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Arlena Sawyers Automotive News | March 3, 2008 - 12:01 am EST Online publishers of vehicle classified ads are rolling out new campaigns aimed at attracting users and persuading dealers to shift ad spending from newspapers. Third-party classified companies, led by AutoTrader.com and Cars.com, make money by charging for listings and generating sales leads for dealerships. More than two-thirds of new-vehicle buyers use the Internet in their searches, according to J.D. Power and Associates. But barely one-fifth of those buyers contact dealerships online, Power says, and that rate has largely stalled since 2004. So the classified companies are ramping up marketing aimed at dealers and consumers. "The greatest number of customers seek information about your inventory online," said Chip Perry, CEO of AutoTrader.com. "So why do (dealers) go to the newspaper? It's a habit — we've done it for years." Perry said companies such as his allow dealers to monitor prices and post multiple photos of vehicles they want to sell. They also accommodate online videos that include personalized comments about dealerships and vehicles. Since AutoTrader.com launched click-to-play video last year, Perry said, about 3,000 dealers have paid to include video in their listings. "The video multimedia side of Internet advertising is still very much in its infancy," Perry told Automotive News. AutoTrader.com posts more than 3 million vehicle listings from 40,000 dealers and 250,000 private owners. Cars.com also enables dealers to post click-to-play videos. Dealers spend an average of $104 to market a vehicle on his company's Web site, says Cars.com CEO Mitch Golub. That figure includes the cost of posting vehicle listings and obtaining leads. Golub compares that figure with data compiled by the National Automobile Dealers Association that conclude the average dealer spends $590 to advertise a car or truck in all media. "During economically challenging times, marketing and advertising is one of the dealer's biggest expenses," Golub says. "We are by far the most cost-effective medium." Golub said the number of online leads Cars.com provided dealerships last year increased 40 percent over 2006. The company is spending $200 million on a new marketing plan that includes an ad campaign and a revamped consumer Web site. Under a new partnership with Yahoo.com, Cars.com publishes 2.6 million vehicle listings. About 16,000 dealers list vehicles on Cars.com, Golub says. In 2006, NADA says, the average dealer spent 27.3 percent of his or her ad budget on newspapers, compared with 11.5 percent on the Internet. Figures are unavailable for 2007. |
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