DETROIT -- Automakers' spending to reach consumers on Internet search engines is set to explode.
Already two out of every three new-vehicle buyers research their purchases online, according to auto and Internet executives. And almost half of that is done using search engines.
Popular engines such as Google, AOL, Yahoo! and MSN allow users to link to automakers' Web sites by typing in key words. Those words can be as general as "SUV" or as specific as a vehicle model.
Each search engine determines which Web links appear first on a results page for a key word. But automakers can buy separate "sponsored" links to their Web sites that also appear prominently on the results page.
Car companies bid with search engines to link their sites to various key words. The more they bid, the higher their sites appear in lists of sponsored links. The companies pay the search engine the cost of their bid every time a computer user clicks on their sponsored Web links from a key word.
Search-engine marketing represents less than 1 percent of most car companies' annual marketing budgets, estimates Don Aydon, senior automotive manager of Yahoo! Search Marketing in Pasadena, Calif.
Automakers spent $10.75 billion to advertise in all U.S. media last year, TNS Media Intelligence reports.
Aydon says he expects automakers' spending on search-engine marketing to rise by one-third each year for the next five years. He says 45 percent of Internet visits to automotive Web sites result from users linking from search engines rather than typing in Web addresses.
Automakers say search engine marketing increases traffic to their sales Web sites. It also allows them to track potential customers.
Jack Bowen, General Motors' general director of customer relationship management, says GM has been buying key words for sponsored links from big search engines for about six years.
"It's a must-have," Bowen says. "Anyone trying to go to market and not leverage searches is missing the boat."
Bowen would not disclose GM's budget for search-engine marketing.
GM spent nearly $2.51 billion on all U.S. advertising last year, TNS says.
Automakers pay a search engine anywhere from a few cents to several dollars for every user click on a sponsored Web link to a key word search, says Denise Chudy, head of automotive at Google in Chicago.
Nissan North America Inc. might have to bid about 10 cents a click from the key words "Nissan" or "Infiniti," Chudy says. But a more general key word such as "car" or "truck" would generate many more searches and could cost an automaker $2 or more a click to link to, she adds.
The cost per lead -- what an automaker spends to get a potential buyer's contact information -- can be 80 percent less from a search engine than from other advertising media, Chudy says.
"It's so targeted, there's no waste of money," she says.
Search engines generally prohibit automakers from bidding on competitors' key words to limit access to Web links. For example, Ford can't buy the word "Chevrolet" on Yahoo!, Aydon says.
"Our editorial and relevance team screens that out because we need to deliver performance," he says.
Google offers trademark protection against a car company buying another company's name as a key word, a spokesman says.
Mark Simmons, advertising director of Toyota Motor Sales U.S.A. Inc., says search-engine marketing delivers "a pretty good return on investment."
"We want to make sure search-engine marketing gets people to think about us who perhaps aren't looking for Toyota directly but are doing a broader search and can easily find us," Simmons says.
He would not say what Toyota spends on search engine marketing. But Simmons adds: "Our interactive spending has been trending up because of the responsiveness."
A spokesman for Ford Division says its consumer sales site forddirect.com sold 210,000 vehicles last year as a result of links from search engines. That was about 9 percent of all vehicles sold on the site, he says.
More than one of every five new-vehicle sales is the product of an online lead, Aydon says.
Google's Chudy says dealers also are discovering the advantages of search-engine marketing. Chudy says a Mercedes dealership she declined to name is attracting 1,100 more monthly visitors to its Web site -- more than one-third of its Web traffic -- because of its marketing with Google.
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