Dealership Marketing

Kelley Blue Book’s Big Move?

KBB wants to change how auto leads are bought and sold

Guest Posting by Cliff Banks

Kelley Blue Book is launching a bold initiative, hoping to revolutionize the way online leads are bought and sold.

In the process, it’s turning its back on a rather successful revenue generator while speeding into a business dominated by and

In July, Kelley announced it was launching an online classified listings service for new and used vehicles and will charge dealers on a per lead basis. It’s calling the venture KBB’s Trusted Marketplace.

For years, and have employed a subscription-type model, in which dealers pay a flat rate each month to list their inventory on the two automotive sites. The price is determined by the level of service a dealer chooses.

At times, dealers have grumbled about the seemingly high prices AutoTrader charges, and say the cost does not always match the level of performance.

Justin Yaros, Kelley’s executive vice president-product design and development, who helped develop the new strategy says the initiative will provide dealers greater control over their lead generating costs, while improving the performance of leads by better matching customers with the right vehicles.

Dealers will pay Kelley $20 for every lead their inventory listed on generates.

Although, other firms such as, Dealix, AutoUSA, AOL, and Autobytel Inc. started implementing pay-per-lead strategies with their dealers within the last year, the model has been slow to take off. Kelley’s brand cache and consumer traffic should lend weight to the concept, executives say.

“ adds legitimacy to the pay-per-lead model,” says Anna Zornosa, Dealix’s executive vice president and general manager, a proponent of the concept.

AutoTrader’s CEO and President Chip Perry declined to comment for this story, but has dismissed the pay-per-lead model at industry conferences and in previous conversations with Ward’s.

He can afford to. AutoTrader is the clear leader in the space, generating more than $1 billion a year in revenue. Why kill the golden goose?

“KBB is a strong brand when it comes to used-car valuations,” says Mitch Golub,’s president. “However, pay-per-lead classified listings are a completely different business. They clearly have their work cut out, especially if they pursue a model that aggregates listings from a wide array of providers. That model has yet to work.”

Although the concept of pay-per-performance is attractive, whether Kelley can move the market sufficiently to create a groundswell among dealers to make a switch to its model, remains to be seen.

Kelley has several challenges. One, it’s new to the listings game — a game and AutoTrader play very well.

Another challenge for Kelley is inventory. It gets the consumer traffic, but has depended on either or in the past for inventory listings. or AutoTrader (depending on which firm Kelley was partnering with at the time) paid Kelley millions of dollars to list their inventory on its site., because of its high consumer traffic, would drive more leads back to AutoTrader’s or’s dealers. Or at least, that was how the concept was to work.

Privately, executives from both firms claim the number of leads received didn’t warrant the high listing prices Kelley commanded.

Kelley executives say listing inventory for other firms is an advertising play. While the money is good, the companies listing the inventory controlled the consumer experience, something Kelley thinks it can improve significantly.

Whatever the reason, AutoTrader and Kelley ended their partnership in July, six months before the contract was scheduled to end.

Kelley then turned to Vast Inc., a technology firm that has been championing the pay-per-performance model the last couple of years.

Vast’s goal is to create a network of automotive online sites that together will create enough pressure on to force them into the pay-per-performance model.

“The subscription players underestimate the innovation that comes with the pay-per-lead model and what that does to the quality of the lead,” Zornosa says.

Vast aggregates inventory from numerous industry partners, such as Kelley, Dealix, Autobytel, AutoUSA, AOL, Dealer Specialties and

Vast then optimizes the inventory and pushes it back out to its partner sites. The value is that each firm’s inventory shows up on each of Vast’s partner sites, extending their reach and visibility.

Kelley’s move is big because the enterprise brings in the most consumer traffic as one of the most visited automotive sites online.

Vast says its value goes beyond just extending the reach of a firm’s inventory listings. It’s created search algorithms that will match consumers with the right vehicle, which in theory, should lead to more valuable leads.

Each of Vast’s partners can customize how they want the search algorithms to work, letting them control the consumer experience on their site.

Like Google, Vast combines its search technology with a bid process to determine where each vehicle appears in the listings. This lets a third party company provide better leads to its dealers by bidding more to push the inventory closer to the top of the listings.

The dealer pays a certain amount per lead. This can include phone leads and online leads. Whom and what they pay depends on which site lead came from. Firms such as Dealix or AutoUSA may charge more or less that Kelley at $20 per lead.

Whichever firm pushed the lead to the dealer pays Vast a percentage of what the lead costs the dealer. Everybody potentially wins: the consumer, the dealer, the third-party companies and Vast.

The end result, says Vast’s Ben Cohen, is that, unlike the subscription model, dealers aren’t paying for leads they don’t necessarily want.

“Dealers have an alternative now,” Cohen says. “But they have to vote with their wallets.”

About the Aurthor: Cliff Blanks is the Editorial Director at Ward’s Dealer Business. Cliff also writes for his own blog on

Pay per performance is the way to go. If they don't produce any leads, you don't pay. Everything should be this way.
I strongly agree with the concept, the question is whether it is a viable business model for KBB in my mind. Will be watching this closely...
I wish KBB luck in this venture. They have been hot and heavy on my inbox trying to get us to sign-up. It is too early for me to pull any triggers, but I definitely prefer a pay-per-lead approach to subscription-based third-party advertising/buying.
Hey Guys!

We are confident this model will give Dealers two things. Individually tailored ROI and Transparency.

Allow us to work through the expected anomalies with our technology provider-Vast Automotive. In the meantime feel free to email us with your questions.
  • H
  • September 15, 2009
So let me get this straight...KBB is convinced that pay per lead is the way to go? You would think that they would know the closing percentages on emails...5% nationally! Not to mention that email is the least preferred method of contact according to consumers. All I can say is Good Luck with that! What and ATC realized was that KBB sent very few customers to the vehicle search page. KBB is a great site. However, consumers still view them as a research site at the top of the funnel. If they really want transparency...maybe they should try the PAY PER SALE model!
Thanks for your comment "HA". Maybe it would be in your best interest to identify yourself? Maybe not?

Aren't you looking at it from the wrong perspective? As a consumer, selection is key. As a dealer, visibility is key. You yourself just admitted Kbb is a great site.
Kbb is bringing lots of eyeballs to dealer's digital storefronts.

In terms of the purchase funnel, Kbb has always controlled selection but not acquisition. All Kbb is vying to do, is take some control of the tail end of that funnel.
Nothing more, nothing less.

And one more comment about Leads. How is a lead from a dealer's inventory decoded by a vin # only closing at 5%?
I do believe KBB "could" help add legitimacy to the pay-per-lead model. I also believe both a pay-per-lead and a subscription model can co-exist as it has already.

I am a fan of the pay-per-lead model, the harder you work to merchandise your inventory, the more qualified leads you return (especially when coupled with the vast algorithm search results).

I do agree that KBB does have several challenges. One is no doubt getting consumers to their inventory listings, but if done correctly and if they are able to figure out how to leverage their "information shopper" (incorporating some persuasive architecture), I believe they could drive some incremental traffic to their inventory listings.

“KBB is a strong brand when it comes to used-car valuations,” says Mitch Golub,'s president. “However, pay-per-lead classified listings are a completely different business. They clearly have their work cut out, especially if they pursue a model that aggregates listings from a wide array of providers. That model has yet to work.” - This model has worked (ask AOL), it depends on how you are measuring the success. Is KBB trying to be the next or, I don't know.

I'm sure we will revisit this post a year or two from now and have an answer.
  • R
  • September 16, 2009
The one thing I am certain of is that this will be a very active thread. I'm going to take the over on whatever number you throw out there.

The real heart of this issue is the old "lead source vs. advertising" argument that Cars and Autotrader reps and dealers have been batting around for years. I've read great position statements on DR in other threads and I expect to see them revisited here. Are the major classified sites an advertising partner with 10 times the targeted reach of the local broadcast networks or are they simply a lead provider to be measured by phone calls and emails? It looks like the industry is about to clearly define the terms and the definition is going to be right on the invoice.

I think it'll work like this, if inventory, dealership name and contact information are freely given to consumers you are by definition an "advertiser." ROI will be determined the same way that it is with other comparable mass media outlets like radio and tv. The old intangibles like page views, map prints, site transfers become the new readership, circulation and reach that define value.

Conversely, if inventory is displayed but contact information is restricted to only those means that are directly trackable as to associate a charge you are by definition a "lead provider." ROI is determined by closing percentage as a barometer of lead quality.

Both models are viable and will have a place in dealer's ad spend because consumer shopping behavior supports both models.

This isn't a "vote with your wallet" scenario, the successful dealerships and savvy marketers will quickly realize the need for both in the mix and the massive differences in calculating ROI for each model.
This could be a really strong move for KBB. I think it might start to show big results or at least help track results. We don't know until we try.
  • Z
  • September 21, 2009
I think it is not about will KBB become next AutoTrader or anything like that. Who ever wants to do this business has to maintain big sales team (like AutoTrader, or any other in this business) but KBB, from what I see wants to leave those guys do their business but just wants to leverage own business. Who wants to buy leads can get them from KBB... if you want them join to KBB Trusted Marketplace even AutoTrader could start buying leads from KBB in a minutes...

Wide array of inventory providers is great thing... the same car can be listed at AutoTrader, CarsCom, CarsDirect or directly from dealership or via God knows which service but the one who outbid will show up and get lead. AutoTrader has to send decent amount of leads to their dealers to keep them happy and keep their accounts so when they need they can spend some dollars at KBB and send their unsatisfied dealers leads and keep them happy... buying traffic in bulk like earlier was most profitable option for autotrader and now time has changed they have to compete with everybody on the individual car level to get leads and support their business.
  • C
  • September 27, 2009
Having worked at Autobytel when they launched the PPL model with VAST it was never going to work because they never generated enough organic traffic to

KBB on the other hand has the eyeballs. VAST's technology is a perfect fit for them. Will they overrun 'Trader and Cars? No, but they'll make a big dent.
Everyone wants to be the next AutoTrader. As a vendor who sends data to virtually every 3rd party there is, we get contacted regularly from start ups that want to be the next AutoTrader.

Websites like Craigslist, Vast, Oodle, Backpage, EveryCarListed, EasyAutoSales and others are all free. Websites with free listings, supported by advertisements, seem to be the future, or at least viable alternatives anyways.

I've heard rumors in the past that even eBay is trying to go to a model of not charging for listings and only charging for leads or sales.