DETROIT New car buyers are clicking their way to auto dealership Web sites and moving away from newspaper ads, fueling a continued and frenzied push for ad dollars to the Internet, according to findings released Tuesday by Friedman-Swift Associates, an automotive marketing research firm.
Last year, 30 percent of new car buyers visited dealer sites, compared with 35 percent who looked at dealer advertising in local newspapers. In 2001, 17 percent of potential new car customers visited a dealer Web site.
"It's a very real possibility that dealers will spend more ad money driving traffic to their Web sites," said Judy George, president of Friedman-Swift, Cincinnati. "As more dealers look at their own numbers and see that only 35 percent of their customers are looking at the newspaper before buying a car, it will change their advertising habits."
With newspapers, George said, a dealer can easily spend $10,000 a week on the full-page ads they traditionally purchase in a small to medium market.
"This research is telling us that in market after market, consumers are going to the Web sites," she said.
The research, based on surveys with 12,270 new-car customers in 2005, shows the number of people using dealer sites is still gaining. Buyers of imports are consulting the dealer sites more frequently than domestic customers, 36 percent to 25 percent.
"We also see that the consumer is forcing dealers into how their advertising is structured," George said. "Branding on a local level, say, for Bob Smith Ford, is happening more frequently and has become more of a factor in selling cars because people are looking for it on the Web."
Dealers, in fact, faced a 7 percent gain in advertising costs between 1995 and 2005, according to data from The Cobalt Group, a marketing services group that specializes in the auto industry.
"MSRP isn't going up, and so at that rate, the advertising spend is taking more of a car dealer's pocketbook," said John Holt, CEO of the Seattle-based Cobalt. "And until recently, the majority of that ad spend has been taken by traditional media."
Earlier this year, Cobalt found that Internet search-engine advertising by dealers has gained increasing favor, with a third of dealers queried paying to advertise on search engines like Yahoo or Google, often shifting advertising dollars away from traditional print ads.
"Using the Internet will ultimately retard the growth rate for advertising spending," Holt said. "It has become fundamental and life changing for these dealers in this industry."