angeles, New York and San Francisco with the tagline, "America's No. 1 way to buy cars online," and includes TV, print, outdoor and online.

TARGETED CAMPAIGN

"We chose those three markets because we are able to do a full range of business in those markets," said Mr. Weiss in explaining that Culver City, Calif.-based CarsDirect cannot sell in certain states with laws against car brokers, such as Texas. "We also picked California markets because they represent a significant amount of our business. They have a high cross-section of people who are Internet-savvy and are car buyers."

The campaign will run through yearend. Additionally, CarsDirect expects to spend $100 million to $200 million on advertising during the next three to five years.

Separately, another car-selling site, Cars.com, this week is to announce its own ad campaign, a consumer TV effort that begins next week.

GOAL: SELL 2,500 CARS A MONTH

CarsDirect was launched in May and has received $30 million in financing from Idealab Capital Partners, Goldman Sachs and others. CarsDirect, which sells more than 1,000 cars a month, aims to up that to 2,500 by the end of the year.

Unlike Autobytel.com and Autoweb.com, which refer consumers to dealers, CarsDirect lets consumers research, price, select, finance, order and arrange delivery of a new car online. CarsDirect buys cars from franchised dealers and resells them.

It's this distinct model the company wants to advertise.

"We want to maintain our leadership position," said Lev Chapelsky, director of marketing. "That's one of the reasons we are not waiting for first quarter 2000 to launch advertising."

The campaign will express that CarsDirect is a "more enjoyable way to buy cars," said Larry Kopald, chief creative officer at Think New Ideas. "We are saying we are going to hold your hand, walk you through it and there's no pressure, ever."

In online activity, however, CarsDirect has yet to make a dent: According to Media Metrix, CarsDirect's unique visitors in August numbered 215,000. In contrast, Autoweb had 731,000 unique visitors and Autobytel, 1.1 million.

VIABILITY QUESTIONED

CarsDirect's long-term viability remains questionable, said Adam Weiner, senior analyst at consultancy Gomez Advisors.

The company is subject to state laws defining who may sell cars. Texas defines companies such as CarsDirect as brokers and brokers may not sell cars, Mr. Weiner said. Additionally, to guarantee prices, CarsDirect sometimes is forced to subsidize sales. "If the dealer is not willing to sell to CarsDirect for a price CarsDirect has guaranteed to a consumer, they have to pay the difference."

CarsDirect will have a hard time selling hot cars at a discount when dealers have no problem selling them directly off their lots at the full price, he said.

"The only way to truly know how much you are saving is to comparison shop among multiple dealers."

Contributing: David Guilford.

Copyright October 1999, Crain Communications Inc.

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