|There is a quiet giant in the automotive industry. It has grown quite large in a few short years, fueled by strategic acquisitions of strong technology companies. Many dealers work with this giant, yet know very little about it. The giant is Dominion Enterprises, owned by Landmark Communications.|
Dominion Enterprises is an organization that provides marketing services to key verticals. Those verticals are automotive, specialty vehicles (such as cycle, RV and commercial trucks), real estate, apartments and employment. Within each vertical are marketing products, technology products and, finally, what Robert Berndt, president of Dominion Automotive Group, refers to as portals.
Dominion, which is a publishing giant, ironically, doesn’t publish in the automotive industry. The closest they come is direct mail products. The reason they aren’t to be found within our industry is due to the separation agreement reached between Cox Enterprises and Landmark Communications in September 2006, when the two companies split the assets of their joint venture, Trader Publishing Company. In the agreement, Cox took the automotive advertising products, since they were experts in the automotive advertising world. Landmark retained pretty much everything else and renamed the organization Dominion Enterprises. The new company included automotive businesses such as Dealer Specialties, which is still the biggest individual automotive company (a surprise to many) that Landmark owns.
Since that split, Dominion, as agreed, has not operated in the automotive print advertising world, therefore they have concentrated on growing their automotive technology assets. When the growth and acquisitions came to a point of critical mass, they determined a separate division was needed to oversee both the strategic planning and long-term development of the automotive-related businesses, hence the creation of the Dominion Automotive Group.
So, what caused the shift in focus for Dominion to this market segment? According to Berndt, “We’ve always considered ourselves information service providers, not simply publishers. Evidence of that was shown through our early adoption of the Internet. We were one of the first to get our information out on the Web. In the past, we may have been pigeonholed as a publisher only, but as far back as 20 years ago, we told ourselves, ‘The railroad industry ran into trouble when they considered themselves railroad people and not transportation people. So as passengers moved from the railroad and into cars and airplanes, folks who got themselves locked into the railroad model had trouble.’ We have long known that people access information in many ways, and print was just one of those ways.”
What feels like a natural progression to Dominion Enterprises may not look that way to outsiders who don’t understand the connections between the businesses. The natural progression started with Dominion’s first automotive company, Dealer Specialties. Through that entity they talked to thousands of dealers each week and gathered data, but more importantly, they watched what dealers did with the data. Sometimes they had to clean it up, which led to the SelectQu acquisition and the development of DataCube. The “clean” data then moved on to a number of places; primary among those were the dealer Web sites, hence the need for XIGroup and Dealerskins.
While Web sites are designed to generate leads, many dealers supplement those leads with third-party leads, which is what led Dominion to InterActive Financial Marketing Group (IFMG). Once dealers have leads, they need to be able to manage them, thus entered AVV. Dealers want to turn those leads into customers, so at that point, CRM (Autobase) came into place. Then there are vehicles to service, and that requires ongoing communication with service customers via AutoRevenue.
Although some might not think the acquisitions were in the correct order, they made perfect sense to Dominion. “Everything we have done is a natural progression, and driven by what we learn with each acquisition,” said Berndt. There was a need to recognize, and in some cases anticipate, customer needs and come up with solutions for those needs.
Thus far, Dominion hasn’t squashed any of the brands they have purchased. The reason is simple, according to Berndt, “We buy premium brands and there is value in the brand. We want the reputation in the dealers’ minds that being owned by Dominion is a good thing and that service will not decline, but will improve.”
If you look at the list of companies owned by Dominion Enterprises (see below), you might notice subtle overlaps in products offered by some of the companies. The most notable is in the area of CRM. Autobase, AVV and AutoRevenue all tend to be classed as CRM products. Additionally, IFMG, known primarily for their third-party leads, has a CRM product. Another overlap would appear to be XIGroup with Dealerskins, both of which provide dealer Web sites.
However, in reality, each company has a core competency. For example, AutoRevenue’s CRM product is highly regarded in the service department, but doesn’t have as much penetration in the sales department. AVV has always been a strong Internet lead management tool and Autobase has a firmer grip in the sales department. XIGroup and Dealerskins, for the most part, serve two very different markets. XIGroup works to serve the often-underserved independent dealers, while Dealerskins focuses on the franchise market.
AVV/Web Control, the most recent entity added to the automotive division, fit perfectly into Dominion’s core competency strategy. Dealerskins representatives have suggested AVV to dealers for years and when it came on the market, Dominion Enterprises was there to snatch it up. “I’ve never seen more eagerness from our other businesses; as soon as the acquisition announcement was made, AVV was getting calls from all over the country. ‘So glad to have you as part of the organization, how can we do business together?’” said Berndt.
One of the more unusual aspects of Dominion’s approach thus far has been that they haven’t pushed the individual companies to integrate with one another. Berndt likes to use the term modular instead of integration. “If I were a dealer and I understood that Dominion owned Dealerskins and AVV, I would say, ‘Great, but what is the advantage to me that you own both products?’ We are working very hard to make our products more modular so we can explain what the opportunity is for the dealer,” said Berndt.
Although integration among Dominion Enterprises companies is not mandatory, there is a level of expectation regarding use of products and referrals. When there are services that are being outsourced, they want the individual companies to determine if another Dominion company can competitively and adequately supply the service or product. If they can, Dominion expects it to be used. If there is no equivalent service, it is an opportunity for someone to improve a product or develop one. “We put a lot of pressure on ourselves to make sure our internal services are just as good as any external services,” said Berndt.
What happens to the management team of a company when Dominion purchases it? Dominion’s desire to let each entity run autonomously is high, as is the desire to have the entrepreneur stay and run the business—and many do stay. However, in some of the businesses that are acquired, the entrepreneurial spirit is so high that the management wants to move on to find their next conquest. The ones who stay become a critical part of the ongoing business.
“George Nenni is a good example. He is a huge part of our organization from an experience standpoint. He came to us as a part of the original Dealer Specialties acquisition,” said Berndt. “Many of the businesses we purchase are valuable because of the people that are in them as much as the products or services they provide. The technology is really good, but it is a product of really smart people coming up with good ideas. And we like to retain those folks.”
Communication among the individual companies is changing the way some of them think. General managers get together and talk about products they are working on. They can exchange challenges and with a roomful of experienced business professionals, and solutions usually follow. Even the IT departments share development information. Instead of each company working to develop a solution to a problem, one company can take care of it and share it with the others. This frees up IT teams to develop even more products.
“That has been an unexpected opportunity through the acquisitions. These folks love to collaborate and come up with new things, and while you would think they would want to stay autonomous, by nature they are curious and creative folks,” said Berndt. “When you get them all in a room, exciting things happen.”
There is really only one centralized function among all of the companies owned by Dominion Enterprises—HR. There is typically a point person at each company who handles the lighter human resources duties, but all other HR functions are handled at the corporate level. This includes arranging benefits for all of the employees across all companies.
There is one item, surprisingly, that isn’t shared among the Dominion companies at this time and that is customer data. All of the companies manage their individual customer databases and only refer clients back and forth when they feel there is a good fit in product or service.
As for future acquisitions, “There are still great fits, opportunities similar to AVV, out there that would be wonderful to bring in and create instant synergy, that our businesses would embrace,” said Berndt. However, many of these opportunities would involve much larger commitments. Those commitments have to be weighed against the level of management time and organizational energy required for new projects versus just focusing on being better at what they already do.
The mantra seems to be, “If we can’t build it, we will buy it.” Berndt declined to comment on the next possible acquisition, but you can bet it will be technology-based.
Vol 5, Issue 5
ADESA has named 20-year industry veteran Dave Fountaine as the new general manager of its Buffalo auction.