Oliver Foley: Sure. Yeah, so we have had roughly 350 dealers adopt one or more of our TCMS products. And we’re certainly encouraged by that, like we articulated in the letter, we haven’t yet incorporated these into our bundles. So they are available as add-ons to subscriptions, but ultimately we want these products to be part of our bundled offering. Because at that point, you have greater adoption. I think our outlook for the rest of the year is that we would love to see a majority of our dealers leveraging these products because frankly we think that they do truly help them either gain additional visibility on the platform or strengthen the quality of the leads that they get from the platform. And so we truly believe that these will help dealers get a stronger ROI and ultimately that will lead to a stickier product, better retention.
But I think the way that we monetize it is through higher RpD. And so, my expectation over the course of the year is that each quarter we’ll see sort of sequential gains in RpD, primarily driven by, adoption of the GCMS product.
Unidentified Analyst: Okay, got it. Thank you.
Operator: The next question is from Naved Khan of B. Riley Securities. Please go ahead.
Naved Khan: Yeah, thanks a lot. A couple of questions from me. Maybe just on the increase in marketing spend in the second quarter, can you talk about if this is going to be more performance-based marketing versus branding and then potential payback period on that? And then maybe just on the incentive revenue, so you’re kind of approaching the range that we had for incentive revenue pre-pandemic. How should we think about growth from these levels? What kind of visibility do you have in terms of driving this further up from here?
Oliver Foley: Sure. Why don’t I take the first one, Naved. And as it relates to marketing, in terms of, sort of, a specific payback period or the channels through which we’ll be deploying these dollars, I think what we need to do is sort of strike a balance between sort of the lower funnel performance marketing that drives an efficient cost per sale and really strong ROI for TrueCar and what’s best for our dealer partners. And what I mean by that is if we’re constantly optimizing our performance marketing spend on a cost per basis, right, trying to get the lowest cost per click, driving the lowest cost per sale, I think you ultimately see some optimizations that aren’t necessarily good for the overall dealer network. And an example of that is Google can be driving the lowest cost per sale in a particular DMA, and certain subsets of our franchise and indie dealers are getting a ton of leads and a ton of sales.
But by doing that, we’re effectively not living up to our promise or not fulfilling our value proposition to other dealers in the network. And so what we need to do a better job at and what ultimately will really, I think, improve dealer churn is thinking more holistically about how do we ensure performance is strong across the network. And so yes, we’re going to continue to invest in those lower funnel campaigns to really drive incremental units through the platform. But we want to make sure that we’re also supporting dealers across the country, across different DMAs, across brands. And in doing that, we think that will really improve churn. And then the second question was on OEM, right? Jantoon, do you want to take that?
Jantoon Reigersman: Yeah, Naved, can you repeat the question just so that I make sure that’s asked correctly.
Naved Khan: Yeah, so the OEM incentive revenue has been pretty strong for you guys. You kind of mentioned where the average incentive used to be pre-pandemic. You’re kind of approaching the lower end of that band. Just wondering where you think it can go from these levels and what kind of visibility do you have for TrueCar in terms of driving this revenue line-up from here?
Jantoon Reigersman: Yeah. So, very good question. So we’re obviously very bullish on the OEM line in general in the long term. We feel that there’s a lot of opportunity obviously for OEMs to help support their dealer networks, especially obviously with high interest rate environment consumers need all the help they can get, vis-a-vis buying cars. What’s hard to predict is like all of the near to midterm. We have a running, we always have a really running strong pipeline in general. But OEM revenue comes in, call it like a little bit of bulky programs and programs are often finite in time. And so they come, they go, they fluctuate a little bit. It’s less around regular sales that you effectively build up in building blocks and build up on your MRR effectively.
And so there’s always a fluctuation in terms of the revenue lines. It’s hard to predict those. You know what you have in the pipeline and the pipeline is strong. The question then is just when do they kick in? When do OEMs decide to actually participate in certain programs? Some programs are more effective than others. Some we try certain things and it might not actually work and some over-achieve. And so it’s a little bit more bulky in nature. And so we do less of an effort to really try to predict this shorter but we’re very confident in this in the long term. So don’t be surprised, right, like historically, where sometimes quarter-over-quarter, there are some fluctuations in terms of OEM revenue, but it doesn’t take away that we feel that in the long run, OEM revenue should supersede effectively what we used to be doing pre-pandemic.
Naved Khan: Okay, got it, that’s helpful. And then maybe just a clarification on the marketing spend. And I’m assuming that the increase in — most of the increase in the marketing would be going towards the direct channel versus partner, but correct me if I’m wrong. And then maybe just talk about the conversions on the website. How are they versus where they’ve been historically? Have they improved or are they below those levels?
Oliver Foley: Yeah, so conversion — sorry, go ahead.
Jantoon Reigersman: Yeah, so I’ll take it, Oliver. So the short answer is, it will mostly be direct. I think there are certain programs we’re running with the partners, but those are fairly steady going. So this is really about more engaging on the direct side. Overarching [frost] (ph) conversions have been improving and continue to improve. And it’s obviously something we’re also very, very focused on. And we feel that now that the market is, market in general, the micro is more normalizing, it also allows us to start utilizing more of the tools we have at our disposal around consumer experience, like in driving really end-to-end funnel efficiencies. And so this is something we’re now really going to deploy a little bit more towards, especially in a world where obviously the Googles of this world have been changing a little bit of the performance marketing landscapes.
