Online Auto Ad Spending to Hit $2.8 Billion This Year

May 21, 2007

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DUBLIN, Ireland — Spending on online automotive advertising is on pace to reach $2.8 billion this year, according to a Borrell Associates report highlighted by Research and Markets.

Furthermore, the report said used-vehicle dealers are making a major shift in how they use their advertising budgets. Officials explained that by next year, used-vehicle dealers will direct more spending to online advertisements than traditional newspapers campaigns for the first time.

Borrell's report explained that 7.6 percent of all industry advertising budgets are being spent online this year, leading to the $2.8 billion total. Officials predicted that budget percentage to climb to 12.6 percent during the next three years, leading to an online advertising expense total of more than $4 billion.

"The days of easy money from automotive advertising are gone for traditional media," Borrell officials explained.

"Buyers are spending five hours researching vehicles online — and less time with traditional media. And manufacturers and dealers are plowing more money into their own Web sites, terminating traditional media by delivering price-and-item information directly to consumers," they continued.

Furthermore, Borrell computed that by using a compound annual growth rate of 13 percent, online automotive advertising will become the second-largest medium, surpassing newspapers, cable, radio and direct mail campaigns. The only medium ahead of online endeavors will be broadcast television, according to the report.

That use of online resources is especially notable in the used-vehicle industry. Borrell's report pointed out that the use of online advertisements by used dealers has increased by 19.6 percent during the past year, a rate greater than officials said has been seen with OEMs.

Officials concluded their report by noting that online strategies are becoming more sophisticated, such as streaming video. They said these types of ads have been much more effective and used more frequently to attract consumers than simple lists or banners.

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