Internet Captures More Automotive Ad Dollars

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New York NY May 21, 2007; The Center for Media Research reported that according to a new report from Borrell Associates, automotive ad spending will reach $31 billion this year, but total ad dollars will grow only 1.7% over the next five years, compared to an annual growth rate of 3.7% in the last five years. Online spending for the industry will reach $2.8 billion in 2007, 7.6% of all automotive advertising, representing annual growth of 13%.

By 2010 online car marketing will reach $4 billion, says the report, and become the second most-used medium for automotive advertisers, surpassing newspapers, cable, radio and direct mail and trailing only broadcast TV. Budgets for offline auto ads in newspapers, direct mail and directories will decline by 20% each during the same period.

Online will become the top marketing channel for used-car marketers this year at the local ad level, surpassing newspapers for the first time. Used-car dealers are allocating 20% of their spending to the online channel, compared to 7.6% of the industry's total online ad budget.

The report says that local car dealers will spend 29% of their online ad budget on online video and paid search this year, but will increase that proportion to 76% of online marketing by 2012. E-mail will also gain as a lead-generation tool, while display ads such as banners will decline.

Many shoppers are going directly to manufacturers' Web sites rather than to third parties, doing their early research online. The report points out that the Internet is not yet effective at reaching car buyers still in the "dreaming" stage, and that manufacturers will use TV spots to sell their brands and then drive prospects to a Web location.