NADA econimist Paul Taylor: Dealers use the Internet to differentiate themselves.
Dealership ad spending fell last year after a decade of steady increases, NADA says in its annual report on the state of the retail auto industry. The average franchise dealership spent $493 on advertising per new vehicle sold in 2004. That figure is down from $512 in 2003.
The average dealership spent $373,876 on all advertising in 2004, NADA says. That's a 5.1 percent decline from the previous year, when dealership ad spending averaged $394,042.
Total ad spending by U.S. dealerships was $8.3 billion last year, compared with $8.5 billion in 2003.
Internet advertising accounted for 6.7 percent of the typical dealership's ad budget last year - an average of $25,844, NADA says. That figure is up from $20,940, or 5.3 percent, in 2003.
The average dealership's spending on broadcast advertising declined last year. TV ad spending averaged $58,361 in 2004, down 9.0 percent from $64,145 in 2003.
Radio ad spending last year averaged $72,821, virtually unchanged from $73,007 in the previous year.
NADA chief economist Paul Taylor says dealerships increasingly are using the Internet to target their messages and differentiate them from other dealerships' ads.
At the same time, Taylor says, the price of online advertising is falling: "If you're spending the same, it means you're getting more."
While dealerships are spending more to advertise on the Internet, they are spending less on newspaper ads.
The average dealership spent $177,992, or 46.4 percent, of its ad budget with newspapers last year, NADA study found. That is down from $187,534, or 47.6 percent, in 2003.
Taylor notes that many daily newspapers publish online automotive ads. Although the newspaper industry benefits from that revenue, he adds, such spending by dealerships shows up in the Internet category.
Taylor says: "I'm sure that many of the dealers don't know that a newspaper consortium does cars.com," a Web site for vehicle sales.
You may e-mail Arlena Sawyers at [email protected]