Vetter told Automotive News that the company now is looking ahead at areas where it sees growth potential. Going forward, Cars.com will collect more revenue from dealership customers now that it doesn't have to split the income with the media chains that brought those dealerships into the network, he said. That in turn will allow for more and faster reinvestment into platform upgrades — the lack of which, he said, has held the company back.
That dovetails with a strategy to help dealers control more of their digital storefront, from websites and retailing software to inventory management and marketing, including online video, Vetter said. He added that Cars.com, through its 2018 acquisition of software company Dealer Inspire, can help dealerships run more efficiently and reduce their vendor count by leveraging data collected from customers searching its vehicle listings.
Analysts who follow Cars.com say time will tell whether the strategy will work. Branching out from the listings business into software is a viable move, but it takes time to develop, said Gary Prestopino, managing director at Barrington Research in Chicago.
"There is no doubt about it that Cars.com has had a pretty rough go of it since it became a public company," said Prestopino. He has a positive outlook on the company.
Vetter, 49, spoke with Staff Reporter Lindsay VanHulle about the company's transition away from its affiliate newspaper partnerships and how it plans to add dealership customers. Here are edited excerpts.
On ending affiliate partnerships with newspaper companies:
The biggest transformation we've done in the past year is to shed ourselves of our legacy affiliate newspaper relationships, which has given us full control of the company to build the brand and to grow the traffic directly. We only recognized [60 percent] of the revenue that dealers were spending with us when we were through a channel. Now we recognize 100 percent of the revenue, so we're seeing a step up in our revenue, which allows us to invest [at a higher rate]. Now we're also selling and servicing our dealers directly, so we can be far more responsive to their needs.
On restructuring the sales side of its business:
We've had to stand up a new sales system that now gives us full control of all these customer relationships directly. The good news is, we did it in 2019, and now we're entering 2020 by showing acceleration in the business.
On Cars.com's transition beyond listings into dealership software offerings:
All these innovations that we're bringing to market are really designed to help the dealership operate more efficiently. We're out to help dealers restore their profitability [and] ultimately be the local retailer that is thriving because of technology, not suffering from it.
