Despite a 3.4% decline in ad spending in 2005, the last full year for which figures are available, at $21 billion in overall spending the automotive industry is still the single-largest US advertising category. So, where auto ad dollars go often determines where other marketing budgets follow.


"Automakers and dealers pulled dollars out of television, newspaper and magazine media buys and redirected them to digital media in 2006," says Lisa Phillips, eMarketer senior analyst and the author of the new Automotive Online: The Race Is On report, "including rich media ads and microsites, search engine optimization and mobile marketing, and short films and video-on-demand."

eMarketer predicts the automotive category, consisting of manufacturers, dealers and after-market vendors, will account for $2.69 billion, or nearly 14%, of the $19.5 billion estimated to be spent on Internet advertising and marketing this year.



eMarketer estimates the auto industry will spend $1.06 billion on search marketing alone this year and more than $1.7 billion in 2010.



"Consumers are heavy users of search when it comes to online auto shopping," says Ms. Phillips, "especially to find vehicles, price information and local dealerships."

According to a Yahoo! search marketing report, fielded by comScore Media Networks, search consistently drove more active shoppers to all types of auto sites than any other navigational channel: 37% of visitors to manufacturers' sites came through sponsored ads, as were 49% of visitors to branded sites such as Edmunds.com, Kelley Blue Book and Yahoo! Autos and 77% of visitors to unbranded sites such as WhyPaySticker.com, Automotive.com and NewCars.com.

According to Hitwise, "eBay," "Kelley Blue Book," "used cars" and "Autotrader" were the four most popular search terms that drove traffic to auto Web sites in September 2006.



However, when consumers search for OEM brand names, a different order emerges.

Seven of the top 10 search terms in July 2006 were for foreign automakers: six from Japan and one from Europe. Toyota, Honda and Nissan were the terms most often searched for, and Ford and Chrysler's Dodge brand ranked fourth and fifth, respectively, on the list.



There's no question that automakers, dealer associations and dealerships are aware of the power of search advertising. However, recent research and trade reports show they are not fully integrating search into ad campaigns, much less their own Web sites.

"As consumers go online in ever-larger numbers to research new and used vehicle purchases, the stakes get higher," says Ms. Phillips.

Research from J.D. Power and Associates shows the chance of making a sale roughly doubles when consumers visit a brand site first, rather than an online shopping site.