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The Boom Continues For Online Auto Advertising

DUBLIN, Ireland Aug. 2, 2005; Research and Markets ( has announced the addition of 2005 Outlook: The Boom Continues for Online Auto Advertising to their offering.

Online Automotive Advertising surged 50% in 2004, hitting $1.2 billion. While manufacturers and dealers continued to shift more spending toward online applications, dealer associations finally started testing the waters. Online campaigns are likely to continue stealing ad share from newspapers and broadcast TV over the next several years as the automotive industry follows a massive audience shift toward the Internet. This 26-page report offers eight charts and an appendix describing the leading automotive Web sites.

Car shoppers are now empowered by the Internet. Most of the estimated 61 million consumers who bought a new or used car last year began their search on the Internet. In 2004, Web sites generated 22 percent of all new-car sales. Another Internet-spurred phenomenon has developed as well: Over the past decade, person-to-person auto sales have increased by more than 20 percent. Private-party sales now match the number handled by independent used-car dealers and could soon pass franchised auto dealers. This audience shift is so dramatic that in 2004, for the first time, the Internet scored higher than the newspaper among car-seekers looking for automotive price-and-item information. Among Internet users, 11 percent said they found the used car they ultimately bought online, while only 9 percent said they found their car in a newspaper classified.

This massing of audience spurred a jump in online automotive ad spending last year. While the overall automotive category grew at a rate of about 2 percent in 2004, the Internet portion grew 51.5 percent, to $1.2 billion. It is projected that the Internet category will grow to nearly $2 billion by 2006, accounting for 6.4 percent of all dollars spent on auto sales advertising.

Traditional ad formats such as print ads and broadcast TV commercials began to show vulnerability in the first half of 2004. All lost market share, while the Internet continued its steady gain. Of the three segments in the auto category (dealers, dealer associations and manufacturers) dealers made the largest spending changes. They nearly doubled their spending on Internet products while slowing down their spending on newspapers, broadcast TV and radio. Dealer associations increased online spending 20.2 percent, making major cuts in auto magazines and radio.

Manufacturers, meanwhile, boosted online spending 38.8 percent, cutting back on auto magazines, broadcast TV and newspapers.

The next wave -- dealer association online spending -- is just beginning to hit. Dealer groups spent $58.3 million on online advertising in 2004 and are expected to increase that by 26 percent this year.

While the numbers may seem big, they are still a drop in the bucket compared with the $30 billion spent on all auto advertising in 2004. The Internet category captured a 4% slice of that pie in 2004.

What does this all mean? While branding and price-and-item advertising continues to be a mainstay for local media, the Internet is fueling some new models for making money in the business of connecting auto buyers and sellers. Lead generation is one way. Trackable rich-media advertising is another.

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