John Holt, in an interview with Ward’s earlier this year, said the hard part about founding The Cobalt Group Inc. in 1995 was “we were 10 years too early,” meaning the world wasn’t quite ready for a digital-marketing firm with ambitious ideas.
But for Automatic Data Processing Inc., the timing now seems right to spend $400 million to acquire Cobalt, which began as a designer of dealer websites and now is involved in many online activities, including search-engine marketing, digital advertising, online lead referrals and coordinated auto maker-dealer marketing campaigns.
Subject to regulatory review, Cobalt will become part of ADP’s Dealer Services Group in the year’s third quarter.
Publicly traded ADP, with nearly $9 billion in revenues and about 570,000 clients, is one of the world’s largest information-technology providers. The impending acquisition is the result of talks between ADP and Warburg Pincus, a private equity firm with a major stake in Cobalt.
It should be a good matchup, because Cobalt and ADP share a “client-centric approach,” says Steve Anenen, president of ADP Dealer Services.
“Cobalt will only strengthen ADP Dealer Services’ global vision to bring our clients and their customers together for life, wherever they are, by delivering an exceptional client experience.”
Specifically, ADP sees the acquisition as positioning the company to deliver enhanced digital-marketing services “that will help transform how vehicles are marketed, sold and managed throughout the entire customer lifecycle.” ADP says the combining of strengths will benefit consumers, auto makers and dealers.
More than 80% of automotive shoppers use the Internet in their buying process, yet many of them still find the experience confusing and inconsistent. Often, local and regional dealership marketing is not aligned with manufacturer-specific marketing.
By acquiring Cobalt, ADP says it expects to better coordinate auto maker-dealer marketing messages to create a more seamless customer experience.
ADP says auto makers currently benefiting from an alignment of national, regional and dealer advertising through Cobalt now will have the opportunity to improve their marketing results with greater levels of brand consistency, visibility and measurable performance.
With the expanded ADP Digital Marketing group, auto makers can track the rest of the sales process across all three tiers of advertising to better understand return on marketing investment.
ADP foresees dealers benefiting from the ADP-Cobalt hookup through better aligned marketing efforts with auto makers and an improved sales process.
“For over 15 years, Cobalt’s mission has been to enable OEMs and dealers to work together to use the Internet to influence prospects as they move from product awareness to purchase and provide more timely services to existing owners,” says Cobalt CEO Holt, who will become vice president of ADP’s Digital Marketing Group.
“By combining our offerings with ADP, we will be even better positioned to carry this mission forward.”
