dealerpreownedshift towards online continues

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 advertisingdollars, but 32 percent of those we polled say in the past year they’ve takenthat money out of newspaper ads, historically the medium of choice for autoretailers. Meanwhile, 41 percent of dealers say they’ve moved more of theirad money online during the past 12 months while only 7 percent say they’veshifted more to newspapers. The poll reflects what’s happening generally inthe industry. Franchised dealers spent $7.75billion on advertising in 2005 and their Internetad buys rose 3.2 percent from 2004, accordingto the National Automobile DealersAssociation (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 adsafter newspapers, 27 percent say radio is their second choice and 11 percent choosetelevision. Only 2 percent of dealers we polled say they’ve cut back or eliminated onlineads.

[PRINTER FRIENDLY VERSION]

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