Watching the Web develop has become an exercise in following and making up new words. One whose origin goes beyond the Web 2.0 days, but whose use is growing amongst the analyst-corps, is “verticalization.”
For consumers, there is clear appeal in vertical search. Compared to a Google search, the refined corpus of data in vertically oriented sites provides higher search relevance. For advertisers, this means qualified traffic, higher CTRs, and more intent to transact. All basic stuff.
Autos and real estate have seen the majority of online vertical product development. High-ticket/high-consideration items in these categories require research tools that have become the forte of vertical sites like Zillow and Autotrader.com.
Advertisers in these verticals have meanwhile embraced online marketing, content production, and multimedia capabilities more than any other vertical. (You don’t see many video buying guides for JCrew Chinos.) Indeed, the high-margin items and traditional pressure for leads in these verticals (see David Mamet’s “Glenn Garry Glennross”) have caused ad spending to be inelastic and early adoption to be a matter of survival.
Competition among third-party sites, combined with an awareness that a majority of traffic comes from search engines, has caused these verticals to deepen content and feature sets, benefiting SEO and consumer appeal.
Content Integration and Aggregation: The New Paradigm
Beefing up content and features is also in line with another online trend – universal access to all forms of content online.
In the offline world, content is siloed into different buckets (television, newspapers, yellow pages, radio, etc.). But consumer expectations to receive everything in one place are evolving in the online world.
Google’s universal search initiative is a response to this, as are features that have become characteristic of Web 2.0 such as personalization, multi-media, and social elements.
So what does all of this mean for autos? The opportunity exists to build an all-in-one online hub for all things auto. This includes social networking, classifieds, news, directory listings, and after-market products – a personalized launch pad for everything that has to do with me and my car.
This can also include DMV and insurance policy information, service history, interaction with like-model owners, ability to save articles, shop for 22-inch rims, and schedule my next oil change.
The point is this can create stickiness for a car owner throughout the life of a car, not just every three or four years during the buying cycle. This maintains a continuity of services to keep consumers engaged and, importantly, treats vertical search not as just a way to manage the process of buying a car, but also as the process of owning a car.
Vehix Plots the Course
Autobytel’s MyRide is one product that has already launched with many of these features and a decidedly younger target market, social features, and a greater focus on used autos.
Vehix, meanwhile, has many of these features on its product roadmap and a view toward being ubiquitous across all media where, the company asserts, the lines are blurring.
“Younger generations see no difference between video clips viewed online and video on television,” said Vehix CEO Derek Mattsson at the company’s automotive sales summit earlier this month.
Mattsson also unveiled a new interactive television search tool that will be served in partnership with Vehix’s cable television affiliates. The platform will serve small inline ads during live television ads, which will allow users to then “telescope” into a Vehix module, using the remote. There, they can customize cars, search local dealer inventory, and submit leads.
This brings video advertising – with traditional strengths in influence, entertainment, and ability to elicit emotional response – to more of an on-demand, pull-based environment. This “lean forward” mode of online search has better direct response capability, as supported by Kelsey Group data (explained here).
A small sample of auto dealers at the Vehix summit were similarly bullish on this concept.
“I recently picked up a Blue-Ray disc player, which lets you do really cool things such as drill down to information on actors and things,” said Reuben Muinos, business alliance manager of L.A.-based Gaipin Motors. “This same thing applies to autos: If you can enable interactivity with content that can drive you back to a Web site, that will be the next wow factor.”
Vehix also demoed a new dealer inventory product, which will be populated by the efforts of its cable partners’ sales channels. Up until now, cable partners have utilized Vehix’s online distribution as a free feature, or an enticement, for auto dealers who buy a certain amount of cable spot inventory.
But the game has changed and, like many yellow pages publishers, some MSOs are beginning to see the need to treat online distribution as more of a primary asset. Vehix – with a successful online brand and the cable sales channel in its back pocket – is now positioned nicely.
The dealer inventory product itself is built around a media-rich feature set that is presented on Vehix and also portable to dealers’ own Web sites. It has a few different price points that correspond to different levels of interactivity, featured listings, and multi-media capability for dealer inventory. An admin module is also included for dealers to manage online campaigns.
“Dealers are still figuring all of this out, and they’re going to continue to get better at it,” said Vehix CEO Derek Mattsson. Our job is to reduce the amount of friction and make it easier for them to self provision.”
Online demand is indeed rising if the cable sales reps I talked to are any indication – not to mention auto dealers themselves, who are largely pulling ad dollars out of newspapers and into online marketing.
“Right now, 5 to 15 percent of our ad budget is online and we see that growing to 25 to 40 percent over the next year,” said Galpin Motors’ Muinos. “Dealer inventory is the number one most requested item on our Web site, while used car sales are up 10 percent over last year, and everyone in our organization attributes that to online advertising.”
Playing in the SEM Sandbox
To tie all of these initiatives together and to make them more visible to search engine users, Vehix also claims it will play more aggressively in search engine marketing. This includes many of its online video efforts, such as product buying guides and dealer inventory.
“We want to continue to have the power of television, but have a search strategy behind it,” said Mattsson.
The company has historically relied on a lot of direct navigation traffic, given the strength of its brand. But in the last year, it has increased its SEM budget from $20,000 to $100,000, according to VP of business development Chris Satovick, due to the attractive returns seen so far.
“We’ve never really played in search [marketing”,” said Mattsson. “Now we’re spending at the $100,000 level. Depending on the ROI from that, going forward it could be a blank check.”
Combined with SEO strategies, vertical search sites that realize such SEM returns should be able to raise their search engine visibility, consumer appeal, and traffic levels – and, as a result, advertiser demand. And around and around we go.
The Original Search Marketing Event is Back!
SES Denver (Oct 16) offers an intense day of learning all the critical aspects of search engine optimization (SEO) and paid search advertising (PPC). The mission of SES remains the same as it did from the start - to help you master being found on search engines. Early Bird rates available through Sept 12. Register today!