Borrell: auto industry ad money (32%) shifts to online

Ben Boles“The biggest single thing to remember about automotive,” says Huntsville, Alabama car guru Ben Boles, “is that everyone, and I mean literally everyone knows that automotive is up, and they all have their hands out for car dealership money.” Interesting, but what are they offering? “They all claim to have the answers,” he told me via email. “Few actually do.”

For Boles, it’s all about leads, and that’s why he’s become a real pioneer in using the web. He’s not alone either. According to a new report from Borrell Associates — to be released Thursday — not only is the industry “up,” but Internet advertising by car dealers is a big growth market.

We’re forecasting an overall increase of 7 percent (in automotive advertising) this year, from $21.1 billion in 2010 to $22.6 billion this year. Every medium except yellow pages is seeing an increase this year. The largest percentage increase goes to cinema advertising (up 98 percent, to $246 million), but the largest dollar increase is expected for online media, which is projected to be up 11 percent this year, from $6.6 billion to $7.3 billion.

Both new-car and used-car auto dealers are earmarking 32 percent of their budgets for online media buys, according to the report, which documents dramatic changes within the industry. What are auto dealers especially interested in? According to Boles, it’s leads.

“While dealers are quick to buy ‘social media solutions,’ very few actually conform to the DISC principal: DOES IT SELL CARS. If you think in terms of the actual quantifiable leads that you are providing for dealerships, you are much more likely to earn their business.”

growth areas for auto dealers online advertisingThe fastest growing online sector of auto advertising is targeted ads, according to the Borrell report, which was authored by research guru Kip Cassino. This requires scale, so it’s very hard for dealerships to get it from media company websites alone. This is why pureplay websites that offer auto-related content, like autotrader.com, are favorites of many dealers. A second growth area is online video, where auto dealers are rapidly expanding into the content marketing business by turning every car on the lot into a video. YouTube is a veritable warehouse of automobiles for sale, and auto dealers increasingly know how to use it.

We’re forecasting a sevenfold increase in targeted banners and 2.5-fold increase in video advertising. While dealer advertising via video sounds like a great idea, we must note that they’re spending only a few hundred million in total — a virtual drop in the bucket when spread across all local markets. Video is a fantastic branding format, and we believe auto dealers won’t see nearly as much branding value with fragmented audiences online as they see with mass audiences in television.

The Borrell report emphasizes that mobile may be a huge opportunity for pitching auto dealers. According to Borrell, one-third of dealers in their survey indicated an interest in utilizing mobile media in some way. In fact, it has already begun, so look for it to increase over the next five years.

mobile apps for car buyers have already begun to proliferat6e. Edmunds.com and KBB.com have apps that allow buyers or sellers to check prices, while Cars.com and Autotrader.com have more robust apps that search listings, check prices or allow you to upload photos. National sites — including the manufacturers themselves — have also launched their own comprehensive apps for car buyers, including Car and Driver magazine and insurance company USAA.

For local media companies, Boles notes that their greatest online value to car dealers might be in search engine optimization efforts, not necessarily in banner ads or sponsorships. “Borrell is spot-on and has exposed the real weakness in the marketplace,” he told me. “Yes, dealers are gravitating to the web for most of their advertising.”

“Because of this,” he added, “stations and newspapers that can sell bona-fide SEO utilizing best practices to complement their offerings will get the buy.”

The auto industry has always been the 800-pound gorilla in town when it comes to advertising. Since advertising is in a full-blown revolution today, it’s vitally important that we pay attention to what the industry is thinking and doing. This Borrell report, among the hundreds I’ve read, is especially critical for media companies to have and absorb. You can obtain a copy at the Borrell website.

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