Auto Advertising in Newspapers on the Decline

Washington DC January 27, 2006; The AIADA newsletter reported that in a reflection of a major shift in media and advertising strategies this decade, auto-classified revenue in newspapers dropped significantly last month, and has steadily declined since 2004.

According to the Wall Street Journal, a combination of web competition and changes in the auto industry has led to a drop in spending on newspaper auto classifieds and a loss in revenue for seven consecutive quarters.

Deutsche Bank analyst Paul Ginocchio believes auto ad revenue is "trending down significantly" in the first quarter of this year as well. Mr. Ginocchio specifically points out that Japanese car makers are a major factor in the trend, as they spend less per car on advertising and devote less of their media mix to newspapers.

He also notes a rise in big dealerships over the past two decades, which tend to dedicate a smaller part of their media budget to newspapers as compared to smaller dealers. Dealer Wes Lutz, who owns Extreme Dodge/Hyundai in Jackson, Mich., also attributes the drop to the influence of the internet. "Eight out of 10 customers that walk into our dealership have already looked at our Web site," says Lutz. The high customer demand from the Internet has even caused Lutz to create a new “internet manager” position, a job that requires a reply to all internet inquiries within an hour.