Auto Advertising Mix and On-Line Functionality Must Evolve to Meet Car Shopper Needs

ATLANTA - October 18, 2007: Where are the cars I want? What’s the gas mileage? How reliable are those cars?

These are the questions consumers are asking when they shop for cars and overwhelmingly they are turning to the Internet to find the answers, according to a new research study of new-car buyers conducted in cooperation with R.L. Polk & Co. The just-completed study revealed new-car buyers found the Internet to be one of the most helpful media sources for information throughout the entire car-shopping process, dwarfing traditional media and even feedback from family, friends and co-workers. And the Internet is second only to the dealer visit – where consumers interact with and test drive the car – as the overall most useful source of information throughout the entire car-shopping process.

AutoTrader.com President and CEO Chip Perry will share results from the study during his presentation on the "Future of Internet Automotive Advertising" at the J.D. Power Automotive Internet Roundtable, held October 17 through 19 at the Red Rock Resort and Spa in Las Vegas. His presentation is slated for October 18 at 10:30 a.m. and will explore how the Internet will continue to impact and improve consumers' car-shopping experience in the years ahead.

“As an industry, we’ve got to do a better job of giving customers on-line access to the information they want,” said Perry. “And manufacturers, dealer associations and dealerships should review their media mix and direct more of their branding and informational advertising to the Internet because that’s where the customers are focusing their attention.”

While, according to the study, 42% of new-car buyers said the Internet was the most helpful source of information during their car buying process, only 8% said television was the most helpful source of information, 2% said direct mail was the most helpful source and only 1% said radio or newspapers were the most helpful sources.

However, 2006 National Automobile Dealers Association (NADA) data indicated 27.3% of dealer advertising dollars were spent on newspapers, 19.5% was spent on television and 18.1% was spent on radio, while only 11.5% of dealer advertising dollars were spent on Internet. Direct mail accounted for 10.2% of dealers’ advertising spend and 13.4% was attributed to "other" sources. In 2005, according to NADA data, 9.9% of dealer advertising dollars were spent on Internet advertising.

“There will always be a place for the kind of brand-building advertising that television, radio and newspapers are great at,” said Perry. “But when 42% of new car buyers say they find the Internet the most helpful resource for car shopping and only 11.5% of auto advertising dollars are directed to the Internet, there’s a huge disconnect between where the customers are looking and where the messages are going.

“The increase in Internet advertising spending from 2005 to 2006 shows the industry is shifting, but not as quickly as buyers are moving to the Internet for their information,” Perry continued. “The company’s that increase their shift to the Internet in a big way could stand to gain great brand awareness and market share.”

According to the study, independent of price, when searching the Internet for new cars, 27% of new car buyers said dealer inventory was the most important piece of information they wanted. “By far, the most important thing people want to know is ‘Is the car I want available to see and test drive?’” said Perry. “This confirms other insights we’ve known for some time – people shop for cars online, they don’t purchase online. After reviewing models, prices, features and other options online, people want to see the cars they’re considering buying.”

In searching the Internet, 36% of new-car buyers said the original manufacturers sites were the most useful of the Internet sites they searched. Twenty percent said third-party car sites were the most useful sites and 18% said individual dealer sites were the most useful sites.

“The manufacturers have done a great job building sites that offer new-car buyers the features and options lists, configuration engines and presentation features that buyers need in making their decisions,” said Perry. “That investment has obviously paid off according to these findings. Third party sites and individual dealer sites are still getting millions of hits and generating a lot of sales, but could do more to offer customers the features and information they say they want.”