Image from: TrueCar
TrueCar posted dramatic growth through the end of 2011. But late in the year news coverage went through the roof with a decidedly negative tone. It seemed like each week there was a story about TrueCar either at odds with a state’s Attorney General or with a particular manufacturer. Many were skeptical of TrueCar business practices – use local new car pricing data to determine what’s “fair” and “reasonable” to pay at a TrueCar Certified dealer and issuing price certificates to support those. While TrueCar said it was striving for a “hassle free” car buying experience and enabling prospects to pay a fair price, OEM’s such as Honda and various dealer groups publically questioned TrueCar’s value. States also jumped on the bandwagon questioning whether TrueCar’s “invoice” pricing was potentially misleading and that price certificates amounted to either below invoice pricing or worse: some saw them as being part of bait and switch tactics to upsell customers on more expensive – but in stock – vehicles. Finally, states were looking into the fees TrueCar charges dealers when a sale is transacted since many ban taking a commission for introducing a sale.
Given all the interest, Compete assessed truecar.com’s performance over the past year. This analysis leverages Compete’s proprietary and patented technology that monitors and normalizes the online behaviors of more than 2 million consumers each month.
More unique visitors. And then a crash.
In Q4 2011, truecar.com was the fastest growing 3rd party automotive site as expansion plans accelerated and consumer marketing kicked in. With heavy marketing efforts targeted at new vehicle prospects, the number of unique visitors to its site nearly quadrupled, from a little more than 500,000 in August to nearly 2 million in December.
However, while the Q4 growth was impressive, the decline in January was equally impressive. The decline coincided with all the negative publicity noted above. In January 2012 UVs declined a whopping 37%. That decline was opposite the trends seen in unique visitors to other 3rd party sites during the same time frame, most of which saw significant UV increases at the beginning of the year.
Traffic sources drying up?
Prior to the January decline, truecar.com enjoyed traffic inflow largely from search and direct type-in (DTI). 3rd party auto sites and, to a much lesser extent, OEM sites also drove site traffic. The high contributions from search and DTI reflect both the volume of marketing (DTI) as well as the fact that the TrueCar brand is a newer one (search). Google search and DTI together accounted for 32% of visits in December 2011. Referrals from 3rd party sites accounted for 14% while OEM sites accounted for 2%.
However, referrals declined sharply in January 2012, leading to the dramatic decline in unique visitors to the site. Referrals from Google fell 37% month-over-month in January while DTI was off 43%. Those two sources alone accounted for nearly 355,000 fewer visits in January 2012 vs. December 2011. In addition, visits originating from 3rd party sites fell 18% month-over-month in January, down nearly 74,000 visits in total while those originating from OEM sites were off 83% month-over-month, down 39,000 visits.
Compete also measured TrueCar results relative to the internet browser population using daily reach. Daily reach measures how many people visit a site as a % of all US internet users online on a particular day and measures the relative popularity of a site over time.
Truecar.com daily reach mirrored its unique visitor trends, peaking from November to December 2011. However, since then the site has been unable to maintain its momentum and has continued to lag. In fact, daily reach in January and February has returned to pre-Q4 2011 levels.
Can TrueCar rebound or are its best days behind it?
Only time will answer that question. TrueCar’s rise was notable: its basic premise, reduce the hassles with the car buying process by providing prospects with a guaranteed low price on a new vehicle, makes sense and appears to have resonated with consumers. But its success drove scrutiny and starting in late 2011 negative publicity. In response, TrueCar has modified its business model to address concerns and will continue to evolve in 2012.
The real question, however, is whether current users will continue to visit the site, use its content in the new vehicle purchase process and whether former users will return. To answer that question, Compete recommends additional analysis such as:
- Continuing to monitor site traffic and inflow to determine if TrueCar has been able to jumpstart its relevance among new vehicle prospects.
- Assess whether the January decline in truecar.com’s popularity was driven by seasonality. Since the site focuses heavily on lower funnel shopping, perhaps the decline was due to strong December sales pulling many prospects ahead.
- Look at site overlap with OEM’s to determine if the TrueCar message has resonated stronger with certain manufacturers compared to others.
Dennis Bulgarelli is a Client Services Director at Compete. At Compete Dennis is responsible for advising auto clients on trends in consumer online shopping behavior. Before Dennis joined the Compete team he did research and planning at most of the large ad agencies. Dennis hopes to one day, drive cross- country on the blue highways. Follow Dennis on Twitter @dennisbul or connect with him on LinkedIn at http://www.linkedin.com/in/dennisbulgarelli.