Why Australia was different in online auto

Around 12 months I wrote a post titled "Why Australia was different to the US, UK & Canada". 

Here's another angle to why Australia was different in the online auto classifieds space.

From an auto, jobs and real estate classifieds perspective in Australia, the old school media giants missed out online, big time. 

If the big media players did anything wrong.....it was not realizing earlier that the game was up; each of them kept throwing good money after bad thinking they could win. 

With the exception of News Limited's $2.2m acquisition for 40% of Realestate.com.au back in 2002 (which is now risen to 61% of over $8b value at time of writing), the media heavyweights in Australia being News, Fairfax and later Sensis (Telstra), especially with their $636m acquisition of the Trading Post in 2004, really missed the boat. 

I can make educated guesses about how/why News and Fairfax failed in jobs and real estate classifieds online but I'll concentrate now on the auto online vertical where my experience is much stronger. 

The way they approached it was different and they did different things wrong. 

News were too late to the party with Carsguide. Their first online auto go was Newsmotoring which didn't even leverage their Carsguide offline brand and when they launched Carsguide online in 2003 it was too late. This should have been done in 1995! Isn't hindsight beautiful.

Fairfax launched Drive online early but (in my opinion) didn't leverage offline anywhere near well enough. Maybe this was because they were trying to protect the riches of their offline asset?

To highlight my point, when carsales started it was called Carz.com.au because you couldn't register a generic name as a domain in Australia back then. 

Then one Friday the Drive newspaper lift out had a computer on the front with a car crashing out of it with the caption which read something like "carsales.com.au - the end of the used car salesman?".

So here we have Fairfax through its Drive newspaper brand brandishing an alertnative auto domain to their drive.com.au brand on the front of their lift-out and worse, no one owned the carsales.com.au domain - for long......the guys at Carsz.com.au saw the lift-out, checked the status of the domain, registered it and carsales was born.

Additionally, in both News and Fairfax's cases, they had opportunities to acquire carsales early and didn't. Again, I think they were trying to protect offline. 

Sensis did a few things wrong. The number one thing was that an online classifieds site was way out of their core competency (I would have thought that they learnt that lesson 5 years earlier in 1999 when they spent millions trying to launch an auto online classifieds site and failed). 

The second thing was that with Auto being the biggest part of Trading Post, by 2004 it was too late to win Auto online, especially with their lack of online expertise. 

But from an operational point I actually don't think they did too much wrong in terms of execution except that their thinking was protection of their print legacy rather than online first.

Could they have really done anything more than they did? Maybe but I'm not really sure what; the horse had bolted very, very quickly and before they knew it, the game was over. 

The fact is that each of them did what has been done in virtually every other country but they ran into the perfect storm that carsales created. 

As soon as carsales moved from the "pay per listing" model (which was/is used by 99% of online classified players) to the "pay per lead" model the game was up for News and Fairfax's online auto transition from offline and Sensis' new foray into online classifieds (even before they had started).

carsales made changes to its website to drive leads to dealers, at the same time the model encouraged dealers to put all their inventory online and the inventory was always refreshed because dealers didn't want to pay for leads on sold cars. 

In the same year carsales moved its private seller to pay until sold which saw a sharp increase in private sellers which in turn drove traffic and brought more buyers of dealers cars. The perfect storm.

For dealers, leads quickly became the way that online automotive websites were measured and no site could get near carsales for the number of leads a dealer would receive. 

The reality was that no matter what the competitors did at that point and moving forward, the horse had bolted, carsales had won. 

Traffic kept on growing as did leads and as a result, revenue just kept growing too. 

Don't get me wrong, it wasn't all roses for carsales and did not come easily. They were incredibly smart and worked incredibly hard, after all the business decisions they made are what made them!

If the big media players did anything wrong (apart from the acquisition thing) it was not realizing earlier that the game was up; each of them kept throwing good money after bad thinking they could win.