Honda dealer takes all ads online
Shift from traditional media is generally slow
Ted Davis advertises vehicles almost exclusively online these days.
The dealer manager of Parker Johnstone's Wilsonville Honda outside Portland, Ore., has seen the store vault to No. 2 in the state in new Honda sales, in large part because of a shift from print and radio advertising to digital, he says.
Whereas the store was 70 percent traditional advertising spend four years ago, it's 2 percent today and that's "only because I get weak in the knees occasionally" and place a newspaper ad, Davis says.
The store spends less than $15,000 a month on digital advertising and sells more vehicles than four years ago when the dealership was spending "considerably more" on advertising.
"I jumped right off the cliff," Davis says of online advertising. Parker Johnstone's Wilsonville Honda expects to sell more than 1,000 new vehicles in 2012 vs. 804 in 2010, a comparable year not marred by vehicle supplies crimped by the 2011 tsunami in Japan.
Davis' dealer counterparts are making the transition to digital more slowly.
According to vehicle shopping site AutoTrader.com, U.S. dealerships spend about 25 percent of their advertising dollars in digital forums vs. traditional media, such as TV, newspapers and radio.
Dealerships this year are expected to spend $2 billion online and $5.9 billion offline, reports AutoTrader. AutoTrader, the world's largest third-party vehicle shopping site, compiled the figures from data available through the National Automobile Dealers Association and other sources.
Digital spending is an even smaller share for factories and the metropolitan dealer associations or Tier 2 groups that get factory money to promote vehicles and specials in their respective markets.
According to AutoTrader, automakers this year will spend about $8.2 billion offline in the United States vs. $1.4 billion online; and Tier 2 dealership groups, $3.2 billion offline and $600 million online.
Perry: Change comes slowly
AutoTrader CEO Chip Perry says the shift to online spending is slower than the increase in online shopping behavior would suggest.
Nearly 90 percent of new-car buyers do some research about vehicles and dealers online, Perry says. And a 2011 R.L. Polk study found that new-vehicle buyers spend an average of 11.5 hours shopping online and 7.5 hours offline.
Perry says there are good and bad reasons why traditional advertising still gets a disproportionate share of automotive marketing dollars.
On the plus side, TV in particular is good at building brand awareness and making a splash during big events such as the Super Bowl, he says.
But too often, car companies and dealers spend money on traditional advertising because they always have, Perry says.
And the glitz of a TV spot reaching millions of viewers at once can be enticing compared with more focused online advertising that tries to conquer shoppers one computer screen or smartphone at a time.
"Traditional approaches can be slow to change," says Perry, who oversees a site that attracts about 15 million car-shopping visitors a month.
Davis at Parker Johnstone's Wilsonville Honda says he has swung exclusively to digital advertising because it gets results.
He says digital advertising gets in front of people who are actively hunting for a vehicle instead of the majority of people who are not but see a TV commercial or hear a radio spot.
The digital sites also leave customer tracks, such as vehicle detail pages viewed on a third-party shopping site or linking to the dealership Web site from a Google search, that help show the return-on-investment from an online spend, Davis says.
The Wilsonville store spends about 20 percent of its monthly online budget on Google ads and the rest on its own Web site and the major third-party sites, such as AutoTrader, KBB.com, Edmunds and Cars.com, he says.
The automakers' preference for traditional media is understandable, says Al Carl, manager of digital marketing for Naked Lime, a Web site and online marketing unit of Reynolds and Reynolds.
Those forums stimulate consumer awareness of the brands, and the factories are generally comfortable with the success they have achieved over the years, Carl says.
But Davis says he's so sold on online advertising at the dealer level that it's inefficient to spend elsewhere. "I'm glad when my competitors do it," he says.
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|Projected 2012 ad spend in billions of dollars|
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