• by Karl Greenberg , July 31, 2009

The market for second-hand vehicles dwarfs the new-car market, and a big chunk of the activity has migrated from print to online classifieds.

The two big players in online classifieds have been AutoTrader.com and Cars.com, but Kelley Blue Book's Web presence Kbb.com is about to jump into the fray with its own classified network, "The Trusted Marketplace."

Kbb.com hopes its reputation, and the listing model it offers sellers and buyers is disruptive enough to put it on top, or at least in the top three.

Rather than using a traditional pay-for-placement model where the listing hierarchy is based on payment up front, Kbb.com is using a Google-like pay-for-performance model, where sellers (dealers, dealer groups and aggregators like AutoNation, initially) pay nothing up front, but get rewarded for the quality of their listing and competitive pricing.

That happens because the program optimizes listings based on price, thoroughness of content, authentic photos (versus stock photos) and distance from a prospective buyer, among other things.

Justin Yaros, EVP, product design and development at the Irvine, Calif.-based company, says that the change is a big one for Kbb.com -- which until now has been a research and vehicle-value site that made incremental revenue driving some 2 million of its site visitors per month to Cars.com and AutoTrader.com through lead-generation deals.

The company, which gets some 13 million unique visitors per month and launched a new-car listing platform in June, used a Silicon Valley startup, Vast, to create a search platform. Sellers pay only for buyers who show interest either through online channels or via phone. "Dealers can spend upwards of $10,000 on classified advertising, so it's very expensive; what we offer is an alternative to the up-front," he tells Marketing Daily.

Kbb.com has also signed deals with Audi, Kia, and Lexus to list their dealers' certified-pre-owned vehicles at Kbb.com, per Yaros. He says the official launch will be at the end of August, at which point the company anticipates it will have online inventory of around 1.1 million used vehicles and between 500,000 and 750,000 new cars, trucks and SUVs listed.

"So far," he says, "we have signed around 600 dealers." He adds that within six months Kbb.com will expand beyond dealerships to include consumer listings.

The company will market primarily through search-engine marketing and optimization. "Right now about a third of our traffic is direct to our site, a third comes through search-engine marketing and a third of our volume is through search-engine optimization," says Yaros.