Car Mart Gets Its
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A ten-year strategy honed for South Africa’s distinct environment has seen AutoTrader’s transition from a traditional print business into a digital giant and runaway market leader. “We couldn’t pretend that we were a First World country. We had to follow our own path and find a different way to do this,” says the man spearheading this publishing revolution CEO, George Mienie. 2 / www.enterprise-africa.net
GEORGE MIENIE - AUTOTRADER SA CEO www.enterprise-africa.net / 3
INDUSTRY FOCUS: AUTOMOTIVE
With shortages in South Africa’s used car market driving new sales growth, vehicle classifieds listing and digital marketing leader AutoTrader is seen increasingly as a key navigator for the discriminating buyer. Offering a safe and secure interaction between buyers and sellers, AutoTrader has been shaping the national auto scene for the past 26 years, assisting the car buyer in every purchase step, with research and comparison tools, features and expert video reviews as well as great car finance and insurance deals. Until 2017 it appeared in traditional print format, but in March that year a phased transformation strategy saw the last copy rolling off the press as the
Randburg-headquartered publisher went 100% on-line. The decision to fold print publication was taken after nearly 10 years of research and against a backdrop of declining print revenue and fewer readers. “Over the years we saw the shift in our audience from print to online,” says the man heading the format revolution, AutoTrader CO, George Mienie. With 45,000 vehicles now on its website, on-line success has trumped any lingering print nostalgia. CALL OF THE INTERNET The call of print had been powerful. Around 2007-2008, the off-line AutoTrader had been running to 1,000 pages. But by 2012, when the UK parent sold the South African title in a private equity/
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// WE HAD TO MAKE A DECISION; DID WE FOLLOW THEIR PATH AND BUILD THIS MODEL INTO THE FUTURE STRATEGY OF THE BUSINESS? // management buy-out in which the current CEO was a participant, internet publication was making fast inroads into First World economies. For astute insiders like Mienie, the writing was showing up on the South African glass wall. Consultants brought in to advise on future strategy reported that South Africa was not ready for internet publishing, and AutoTrader’s best model would be a combination of paid-for and free titles. Only at some future point should it venture into off-line. Mienie was unimpressed. “I ignored that advice. I felt that if we were going to sit with the print magazine for too long, we were going to be disrupted by some online player who would close our doors, which is what had happened to AutoTrader in Australia. “In the UK and the US, the internet took hold very quickly, and newspapers and magazines followed quite rapidly. We had to make a decision; did we follow their path and build this model into the future strategy of the business? “We said No; we are a different country, with different people and a different market. Our demographics and population patterns are very fragmented, and there are education issues. Other issues were broadband, smart phones, and an infrastructure which wasn’t as developed as in the UK and the US.
WAY FOR SA “We couldn’t pretend that we were a First World country. We had to follow our own path and find a different way to do this. And we did, thank goodness.” The chosen path was a graduated transition that would see internet publishing systematically expanded as print was phased out. But some imponderables remained. “We were sitting with a successful print business where the pricing policy was dependent on volume, whereas the internet had a subscription model where everybody paid the same. Maybe this transition from magazine to digital would take a little bit longer than we expected, but we didn’t know how long “We knew what the problems were and what the end game was. But we didn’t know when it was going to be. We needed to find a way that measured online adoption of car search and came up with one solution which I think was the saving grace of this business.” This was Call Tracker, a technology which among other attributes, measures the number of calls to a dealer. “It was so simple, but at the time it wasn’t so easy to think about. We spent five million Rand a year in costs running the system and doing our own research. Once every three months we would take a sample set of
// WE NEEDED TO FIND A WAY THAT MEASURED ONLINE ADOPTION OF CAR SEARCH AND CAME UP WITH ONE SOLUTION WHICH I THINK WAS THE SAVING GRACE OF THIS BUSINESS //
customers, which among other things established the rate of adoption of the internet in our auto market. “With 2% of consumers calling from the internet adverts in 2008 and around 90% from the magazine, for me this was the Silver Bullet that allowed us to transition our revenue. We allowed the car buying consumer to dictate the pace of the transition rather than us
“In 2015, 70% of response was from internet and 10% from the magazine. Come March 2016 when we still had a 150-page magazine, we decided come hell or high water we were going to close it by March 2017, even if it was running to 100 pages. And shut it we did. I think we had 80 pages left, selling 2000 magazines per issue, and clearly becoming unprofitable.
INDUSTRY FOCUS: AUTOMOTIVE
GROWING REVENUE “Most of the other markets that succeeded in transition did it by setting up a separate business. We did it by continuing to run the same business but allowing the consumer to make the transition and moving the money across. As a result, we have consistently grown both our revenue and our profits.” Investing in leading research and technology – such as the deployment of AutoFuzion’s live market view and real-time information - AutoTrader is the first stop for buyers and sellers
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// WE HAVE ENJOYED THE LEADING POSITION IN SOUTH AFRICA PRETTY WELL FROM THE BEGINNING AND WE ARE NOT GOING TO GIVE THIS UP VERY EASILY // searching for any type of vehicles. Growing exponentially in online users as the market shifts and grows, it is now seven times bigger online than at its offline peak. “Transparency and credibility are core to AutoTrader’s ethos,” says
Mienie, a young digital technology visionary, entrepreneur and former accountant – “I have never acted like one, not that they are bad.” In an ‘an extremely competitive environment’ AutoTrader leads the market by engagement, conversion
into customers, and revenue taken. “We are not necessarily car lovers, but rather we love bringing buyers and sellers of cars together. This is why we have almost 70% market share in South African car sellers. “We have enjoyed the leading position in South Africa pretty well from the beginning and we are not going to give this up very easily. We are not sitting on our laurels and are very cognisant of the likes of vertical and horizontal players such as Facebook and the Facebook marketplace.
“I don’t think everybody in South Africa has really got their eye on this, but if they’re going to do what I think they’re going to do, it’s not going to be a threat.” With auto sales key indices of consumer confidence, Mienie says the national economy and political environment have made South Africans reluctant to spend. “We have seen over the last two or three years that people are holding onto their cars for a lot longer. Dealers also need to get their hands on good clean stock for resale and this has a
knock-on effect for price inflation. “But on the flip side, our lack of transport infrastructure means South Africans have to drive cars. Without the public transport systems that the UK or US has, they don’t have any choice. So the prospects for the South African auto industry are bright, and because of this bright for us too.” RAMAPHOSA AT THE REINS Mienie is cautiously encouraged by the recent election of Cyril Ramaphosa as ANC leader and his subsequent promotion. “It’s become a little bit brighter now. Early days of course, but hopefully he is going to take the reins into the future in the right way and not in a corrupt way. “South Africa is one of the more advanced countries in Africa, the Gateway to the continent as it has often been called. Some people have a negative opinion of our future; I have a positive opinion. My cousins have left the country to work in England, Australia, and Dubai, but I refused to leave because I believe South Africa has a bright future. Too many people have too much to lose to let it to go down the tubes.” Meantime the opportunities of the age leave this dynamic creative thinker and publishing revolutionary exhilarated. “It’s like being in a time machine and the world is changing so fast. England and the US are travelling at one million miles an hour in terms of the pace of change in the technology world. “South Africa is travelling at that same pace but trying to catch up with England and America, and so therefore we are travelling faster. To say these are exciting times is an understatement.”
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EXCLUSIVE INTERVIEW WITH ABB SA CEO LEON VILJOEN
Technology Focus Powers ABB’s African Growth ALSO IN THIS ISSUE:
Jawbone / AutoTrader / Dis-Chem / Attacq
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MAR CH 2018