Internet Insider Series: How Trade Me Rode AA All The Way To The Bank..

When news spreads of a local website selling for 0.7 billion dollars after operating for fewer than 10 years, people tend to stand up and take notice. The mark of a true success story though, is the rate at which word-of-mouth spreads the news from family to family, friend to friend.

One might wonder as to why people would be so keen to talk up the success of a website they have no vested interest in. The answer, however, is surprisingly simple and deceptively effective. It is a tactic that every great business uses to acquire and connect with its customer base. The tactic is known as Integrated Marketing and the biggest example of this is the relationship between Trade Me and the New Zealand Automobile Association.

Setting The Scene

It wasn’t 11 years ago that people were beginning to familiarise themselves with Trade Me, a fledgling website which provided a service for buying and selling items online. It was relatively easy to use and, initially, completely free of charge. Fast forward to 2006 and at the time of selling for NZ$700 million, Trade Me was receiving roughly 450,000 unique browsers each day, representing more than 70% of the domestic web traffic within New Zealand. The irony of this story is there was more to Trade Me and its marketing strategy than simply word-of-mouth referrals and slow natural growth…

Trade Me & AA

While in its early stages, Trade Me saw the need to gain extra leverage with its auctions. Some people were comfortable with the site but others were weary of its validity as well as its security when it came to providing user information. The decision was made by Sam Morgan (Founder) and Mike ‘MOD’ O’Donnell to approach the Automobile Association with an Integrated Marketing proposal, which would grow to be a long term business partnership that still stands at the time of this writing.

What Trade Me stood to gain from this business partnership was improved awareness of its own brand via the reputation of one of the most established motor vehicle organisations in the country. AA benefited from this arrangement by receiving exclusive rights to market to people seeking services they offered, one example being Pre Purchase Vehicle Inspection Reports. AA also gained greater brand awareness by being the only visible choice for such a product when people looked at car auction after car auction.

The benefit is obvious:

  • Trade Me increases its own reputation as a secure, reliable online marketplace
  • AA gain greater market presence and an increased likelihood of selling its product to customers.

What’s In It For Me?

Now, sometimes its all too much to hear about a huge company that was hugely successful but on speaking with Craig Jordan, The (then) Head of Business Partners as well as the Motors Division, about this piece, he had this advice for small businesses looking to Joint Venture or find Integrated Marketing opportunities with other companies:

  1. Recognize that brand matters – without it, you’re a nobody
  2. Online expertise – select a partner who is an expert in a complimentary field to yours
  3. Be flexible – flexibility is vital when partnering up with other businesses and it goes both ways
  4. Ability to take care of customers – without them (not unlike branding), you’re a nobody

The irony of this case study is that what Trade Me and AA did was help each other out. No more, no less and it was done in a manner that didn’t encroach on the other parties business.

A Florist might attempt to steal customers from the Candy Shop next door, naively thinking that a customer could only purchase from one store or the other. The Integrated Marketing or JV approach would be to up-sell a customer from your product to the other stores by way of loyalty cards, event promotions or bundles. You might sacrifice a little in margin but the end result is a far easier conversion from a paying customer as opposed to a non-paying prospect.

Lifting The Veil To Integrated Marketing & Joint Ventures

To conclude, Integrated Marketing is present wherever you look, the Happy Meal with a movie toy or the Website designer who also provides business cards. The fact that so many companies look for lateral partners in their market, as opposed to whinging about vertical competitors proves that  ‘Intergrated Marketing’ or JVing as  is a great tactic every entrepreneur and small business owner should master.

Now, of course, AA is not the only company that partnered up with Trade Me so it’d only be fair that I include further case studies over the next few weeks..

Can you think of other examples where companies have partnered up in a way to strengthen their own sales proposition? Do you have examples of what you’ve done to increase the value of a service or product you offer as well? Leave a comment below and let’s see how many we can come up with!