1. Wednesday, September 6, 2006 Issue 5 VOLUME 1 ISSUE 5
Shift toward online ads continues
It’s no secret dealers increasingly favor the Internet with their advertising
dollars, but 32 percent of those we polled say in the past year they’ve taken
that money out of newspaper ads, historically the medium of choice for auto
retailers. Meanwhile, 41 percent of dealers say they’ve moved more of their
ad money online during the past 12 months while only 7 percent say they’ve
shifted more to newspapers.
The poll reflects what’s happening generally in
the industry. Franchised dealers spent $7.75
billion on advertising in 2005 and their Internet
ad buys rose 3.2 percent from 2004, according
to the National Automobile Dealers
Association (NADA) 2005 Industry Analysis.
The past decade also saw the average
dealership's ad expense allocation for
television rise 22 percent and for direct mail 32
percent. Nationally, ad spending on
newspapers dropped a whopping 39 percent,
although NADA notes many newspapers
provide Internet used-car advertising.
In 2005, the typical dealership spent 9.9
percent of its ad budget on the Internet, an
increase from 6.7 percent in 2004. The
average Internet ad expenditure for all
dealerships was $35,738 and for those selling
more than 750 units, $69,249. That compares
with average newspaper spending of $118,790
and $219,706 for dealerships selling 750 or
more vehicles.
Fifty-seven percent of dealers we polled say the Internet is their dominant choice for ads
after newspapers, 27 percent say radio is their second choice and 11 percent choose
television. Only 2 percent of dealers we polled say they’ve cut back or eliminated online
ads.
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