CarGurus Shifts Its Programmatic Business Into High Gear

CarGurus-picIn under two years, CarGurus transformed its display revenue strategy from one built on ad networks to one focused on high-value programmatic deals.

The auto shopping site, which attracts 12.4 million uniques a month, according to comScore, used to sell search listings and upfront sponsorships with auto manufacturers and dealers. CarGurus farmed out its display revenue sales to ad networks, so it had little control over the process.

Realizing it needed to revamp its ad stack, CarGurus hired talent like Ben Harman, a Millennial Media and Yahoo vet who joined as director of ad ops. A new ad server, SSP, DMP and DSP followed. CarGurus then turned to programmatic when its customers demanded it.

“We are hearing from customers across the spectrum that programmatic is front and center,” Harman said. “There is a longstanding tradition of accessing big brand dollars in the upfront process. But we are seeing more and more that the opportunity to engage in real time with data and programmatic is becoming a big priority for them.”

CarGurus hired OpenX, an exchange partner, as its SSP in November. It added OpenX as its header bidder in February. Between December and March, exchange revenue increased 300%.

The move to add header bidding unlocked significant value after some experimentation. CarGurus took two months to tweak how it prioritized these new programmatic bids to “enable better competition among all demand sources,” Harman said. Higher-priced, higher-value private marketplaces were allowed to beat direct-sold deals in some cases.

Those tweaks dramatically boosted yield. Between March and April, private marketplace revenue increased 160%. CPMs for private marketplaces averaged 20% higher after making the adjustments.

Having programmatic pipes and a header tag in place will set up CarGurus for the next upfront process. Many car manufacturers buy in yearlong deals, and the negotiations for 2017 are starting now. Programmatic will increasingly be a part of those conversations.

“Auto manufacturers see the value in having better predictability and access to our audience,” Harman said.

The ability to use data while guaranteeing spend aligns well with these advertisers’ goals. That drove CarGurus to become an early adopter of OpenX’s real-time guaranteed product. The hybrid of a private marketplace and a guaranteed buy allows buyers and sellers to forecast how much of an audience is available.

The next step, which is part of the real-time guaranteed conversations, will be infusing even more of these deals with data.

With both a DMP and header bidding in place, CarGurus will be able to give its advertisers better access to its car-buying audience.

“What’s most exciting to me is layering in some of our data to refine the audience we are providing in the private marketplaces,” Harman said. “That allows the buyers to leverage our expertise.”

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