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$1.3B Expected for Online Auto Ads

The automotive industry will drive online spending to a projected $1.3 billion by the end of 2003, according to data from Borrell Associates Inc., representing a 15 percent increase over 2002. At the local level, auto dealers are now spending $2 on Internet advertising and Web sites for every $3 they spend on local TV advertising.

"Auto dealers and manufacturers will spend more money on the Internet, and on Web site advertising, as they become convinced that it should be an integral part of their marketing efforts," noted Colby Atwood, partner, Borrell Associates.

Newspaper Web sites will receive $150 million of the big pie, primarily from dealers, making them the largest recipient of local automotive dollars.

"Web sites that want to win more of this business will need to do a better job of promoting dealer inventory, accepting private-party car ads online, and generating measurable leads for dealers. There is also a rich opportunity to build and promote Web sites for car dealers, especially independent dealers, who have been a bit slower to embrace the Internet," commented Atwood.

U.S. Automotive Dealership Sites Ranked by Market Share, September 2003
CarMax.com 51.34%
Ford Direct 21.22%
InvoiceDealers 15.44%
Volvo Cars 2.85%
www.autodealers-usa.com 1.26%
Note: Web sites of specific car and vehicle dealers, licensed motor car traders.
Source: Hitwise

U.S. Automotive Manufacturers' Sites Ranked by Market Share, September 2003
Chevrolet 9.85%
Toyota Motor Company 5.35%
Cadillac 4.74%
Ford Vehicles USA 4.58%
Honda USA 4.06%
Ford Motor Company 3.95%
Honda Cars 3.15%
Pontiac 2.79%
Harley Davidson 2.77%
Honda Motorcycles 2.62%
Note: The Manufacturers category includes all official Web sites of automotive manufacturers, such as Mercedes, BMW, Volkswagen and Audi.
Source: Hitwise

Measurements from Hitwise indicate that the average session duration for the Automotive Manufacturers category in September 2003 was 6 minutes 41 seconds, with most visits (74 percent) coming from home computers. More men than women (54 percent vs. 46 percent) visited automotive manufacturer sites, and most (26 percent) were in the 35-44 age range.

Borrell Associates found that while 4.5 percent of automotive advertising is now slated for the Internet, 47 percent of potential car buyers report using the Internet as a research tool in making their buying decision.

Cap Gemini Ernst & Young found that the Internet out-influenced car ads on TV, but direct mail and word-of-mouth made the biggest impact. The survey of 700 U.S. consumers revealed that 71 percent were influenced by word-of-mouth car recommendations; 48 percent cited a direct mail offer from a car dealer; 26 percent said that ads on Internet search engines would be most influential; and 17 percent were swayed by TV ads.

More than 20 percent of those who go online regularly or occasionally during an average weekday visit automotive Web sites, according to a report on 49 U.S. metro markets by The Media Audit.

The Media Audit's study showed that AutoTrader.com and Cars.com had the strongest Web sites in most markets, and Borrell Associates found that Autotrader.com will pull in the most dollars of any single auto site, with $120 million projected.

U.S. Automotive Sites Ranked by Market Share, September 2003
eBay Motors 11.63%
NASCAR.com 7.22%
AutoTrader.com 5.31%
Kelley Blue Book 4.32%
Cars.com 2.61%
MSN Autos 1.86%
Chevrolet 1.77%
Edmunds 1.70%
Yahoo! Autos 1.58%
CarDomain.com 1.36%
Note: The Automotive category features websites dedicated to automotive distributors, manufacturers, car dealerships, classifieds, maintenance, motor sport and motorcycles.
Source: Hitwise

According to The Media Audit, AutoTrader.com attracted to its sites a total of 2.4 million unique visitors who live in the 49 markets covered in the local market surveys. Cars.com attracted 1.3 million; Carmax.com, 747,900; ebay.com, 730,800; local newspaper Web sites; 639,000; Yahoo, 253,400; and, Vehix, 131,800.

Some independent sites not affiliated with the media did well in a few markets. CarSoup.com showed up in three of the 49 markets and was easily the most popular automotive site in Minneapolis. Recycler.com led the field in Los Angeles. In all, 35 auto Web sites succeeded in attracting at least 1 percent of the adults in a market and, as a result, were included in The Media Audit.

"There are significant differences between markets," says says Bob Jordan, President of International Demographics, Inc., which produces The Media Audit., "and as a result the data must be examined on a market by market basis. The markets are being created and shaped by competition. The more competition, the more unique visitors generated in the market. Atlanta, among our markets, appears to be the most competitive. AutoTrader.com, Carmax.com and AJCcars.com are collectively generating more than 400,000 unique visitors a month. The unique visitors break down this way: AutoTrader.com, 176,900; AJCjobs.com, 139,000; and, Carmax.com, 108,200."

Jordan continued, "The fact that AutoTrader and ACJ (Atlanta Journal & Constitution) are owned by the same company does not diminish the competition. It may, in fact, intensify it. An equally competitive market exists in Chicago between AutoTrader.com, Cars.com, and Carmax.com. The numbers in Chicago are: Carmax.com, 156,700. Cars.com, 131,800; AutoTrader.com, 108,900. The data seems to indicate that Carmax is going to be a fierce competitor in any market in which it has multiple dealerships."

North American car marketers might want to take a lesson from China. A collaborative TNS and NFO study that evaluated the Chinese market found that the automotive manufacturers are recognizing the important role that consumers' emotional needs play in new car sales growth and brand selection.

"China is revving up to potentially become a huge player in the global automotive market," said Andy Turton, president of NFO Automotive in North America. "As Western automotive manufacturers struggle for differentiation among their individual brands, China is ahead in the game when it comes to successfully managing the emotional content of their brands."

The study found 40 percent of new car buyers fall into the "Status" buyer category, who want to show off success and gain self-confidence — up from 30 percent of new car buyers in 2001. Also, "Utility buyers" — those motivated by a basic need for transportation — dropped from 25 percent in 2001 to 10 percent in 2003.

TNS/NFO further categorized the major "need segments" in the Chinese market:

  • "Adventure" buyers seek freedom and adventure
  • "Family" buyers want a car to please their family
  • "Belonging" buyers want to fit in socially
  • "Attraction" buyers want to be attractive and attract attention

"American automotive manufacturers should take note as the same type of segmentation and positioning of brands in the emotional space is also relevant here in the U.S.," said Turton. "In an oversupplied American market, where consumers find differentiating between products and product features increasingly difficult, those brands that have the richest emotional connections to the marketplace will ultimately thrive."