Local online auto advertising set to rise

In their recent report, “2007 Local Online Auto Advertising”, Borrell Associates shows how the auto industry will increase online advertising spending, despite a decline in overall auto advertising growth. The auto industry is the second-largest advertising category, at $31 billion in 2007. Online currently accounts for $2.8 billion, and is set to reach $4 billion by 2010, says the report.

Over two-thirds (76 percent) of local online ad dollars will be directed towards video and paid search ads by 2012, forecasts Borrell. Auto buyers are already spending less time searching traditional media and are instead researching vehicles online, for up to five hours, before they purchase.

Consequently, traditional offline media will see revenues from local auto advertising decline, as budgets are cut by 20 percent over the next five years. The report states that “by 2010 online will hit $4 billion and become the second-largest medium for automotive advertisers, surpassing newspapers, cable, radio, direct mail – everything but broadcast TV.”

The private used-auto market spends a larger percentage of ad spend online. Borrell Associates forecasts that the internet will soon become the number one media channel for private used-auto sales. In 2006, $421 million was spent on used-auto sales by private individuals, of which $114 million was spent online.

“There is also a big opportunity for those who can master used-vehicle marketing, and in particular private-party sales," said Borrell Associates VP Pete Conti. "The number of used vehicles on the road continues to swell, and dealers and individuals alike will need new ways to connect with buyers.”

Borrell Associates’ report also noted that email spending on local online advertising is set to rise but banner units will see a spending decline.

An executive summary of the report can be viewed online.

Tags: advertising spending, automobile industry, online advertising, paid search, video advertising