Maintaining Edmunds' Edge

How the privately held, rapidly growing company is rewriting the rules on auto "buff books"

by Matt Vella

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It's 8:40 a.m., and the staff of Edmunds is already rowdy. Jeremy Anwyl, the company's chief executive officer, is calling new hires to the center of the room, a vast, loft-like space that forms the core of the company's Santa Monica (Calif.) headquarters. Each new employee, from every level and every department, is met with applause and raucous hoots from a crowd of several hundred, as well as by the digitally transmitted cheers from a satellite office in Detroit connected via video conference.

The welcoming ceremony is part of a weekly companywide meeting held at the rapidly growing automotive Web publisher. Managers also use this time to disseminate crucial and often detailed information about the state of the business. Topics include the performance of site-wide advertising campaigns, revenue and profitability margins, and traffic statistics. The straightforward, open tone of the meeting is emblematic of the group's success: As traditional media companies continue to struggle with the transition to digital, Edmunds is focused, nimble, and—with a cool corporate campus finished last year—firing on all cylinders.

Banking on the Web

Edmunds started in 1966 as a publisher of the printed booklets packed with automotive specifications intended to help car shoppers make buying decisions. But since 1995, when its Web site launched, it has become the go-to online resource for car buyers and enthusiasts.

That success led Edmunds to cut ties with print altogether last year, to focus exclusively on its stable of automotive Web sites. "It was difficult for us emotionally," says Avi Steinlauf, the company's president and chief operating officer, of the break with print. "But not financially." By then, the print publication was generating less than 1% of the company's revenue.

These days, Edmunds' online properties draw 13 million unique readers every month—or some 100 million a year. And with its layered ecosystem of automotive information, it generates revenue by selling advertising and sales leads to local car dealers. The privately held company won't break down its finances, but executives say the company is profitable and has had a compound annual growth rate in revenue of 43% over the last seven years. Its staff has ballooned to some 370 employees from just 20 in 1998. And, a profit-sharing program based on the company's margins for the year is on track to give every employee a 20% salary bonus this year, up from 9% last year.

Data-Driven Development and Advertising

The cornerstone of the company's business is the extensive, data-driven Edmunds.com, which helps shoppers compare and price new vehicles. Edmunds can command a premium for sales leads of brands or even specific vehicles that users research. Unregistered users of the site can browse the site if they input their zip codes first, allowing Edmunds to serve geographically specific advertising to local dealerships. "We've benefited a great deal from the shift to measured media," says Steinlauf of Edmunds' ability to provide detailed, contextual information to advertisers. Steinlauf says the company doesn't track more than visitors' zip codes.