Profile: Autobytel Inc (ABTL.O)

Autobytel, Inc. (Autobytel), incorporated on May 17, 1996, is an automotive marketing services company that assists automotive dealers and manufacturers sell cars. The Company owns and operates automotive Websites, including Autobytel.com, Autoweb.com, AutoSite.com, Car.com, CarSmart.com, CarTV.com and MyRide.com. The Company purchases from third parties and generates from its own Websites consumer Internet requests for pricing and availability on new and used cars, as well as for vehicle financing. These consumer Internet requests are referred as leads. Autobytel sells the leads to its automotive dealer and manufacturer customers. Leads are purchased from a network of supplier Websites, such as Edmunds, AOL, Kelley Blue Book and Yahoo (Network Websites). On January 23, 2008, Autobytel sold certain assets of its AVV, Inc., data extraction and customer relationship management software business to Dominion Enterprises.

New Vehicle Lead Program

The Company’s new vehicle lead program enables consumers to submit a request for pricing and availability information on a specific make and model of vehicle from a local dealer through network Websites. For the dealer, these requests are leads, which they receive digitally as part of their participation in the Company’s new vehicle lead program. In addition to specific information regarding the make and model of a vehicle, requests may also include additional data regarding the consumers’ needs, including the vehicle they wish to trade-in, whether they wish to lease or buy, and other options that are important to their buying decision. In addition to a lead includes the consumers’ name, phone number, and e-mail address and may include their home address.

Autobytel validates the consumer contact information using its quality verification system. It then routes the requests to one or more local participating dealers, if available, that sell the type of vehicle requested in the consumers’ area. Autobytel then returns an e-mail message to the consumer with the dealer’s name and phone number and the name of the dedicated manager, if any, at the dealership. Dealers contact the consumer, generally within 24 hours of receiving the lead with a price quote and availability information for the requested vehicle. Revenue from retail new car leads accounted for 42% of total revenue during the year ended December 31, 2008. Revenue from wholesale leads accounted for 25% of total revenue in 2008.

Used Car Lead Program

The Company’s used car lead program allows consumers to search on network Websites for used vehicles according to specific search parameters, such as the price, make, model, mileage, year and location of the vehicle. The consumer is able to locate and display the description, price and, if available, actual digital photograph of vehicles that satisfy the search parameters. The consumer can then submit a request for additional information regarding a specific vehicle that it then delivers to the local dealer. In addition to sending requests digitally, consumers may choose to contact the dealer using a toll free number posted next to the vehicle. The Company charges each dealer that participates in the used car program a monthly subscription or a fee per lead. The used car program provides participating dealers online consumer requests, shortly after their submission, as well as the ability to listen to recorded phone calls made to the toll free number. Revenues from used car leads accounted for 8% of total revenues in 2008.

Finance Lead Programs

In addition to the Company’s new and used leads programs, it also enables consumers to submit a credit questionnaire or a request for financing on network Websites from which it acquire Leads. Consumers can also submit a request for financing on Autobytel Websites. Finance lead requests are forwarded to the nearest participating dealer that offers financing or, if a dealer is not available, to an automotive finance institution. The finance leads program is designed to enable consumers, who may not be able to secure loans through conventional lending sources, to obtain financing to purchase their desired vehicle. The Company charges each dealer and finance institution that participates in the finance lead program a monthly subscription or per lead fee. Revenues from finance leads accounted for 14% of total revenues in 2008.

Advertising Services

Autobytel has Website properties on which it offers media products to manufacturers and related businesses. The Websites attract an audience of car-shopping and car-buying consumers that advertisers can target during the vehicle shopping process. A primary way advertisers use the Company’s Websites to reach these consumers is through vehicle content targeting. This allows automotive marketers to reach users, while they are researching one of several site segments, including specific vehicles during the shopping process on its network. In supporting brand driven objectives, the Company sells advertising that consists of fixed ad placement and anchor tenant opportunities. Advertising revenues accounted for 11% of total revenues in 2008.