Automotive Marketing Online: Negotiating The Curves by Emarketer

June 2008
Automotive Marketing
Online:
Negotiating the Curves
Executive Summary: After consistently leading the US in advertising spending, the automotive sector has
dropped into the number-two spot behind retail. Ad spending in the sector is going in reverseeverywhere except on
the Internet.
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Online Advertising Spending by the US Automotive

Industry, 2007-2012 (billions and % change)
2007
2008
2009
$2.45 (25.6%)
Auto marketers are following their customers. Research shows

that eight out of 10 consumers now consult the Internet at
least once during the car-buying process. In fact,
recommendations from family and friends have been replaced
in importance by online customer reviewsby strangers.
$2.98 (21.6%)
$3.39 (13.8%)
2010
2011
Even as new-vehicle sales decline, automotive marketers will

spend nearly $3 billion online this year, up 21.6%. By 2012,
automotive online ad spending will top $5.6 billion.
$3.85 (13.6%)
$4.51 (17.1%)
2012
$5.61 (24.4%)
Note: includes auto manufacturers, national dealer associations, individual

dealerships and after-market vendors advertising new and used cars of all
types; excludes auto insurance and rental companies
Source: eMarketer, June 2008
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Industry Snapshot
Automotive Advertising
Spending Shifts Online
Consumer Behavior and Attitudes
Online Media Tools
Trends to Watch
Conclusion
Related Information and Links
www.eMarketer.com
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Manufacturers sites are now visited about as often as thirdparty sites, and how dealers handle online inquiries can make
or break a sale.
Nevertheless, though automakers and dealers see the Internet
as cost effective, measurable and in some ways better than
traditional media, the channel doesnt get a free ride. Marketers
are monitoring their online mix, executions and technology as
closely as they do older, established ad vehicles to ensure that
all touch points work in sync to connect with consumers who
tend to steer away from ads and promotions of all kinds.
Key Questions
Where are automotive manufacturers spending their
advertising budgets?
How will the slowing economy affect car sales?
Are dealerships lagging in adopting Web 2.0 tactics?
How has consumer behavior online been influenced by
social media?
What can dealers do to boost conversion rates from
online inquiries?
Do consumers really want to buy cars online?
The First Place to Look
Copyright 2008 eMarketer, Inc. All rights reserved.
Industry Snapshot
Key eMarketer Numbers Automotive Marketing
Online
$5.61 billion
Online advertising spending by the US automotive

industry in 2012, up from $2.45 billion in 2007
11.0%
Online advertising spending by the US automotive

industry % of total US online advertising spending
in 2012, down from 11.6% in 2007
24.4%
Growth in online advertising spending by the US

automotive industry in 2012, down from 25.6% in
2007
Note: includes auto manufacturers, national dealer associations,

individual dealerships and after-market vendors advertising new and
used cars of all types; excludes auto insurance and rental companies
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Crude oils price increase since the beginning of the decade is

being felt across all sectors, but it appears to be hitting automotive
consumers hardest, which hurts the automobile industry.
General Motors, Ford Motor, Chrysler and others continue to be
roiled by red ink, intense competition and the runaway costs of
everything from healthcare to copper and petroleum-based resins.
The Big Three, in response, are restructuring their North American
operations, closing plants, renegotiating union contracts, cutting
costs, reducing workforces and shedding units. In March 2008,
Ford announced it would sell Land Rover and Jaguar to Tata for
$1.7 billionless than one-third of the $5.3 billion it paid for the
brands. And that does not count the $10 billion it pumped into
Jaguar, trying to turn it around.
J.D. Power & Associates chief economist, Bob Schnorbus, told
Advertising Age he expected sales figures for the US automobile
market to come in at roughly 15.8 million new vehicles in 2008.
Thats a 7% drop from the 16.9 million units the country averaged
in the early part of the decade.
This year is expected to be the worst for sales of passenger cars
and light trucks in a decade. Particularly painful for an industry
where new vehicles sell for the skinniest of profits is slack demand
for the once invincible (and highly lucrative) trucks and SUVs.
Not surprisingly, fuel-efficient models are becoming more popular.
Ford, the countrys number-three automaker after GM and Toyota,
predicts that sales of small cars in the US will increase 25% by
2012 to a record 3.4 million, while SUV and pickup sales continue
to languish.
Green: The New Black

After being left in the dust of more fuel-efficient imports, Detroit is
tuning up production of small cars.
Automotive Marketing Online
According to car-buying Web site Autobytel.com, Ford, Saturn and

Toyota are redesigning their hybrid SUVs. GM is developing a Volt
hybrid under the Chevrolet mantle, and this year it will launch
hybrid versions of the Chevrolet Tahoe and GMC Yukon. Fuelefficient sedansfrom Chevrolets Malibu to the Aura from Saturn
(also part of GM)as well as gas-sipping crossovers (automobiles
taller than a standard sedan but with better gas mileage than the
typical SUV) like Chevrolets Traverse and Fords Edge SUV are in the
offing. At this years New York International Auto Show, just about
every type of vehicle, from SUVs to sedans, has a hybrid offering.
Clean-burning, high-mileage diesels are also coming to the fore.
Still, it is easier to talk green than walk (or drive) green.
As if American automakers didnt have enough problems,
competition is coming from unexpected corners as well.
Accelerated Composites, a private California startup, announced it
would begin selling the 230-miles per gallon, three-wheeled
Aptera in California by the end of 2008. The car, which looks like a
pedicab out of The Jetsons, will have a motorcycle engine and
seat two adults in front and a small child in back. It will be available
as a plug-in hybrid or in an electric version. Aptera will not have
GM shaking in its whitewalls, but the concept does give fodder to
advocates of high-mileage vehicles.
In January, Americans started seeing the tiny smart car on
neighborhood streets. The car, a mainstay in Europe since 1998,
gets 33 to 41 mpg, which smart (a division of Mercedes) says is
better than any other car on US roads today, save hybrids. Three
models are availablethe smart fortwo pure coupe (starting at
$11,590), the smart fortwo passion coupe (starting at $13,590) and
the smart fortwo passion cabriolet convertible (starting at $16,590).
Also in January, Indian automaker Tata said it would begin selling a
$2,500 car by the end of the year. Truncated in size and amenities,
the Nano (which will be pasted together, have one windshield
wiper and no tubes in its tires) will not be sold in the US, but it has
auto marketers worldwide rethinking their business model.
Chryslerwhich was bought by private investors in 2007last
year said it would team with Chinas Chery Autos, that countrys
largest automaker, to create a low-cost car. And GMwhich last
year dropped to the worlds number-two carmaker, behind
Toyotaput the kibosh on plans for a new line of gas-guzzling V-8
vehicles. Instead, it will devote the money to smaller cars,
according to Newsweek. Though Toyota is number one globally,
GM still leads in the US.
With American consumers thinking small, luxury vehicles are not
off the table for US automakersif they look abroad. With the
dollar tumbling in value, demand for high-priced American
offerings is expected to come from Asia, particularly China,
Russia, India and the Middle East, rather than at home.
Automotive Advertising
Although automotive remained the largest US
advertising category, automakers have already
begun reining in their ad budgets. According to
eMarketer calculations based on TNS Media
Intelligence data, spending declined 5.8% in 2006,
a loss of $1.2 billion. GM led the pack, cutting its
advertising spending by $814 million, or 19.8%.
The former top-spending US advertiser fell to
third place, behind Procter & Gamble and AT&T.
The trend continued in 2007, as automakers, dealerships, parts
suppliers and accessories marketers spent $18.6 billion, down
6.4% from $19.9 billion one year earlier, according to TNS.
Top 10 US Industries, Ranked by Total Advertising
Spending*, 2003-2007 (billions)
2003
2004
2005
2006
2007 Total
20032007
1. Automotive (access and

equipment)
$13.65 $15.17 $14.86 $14.05 $13.17 $70.90
2. Retail
$13.20 $13.80 $13.90 $14.25 $13.90 $69.05
5. Media and advertising
$8.66 $9.14 $10.06 $10.30 $10.75 $48.91
3. Communications
$7.52 $8.40 $8.57 $9.48 $9.11 $43.10
8. Financial
$6.67 $7.86 $8.51 $8.70 $9.22 $40.98
4. Misc. services and

amusements
$6.61 $7.34 $7.88 $8.74 $8.99 $39.57
6. Medicines and proprietary

remedies
$5.92 $6.93 $6.87 $7.68 $8.10 $35.51
7. Direct response
companies
$4.74 $5.31 $6.13 $6.51 $7.81 $30.50
9. Automotive (dealers and

services)
$6.28 $6.65 $6.25 $5.83 $5.44 $30.45
10. Insurance and real estate
$3.54 $4.53 $5.49 $6.58 $6.37 $26.51
The Kelsey Group in December 2007 forecast global automotive

ad spending to remain around $40 billion through 2011. However,
the Internets share of that spend would increase from 5% in 2007
to 13% globally in 2011. Traditional classifieds will migrate online
and newspapers share of spending will decline from 17% to 14%
in the same period.
2008 does not look like a turnaround year, by any means.
The pullback in ad spending mirrors the decline in new-vehicle
sales. This year sales are expected to be below 16 million,
according to the National Automotive Dealers Association (NADA).
Through 2014, J.D. Power predicts just an 8% increase in newvehicle sales, about 1.2 million.
Add to that a weak economy, ever-rising gas prices and tighter
credit, and it is no surprise that consumers are hanging on to their
aging cars. For the second year in a row, R.L. Polk & Co. reported
that the median age for passenger cars was at a record high of 9.2
years. Cars 11 or more years old made up 41.3% of the US car
population in 2007, and that figure was 29.5% for light trucks.
Roughly 6% of the US adult population buys a new vehicle in any
given year, according to J.D. Power, so customer retention is
paramount. The cost of new-customer acquisition is about four
times that of maintaining an existing relationship, and with
retention rates averaging 49% for the industry there is an
opportunity for savvy marketers.
Note: includes outdoor, Internet (display advertising only), radio (network

radio, national spot radio, local/spot radio, local radio detail), newspaper
(local, national, Hispanic), magazines (BtoB, consumer, Hispanic, local,
Sunday magazines), TV (network, cable, spot, syndicated and Spanish
language); *ranked by total spending for 2003-2007
Source: TNS Media Intelligence, provided to eMarketer, March 20, 2008
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Overall ad spending, like new-car sales, is not expected to stage a

comeback this year or in the near future.
Borrell Associates 2007 automotive report noted that, between
2002 and 2007, auto ad spending grew at a compound annual
growth rate (CAGR) of 3.7%. Looking ahead to the next five years,
the CAGR is expected to be just 1.7%.

Overall spending may be stagnant, but
automakers and dealers will continue to shift it
among media channels.
Between 2005 and 2007, advertising spending moved from
traditional media into digital and out-of-home initiatives, according
to TNS Media Intelligence data supplied to eMarketer. Hardest hit
were newspapers (-30.3%) and magazines (-12.5%), while TV (-6.3%)
and radio (-7.6%) experienced smaller by similar declines. At the
same time, spending for online display ads rose 109.1%, while
outdoor climbed a modest 1.9%.
Total Advertising Spending by the US Automotive
Industry, by Media, 2005-2007 (thousands)
2005
2006
2007
Television
$9,653,837
$9,771,971
$9,044,671
Magazines
$2,426,046
$2,148,130
$2,123,370
Newspapers
$6,207,164
$4,897,107
$4,328,665
Radio
$1,463,199
$1,440,683
$1,352,079
Internet*
$414,477
$714,059
$866,587
Outdoor
$308,464
$303,340
$314,295
$20,473,186
$19,275,289
$18,029,667
Total
Note: numbers may not add up to total due to rounding; *excludes paid
search and broadband video ads
Source: TNS Media Intelligence, provided to eMarketer, May 9, 2008
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eMarketer estimates online ad spending by the entire automotive

industry (excluding car rental and insurance) will reach $2.98
billion this year as advertisers large and small try to make every
dollar count.
Online Advertising Spending by the US Automotive
Industry, 2007-2012 (billions and % change)
2007
$2.45 (25.6%)
2008
2009
2010
2011
2012
$2.98 (21.6%)
$3.39 (13.8%)
Between 2005 and 2007, the auto industry accounted for 11% to
11.6% of all online advertising. Even as growth slows for Internet
advertising overall, eMarketer expects the auto industry will keep
pace with growth of 21.6% this year and about 14% in 2009.
Borrells data is roughly in line with eMarketers.
US Online Automotive Advertising Spending by Car
Sellers*, 2001, 2006 & 2011 (billions)
2001
$0.5
2006
$2.3
2011
$4.2
Note: includes video and paid search; *automotive manufacturers,

franchises, dealerships and private sellers
Source: Borrell Associates Inc., "2007 Online Auto Advertising Shifts Into
High Gear" as cited by ClickZ, May 10, 2007
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Borrell predicts that online auto ad spending will increase by 13%

over the next five years, compared with less than 2% for total auto
industry spending. By 2009, digital spending will hit $4 billion,
surpassing every other medium except broadcast television.
Manufacturers Media Mix

Automakers top priorities are getting their name into a
consumers consideration set and then helping those in-market
shoppers reach a dealership. To that end, their use of major media
channels has changed significantly in recent years, moving out of
print and radio and onto the Internet.
According to eMarketer calculations based on TNS data, major
media ad spending by original equipment manufacturers (OEMs) fell
by 12.1% between 2005 and 2007, from $10.7 billion to $9.4 billion.
Newspapers took the hardest hit, falling 52.6% in the period, while
magazines dropped 14.5%. Internet spending in the form of
display ads rose 119% to $610 millionor about 50% of the
probable total, since TNS does not include paid search or
broadband video.
$3.85 (13.6%)
$4.51 (17.1%)
$5.61 (24.4%)
Total Advertising Spending by US Auto

Manufacturers, by Media, 2005-2007 (thousands)
2005
2006
2007
Note: includes auto manufacturers, national dealer associations, individual

dealerships and after-market vendors advertising new and used cars of all
types; excludes auto insurance and rental companies
Television
$6,708,903
$6,650,178
$6,034,951
Magazines
$2,051,686
$1,791,647
$1,754,522
$278,456
$436,454
$609,845
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Newspapers
$1,240,661
$705,999
$588,322
Radio
$288,628
$271,806
$286,204
Outdoor
$152,431
$139,308
$153,296
$10,720,764
$9,995,392
$9,427,139
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By 2012, automotive online advertising will hit $5.6 billion, or 11%

of the total $51 billion eMarketer forecasts for that year.
(Note that eMarketer benchmarks its figures against data reported
by the Interactive Advertising Bureau (IAB) and
PricewaterhouseCoopers (PwC), the most recent year for which
was 2007.)
Internet*
Total
Note: *excludes paid search and broadband video ads

Source: TNS Media Intelligence, provided to eMarketer, May 2008
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Put into perspective, total online spending last year by automakers

equaled GMs television budget alone. Even though GM upped its
online spending by 78% last year, the total was just $208.3 million.
Ford and Chrysler boosted their online display spending by 65%
and 41%, respectively.
The share of budget for each media channel64% in television
and just 6.5% online last yearillustrates the OEMs reluctance to
let go of old media habits. That is money wasted on a channel that
does not deliver one-half of the influence that advertisers expect.
BIGresearch analyzed 2007 media spending by the top three US
auto manufacturersGM, Ford and Toyotaand found that 40% of
the ad budget (what each company spent on television) influenced
the purchase of fewer than 18% of respondents. Online advertising,
however, received between 2.8% and 3.9% of the total budget and
influenced a higher percentage of viewersabout 8.5%.
US Advertising Spending vs. Influence to Purchase
among Leading Automotive Advertisers, by Media,
2007
Maga- News- Outzines papers door
TV
Radio Internet
General Motors
% share of ad budget
12.2%
6.7%
1.2% 40.3%
3.0%
3.6%
% of respondents who said 16.9%

that the medium influences
their auto purchases
17.0%
10.2% 17.5%
6.4%
8.7%
Ford Motor Co.

13.1%
5.9%
0.8% 40.9%
1.5%
3.9%

16.5%
11.9% 18.0%
6.7%
8.4%
Toyota
13.0%
2.6%
1.1% 39.5%
1.4%
2.8%

15.8%
10.5% 16.8%
5.3%
8.6%
Source: BIGresearch as cited in press release, April 15, 2008

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comScore data showed that the top three automakers accounted

for the majority of display ads, commanding 80% of the categorys
online page views.
Top US Auto Manufacturer Online Advertisers, Ranked

by Total Display Ad Views, January 2008 (millions and
% of voice*)
Ad-exposed
unique visitors
Total display
ad views
% of
voice
General Motors
102.6
1,687.1
32.8%
Toyota
62.4
1,356.8
26.4%
Ford Motor Co.
95.0
1,075.8
20.9%
Honda
57.9
377.9
7.3%
Nissan
31.3
291.7
5.7%
Chrysler LLC
22.1
123.9
2.4%
Hyundai Motors
16.7
95.2
1.9%
Volkswagen
7.1
60.5
1.2%
Suzuki Motor Corp.
5.4
42.5
0.8%
Harley Davidson
6.1
35.3
0.7%
Note: home/work/university locations; *based on all publisher sites where

auto manufacturer display ads appear
Source: comScore Ad Metrix as cited in press release, March 28, 2008
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Many auto marketers are starting to use their decades-long

expertise in TV ads to boost their online presence and
engagement with in-market shoppers.
Sites such as driverTV showcase carmakers products in threeminute, high-definition videos that virtually replace a trip to the
dealer for a test drive. In March, NBC Universal paid about $6
million for a 35% stake in driverTV, which has annual revenues of
around $8 millionsolely from automakers, according to The Wall
Street Journal.
Automakers are also building their own online video channels,
offering streaming videos, video podcasts and music downloads
to attract younger audiences.
Toyotas Scion brand last year added a broadband channel
accessible through its Web site that featured a video newsletter by
rapper Slick Rick. GMs Cadillac brand has worked user-generated
videos into its campaigns since 2006, and now sponsors
MyCadillacStory.com, a site that invites owners to post photos or
essays about their Cadillac. And to launch its Edge crossover, Ford
teamed with iTunes to offer free downloadable music videos on a
monthly basis.
Higher-end nameplates are no less active online. Mercedes-Benzs
online museum has been replaced by Mercedes.tv, where videos
are updated weekly. Porsche Cars North America tripled its online
spending between 2005 and 2007 and plans to keep boosting
spending on video.
Audi launched German- and English-language broadband TV
channels on its site last year. Scott Keogh, chief marketing officer
at Audi, explains some of the thinking behind Audis move online.
eMarketer Interview
Scott Keogh, CMO, Audi
eMarketer: In the first quarter of the year General
Motors said it would shift one-half of its marketing
budget into digital marketing over the next three
years. Thats a big move.
S.K.: Online marketing is the absolute foundation of all
our marketing efforts. We have highly educated and
affluent consumers and theyre online. Were never
going to win at the game of massive TV advertising. It
really is the only medium where we are active
throughout the year.
eMarketer: How much have you increased the online
budget year-over-year?
S.K.: We are up, double, I would say, over the last two
years. Twenty percent of our media budget goes
toward online. We more than doubled our online ad
budget in 2007 to about $1.2 million, and it looks like
well double it again in 2008.
eMarketer: What are you doing with Audis Web sites?
S.K.: We have audiusa.com, our business site, which
lets consumers do configurations on cars. Then we
have a site called truthinengineering.com which is
about telling stories that get to the emotion of the
brand. [The site offers theatrical-style videos
highlighting eight different truths about the brand,
from supporting technology to model features. Truth
in Iron Suit features footage from Iron Man.]
We have lots of microsites and we do a lot of online
videosomething like 100 podcasts, which are like
entertainment and show the A4 or an R8 on a
racetrack. There are also podcasts on technologyyou
can download a one- to two-minute episode on a
feature, like the transmission system. Customers are
downloading these to their iPods to listen to while
theyre in the car, which is an unexpected twist. Weve
had millions of downloads. Within the video footage
there are real details on the cars.
Dealers Divvy Spending Differently

Call it The Case of the Disappearing Dealers. The NADA reports
that the number of US auto dealerships has fallen from 25,150 in
1987 to 20,700 last year, and this year new-car sales will decline 3%.
Still, franchise dealers spent $7.86 billion on advertising last year,
with the average ad spend per dealership increasing by 4% to
slightly over $378,000.
Average Advertising Spending by US Automobile
Dealerships, by Media, 2003-2007
2003
2004
2005
2006
2007
Newspapers
$187,534
$177,992
$118,790
$99,702
$100,839
Television
$64,145
$58,361
$70,410
$71,104
$66,097
Radio
$73,007
$72,821
$63,585
$66,111
$64,094
Internet
$20,940
$25,844
$35,738
$41,733
$62,607
Direct mail
$29,005
$30,132
$36,146
$37,029
$38,466
Other
$19,411
$18,726
$35,556
$48,940
$46,242
Total
$394,042 $383,876 $360,225 $364,619 $378,346
Total advertising
% of total sales
1.22%
1.16%
1.11%
1.14%
1.13%
Total advertising
per new vehicle
sold
$512
$493
$457
$590
$610
Note: numbers may not add up to total due to rounding

Source: National Automobile Dealers Association (NADA), "2008 NADA
Data: Economic Impact of America's New-Car and New-Truck Dealers,"
May 2008
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Internet ad spending by dealers is rising in both share and

importance: According to NADA, the typical dealership spent
16.5% on Internet advertising in 2007, compared with 11.5% in
2006 and 9.9% in 2005.
Dealers ad spending focuses heavily on newspapers and spot
television to reach a local audience. Only recently have dealers
begun to use the Internets geographic targeting capabilities to
reach active online shoppers.
According to TNS, newspapers received 62% of dealer advertising
in 2007, followed by television with 20.5%.
We wanted the podcasts for absolute Audi fanatics.

We didnt imagine how popular the videos would
become. If someone understands the feature and
benefit of the car, scores go up on customer
satisfaction surveys. Its just a smarter way for us than
mailing out books or manuals.
Consumer Behavior and Attitudes
But the chart below reveals changing trends in media buying at

the local level. Total ad spending dropped 13.5% between 2005
and 2007, to $4.9 billion. Newspaper spending fell by almost 22%
in that time, followed to a lesser extent by radio and outdoor.
In 2008, the question for both OEM and dealer

marketers is not who is using the Internet to shop
for cars, but who isnt? Capgemini reports that
80% of in-market vehicle shoppers go online at
some point in their search. The firm reported that
percentage was 71% in 2006 and 64% in 2004.
Total Advertising Spending by US Auto Dealerships,

by Media, 2005-2007 (thousands)
2005
2006
2007
$3,850,051
$3,313,087
$3,011,762
Television
$951,329
$1,023,053
$996,148
Radio
$631,956
$639,379
$582,328
Outdoor
$126,340
$130,936
$125,418
Internet*
$39,570
$87,240
$114,399
Newspapers
Magazines
Total
$17,099
$26,344
$29,246
$5,616,345
$5,220,038
$4,859,300
Note: *excludes paid search and broadband video ads

Source: TNS Media Intelligence, provided to eMarketer, May 9, 2008
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Magazine spending, although a modest $29.2 million, actually rose

71% in the same time periodand online display ads surged 189%
to $114 million and a 2.4% share of the total advertising budget.
According to Borrell, in-market buyers spend an average of five

hours researching vehicles on the Internetand less time with
traditional media. CarGurus, a third-party auto site, reported that
online prospective buyers spend more than 60% of their time
looking at photos and videos of new cars and the rest of the time
reading articles, user reviews, vehicle specifications and pricing.
Even so, according to TNS data, in 2007 automakers were still
pouring the majority of their ad budgets, about 60%, into TV. That is
money they cannot afford to waste in 2008 and beyond.
For dealers, the Internet dramatically changed the dynamics of
selling and servicing cars by offering shoppers transparency in
pricing and vehicle specs. Today, consumers expect dealers to
respond to e-mail inquiries in about four hours, not four days. They
want to schedule service appointments online and check dealer
inventory on new and used cars.
In the coming years, more and more consumers will want to
conduct the entire buying process online, and dealers will have to
provide the tools to facilitate the sale, including links to loan
applications and insurance sites.
Web sites will make or break a saleand an ongoing relationship.
Sales contact with new customers will be limited to a one-time
showroom visit for pickupand then continue via the Web site for
ongoing promotion and maintenance appointments.
Online Media Tools

Knowing that millions of potential automobile
buyers are online is one thing; understanding
which tools to use to reach them is another. But
savvy auto marketers are learning.
Top 10 Automotive Categories Searched Online

among US Adult Broadband Users, May 2007 (% of
respondents)
1. New vehicles
48.2%
2. Local dealerships
40.7%
Search Engine Marketing

Once online, most people turn to a search engine for auto
research. A global survey from Capgemini showed that 78% of
respondents visited one.
Online Tools Used by Internet Users Worldwide When
Researching a Vehicle Purchase, 2007 (% of
respondents)
3. Used vehicles
39.2%
4. Car accessories
33.5%
5. Car videos/photos
32.0%
6. Reliability/cost maintenance information
Search engine
27.4%
78%
7. Professional reviews
Automotive discussion group/forum
26.0%
37%
8. Local service/repair providers
Automotive blog
25.4%
30%
9. Consumer reviews
Informational/encyclopedia site with user-generated content

23%
23.7%
10. Auto enthusiast information
Online video site/video-sharing service
13.5%
17%
Note: n=1,001 ages 18+

Source: Autobytel Inc. and Kelton Research (KR), "The State of Search,"
provided to eMarketer, October 15, 2007
RSS feed
10%
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Other
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088639
2%
But shoppers do not always find what they are looking for on
major search engines.
None of these
9%
Note: China, France, Germany, UK and US; all respondents were planning
to purchase or lease a new or used vehicle in the next 18 months
Source: Capgemini, "Cars Online 07/08" conducted by SmartRevenue as
cited in press release, October 4, 2007
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One-quarter of respondents said they were overwhelmed by the

deluge of results returned by searches on Google, Yahoo! and
MSN, and nearly the same percentage were turned off by the paid
commercial listings that showed up alongside organic results.
088208
According to a survey from Autobytel conducted by Kelton

Research, searches for new vehicles topped the list of automotive
categories for broadband users. Finding a local dealership was the
second-most-popular use of search engines, while used-car
searches ranked third.
Leading Complaint of US Adult Broadband Users

about Online Automotive Information Searching on
Large Search Engines*, May 2007 (% of respondents)
Deluge of results
25.0%
Prevalence of commercial paid listings
24.0%
Disorganized or random results
18.8%
Inability to understand keywords
18.6%
Other
13.6%
Note: n=1,001 ages 18+; *Google, Yahoo! and MSN

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Online Media Tools
To alleviate the problem, auto marketers need to stop buying

keywords that do not describe a new cars features.
Advertising Age discussed auto marketers penchant for buying a
competitors name or keywords like green cars or hybrid when
the automaker did not offer such models. The practice risks
alienating in-market shoppers who have defined their needs and
are online to research and narrow their choices.
Reasons that Internet Users Worldwide Use Online

Tools When Researching a Vehicle Purchase, 2007 (%
of respondents)
Opinions/reviews about specific car brands/makes
51%
News about new vehicles
37%
Helpful hints
Automotive searchers quickly become disenchanted with auto

marketers who try to push vehicles that do not match their criteria
for fuel efficiency, passenger seating, engine performance and
other features.
33%
Opinions/reviews about specific car dealerships
33%
Personal stories
23%
Social Media Marketing

Every day, conversations that used to take place with friends and
family are shifting to the Internet.
Capgemini found that, with the spread of social media, shoppers
are now looking for opinions and reviews from total strangers
about specific brands, makes and dealers, as well as to discuss
their own impressions and experiences.
Discussions with other consumers

21%
Discussions with automotive experts
20%
Information about vehicle recalls
19%
Discussions about a specific automotive topic
15%
Information about automotive events/auto shows
12%
Spy photos or other car images/videos
9%
Other
1%
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Likewise, the New Autoshopper.com Study from J.D. Power

found that nearly 69% of online new-vehicle buyers used one or
more types of user-generated content. Consumer ratings and
reviews were the most popular form, and enthusiast sites, online
forums, blogs and photo-sharing sites were considered helpful but
had lower usage rates.
Online Media Tools
A joint comScore and Kelsey Group study showed that 78% of

Internet users who read an online review in the automotive
category said it influenced their offline purchase decision.
Behavior of US Online New Car Shoppers,

March-August 2007 (% of time spend on Web pages)
Offline Purchase Behavior of US Online Consumer

Review Readers that Was Significantly Influenced by
Review, by Service Category, October 2007 (% of
respondents)
Hotels
Travel
87%
Looking at photos
and/or videos
62%
84%
Restaurants
79%
Legal
79%
Automotive
Looking at articles,
user reviews,
specifications
and pricing
38%
78%
Source: CarGurus as cited in press release, October 11, 2007

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Medical
Home
76%
73%
Note: includes responses of 4 or 5 on a 5-point scale

Source: comScore, Inc. and The Kelsey Group as cited in press release,
November 29, 2007
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Toyotas Scion is building buzz via social engagement and

community participation. The brand has even gone virtual, as the
following case study illustrates.
Scion Case Study
Not surprisingly, Capgemini found that younger Internet users are

more likely to check out automotive blogs. About one-third of
respondents ages 18 to 34 did so while researching a purchase,
compared with 22% of respondents ages 50 and older.
One of the most successful brands to tap into the

consumer zeitgeist is Toyotas Scion. Aimed at the 18 to 24
year-old set, Scion is designed to recruit young consumers
to the automaker.
Toyota was an early entrant in the blogosphere, employing staff to,

among other things, blog back.
Scion hardly advertises and does not need to give

incentives, a popular tool in clearing dealer lots. Instead, it
relies on word-of-mouth and a strong Internet presence.
But rather than buy keywords and run banner
advertisements, Scion reaches anti-ad consumers by going
viral, using virtual worlds, tapping into so-called influentials
and even sprinkling in a bit of traditional marketing.
Bruce Ertmann, corporate manager of consumer-generated

media, told Brandweek he checks Autoblog, Jalopnik,
Autoextremist.com and fan sites. As an example, when Al Gore III,
son of the former vice president, was pulled over in July 2007 for
driving his Toyota Prius at 100 mph, the automaker responded to
blog entries about the incident.
We dont advocate traveling at 100 mph on our nations
highways, or anywhere for that matter in any of our products, but
weve also heard from some of our Prius owners that say its kind
of nice to know the car is not a slug at all but has the power to
move fast if needed. Just what is the top speed of a Prius? Its
actually 103 mph. Buy a Priusbut obey the law, Mr. Ertmann
wrote on his blog.
In a six-month study of online behavior conducted in 2007,
CarGurus found that new-car shoppers spent a majority of their
time online looking at photos or watching videos. Reading articles
and user reviews or comparing prices and vehicle specifications
occupied 38% of their time.
Scions entre to the virtual world began in 2006first in

Whyville (demographic: 8 to 14 year-olds), Second Life (30somethings) and There.com (late teens).
Some of Scions virtual initiatives:
Gaia Online. Members buy and build virtual cars.
Second Life. In Scion City, residents build their cars and
choose avatars, as on Gaia.

Club Scion (There.com). Described as vehicle
exploration disguised as a night club. A series of

interconnected clubs built in the shape of the Scion xA,
xB and tC models.
Whyville. Where users buy and create tricked-out
versions of virtual Scion models and learn how cars

work. In June 2007, it had a virtual after-party for an
avatar version of hip-hop artist tobyMac.
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Online Media Tools
Scion.com. Areas devoted solely to registered users,
many of whom own Scions, featuring a broadband video

and music site with an indie bent. It also supports virtual
games on sites like Want2BeSquare.com.
Media that Influence Automobile Purchases by US

Adults, July & December 2007 (% of respondents)
July
2007
December
2007
Word of mouth
30.8%
30.2%
Scions interactive marketing manager, Adrian Si, told

Mediapost it does not matter that the brand does not
collect money for cars purchased online. The important
thing is engagement, and the Internet allows marketers to
track how many people visited a particular site, what they
bought and customized as well as what they said about
the brand.
Reading articles on product
22.9%
21.7%
TV/broadcast
22.7%
20.8%
Newspapers
19.2%
19.5%
Magazines
17.9%
16.5%
Radio
13.8%
14.1%
Cable
14.2%
12.6%
Newspaper inserts
11.3%
11.9%
Direct mail
10.9%
11.6%
Just as Scion lets consumers (virtual and real) design their

own vehicles, consumer input helps shape the brand,
covering everything from product introductions and
pricing to dealer operations.
Outdoor billboards
10.2%
10.6%
Internet advertising
10.3%
10.2%
In-store promotion
8.2%
8.5%
Coupons
8.3%
8.5%
Product placement
7.0%
7.3%
Launched in 2003, Scion is a niche vehicleselling 130,000

units last year, according to AutoWeek4% of Toyotas total.
The up-and-coming brand appears to have found the golden
goose: entertaining marketing that consumers believe
improves their lives rather than intrudes upon them.
Yellow Pages
7.0%
7.2%
E-Mail advertising
7.0%
6.7%
Satellite radio
2.8%
3.2%
Web radio
1.8%
2.2%
Blogging
1.9%
2.1%
Instant messaging (computer)
1.6%
2.0%
Videos on cellphone
1.9%
1.7%
1.7%
Word-of-Mouth Online
Text messaging (cellphone)
A few short years ago, price and vehicle specs were the main
pieces of information sought online. Today, shoppers turn to the
Web for recommendations and reviews.
Note: ages 18+; includes cars and trucks

Source: BIGresearch, "Simultaneous Media Usage Study (SIMM) 11" as
cited in "Media Multitasking," provided to eMarketer, January 22, 2008
Word-of-mouth has always had a great influence on vehicle

purchase decisions, but now the Webthrough blogs, user
reviews, discussion groups, automotive wikis and other social
mediais replacing recommendations from friends and family.
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For the automotive cognoscenti, an important influencer target,

the Internet outstrips all other media as a source of information.
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Online Media Tools
A Harris Interactive survey of people who considered themselves

very or extremely knowledgeable about cars found that 63%
had used the Internet as a resource for their most recent car
purchase, while magazinespresumably enthusiast titleswere
a distant second, at 33%. Newspapers ranked only slightly ahead
of television.
Information Resources Used by US
Automotive-Influential* Adult Internet Users for Most
Recent Automobile Purchase or Lease Decision,
June-July 2007 (% of respondents)
Internet
63%
Magazines
33%
Friends, family or acquaintances
26%
Customer reviews were not as popular, perhaps due to fears of

negative comments. Likewise, social networkspresumably for
the auto enthusiast crowdwere not in great use, but some
planned to add them.
Auto marketers are getting the picture. Beyond adding more video
to their sites, highlighting their service departments and even the
showroom sales experience, a good portion of dealers broadcast
TV spending is shifting online in the form of broadband video
channels sponsored by manufacturers or devoted to new cars.
Borrell expects online video and search ads to dominate the local
automotive advertising scene in five years. Online video and
search advertising made up just 27% of local automotive online
spending in 2007, but by 2012 these two tactics will account for
76% of local auto online ad budgets.
Online Video and Paid Search Advertising Spending
by Car Sellers* As a Percent of US Total Local
Automotive Online Advertising Spending, 2007 & 2012
Newspapers
26%
TV
2007
24%
27%
2012
76%
Auto dealership salesperson

17%
Note: ages 18+ who acquired a new or used automobile in the past year;
*self-described as "very" or "extremely knowledgeable" about vehicles
Source: Harris Interactive as cited in press release, January 24, 2008
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Online Video
Just one-third of auto dealers now use online video on their local
sites, but nearly 60% of respondents told the Kelsey Group they
planned to add video in the next 12 months.
Current and Intended Usage of Select Web 2.0 Tactics
by US Auto Dealerships, February 2008 (% of
respondents)
Online video integrated into site
33%
59%
Customer ratings and reviews
29%
43%
Use of social networking sites
15%
33%
Currently use
Note: *automotive manufacturers, franchises, dealerships and private

sellers
Source: Borrell Associates Inc., "2007 Online Auto Advertising Shifts Into
High Gear" as cited by ClickZ, May 10, 2007
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083827
Volvo created a 16-episode online video series, Mr. Robinsons

Driving School (featuring Craig Robinson from NBCs The
Office), to promote its C30 model. In addition to watching the
video, users can participate in driving games.
OEM Sites on the Rise

Manufacturers are slowly making inroads online, and dealers are
following their lead. According to J.D. Power, shopper satisfaction
with the usability of automakers sites increased by 6% between
2003 and 2007.
The research firm also found that 47% of new-vehicle shoppers
went to independent sites, while 46% visited a manufacturers site.
The shift is substantial: In 2003, 62% of new-vehicle shoppers went
straight to an independent site and only 36% visited an
automakers site first. The trend continues throughout the
shopping process, with online shoppers visiting manufacturer
sites more than ever.
Intend to use within next 12 m
Source: The Kelsey Group as cited in press release, March 10, 2008
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Online Media Tools
A global trend toward manufacturers and dealers sites and away

from information and independent car valuation services was
confirmed by Capgemini data covering 2005 to 2007. In the threeyear period, respondents claiming visits to automakers sites
increased 27% and dealers site visits rose 2%. Meanwhile, the
percentage of respondents citing information sites declined 14%,
independent e-tailer sites were down 15% and independent car
valuation services fell 3%.
Sources Used by Internet Users Worldwide When
Researching Vehicles, 2005-2007 (% of respondents)
2005
2006
2007
Information Web sites
55%
54%
41%
Manufacturer-specific franchise dealer
55%
54%
51%
Family and friends
55%
46%
44%
Dealer Web sites
49%
52%
51%
Manufacturer Web sites
43%
64%
70%
Specialist motoring/automotive press
41%
42%
44%
Independent e-tailer sites
36%
36%
21%
Print advertising
32%
23%
20%
TV advertising
31%
29%
29%
Independent car valuation services
27%
29%
24%
Nonspecialist motoring/automotive press
24%
17%
14%
Used car dealer
7%
7%
8%
Financial services broker
6%
6%
6%
21%
29%
Web forums/blogs/Internet discussion groups
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Most Important Manufacturer Web Site Features for

Researching a Vehicle Purchase according to Internet
Users Worldwide, 2007 (% of respondents)
Price information*
45%
Compare vehicles
36%
Full range of product information
36%
Full vehicle configurator
24%
Obtain a quote
22%
Cost calculator
21%
Easy site navigation
19%
Transaction price available online
19%
Retail list price available online
16%
Trade-in information
13%
Contact dealer sales staff from the Web
11%
Dealer invoice price available online
10%
Communicate with dealer/car company online
088201
Interestingly, influence from family and friends fell 11%, while Web
forums, blogs and online discussion groups, first measured in
2006, gained ground. Traditional media channels such as print and
TV ads also showed declining influence, although enthusiast press
outlets saw a bump in interest.
10%
Locate vehicle anywhere in the country
9%
Ability to check European dealer inventory or central stock
8%
One-step or partial configurator
Consumers are also limiting the number of manufacturer sites

they consult. In 2007, 67% visited four or fewer OEM sites,
compared with 57% in 2005. The number of shoppers who
checked out five or more automaker sites fell to 34% in 2007 from
44% in 2005.
The list of features these online shoppers are looking for has not
changed very much in recent years. Price is still the number-one
reason shoppers visit a manufacturers site, although the number
of respondents considering it most important slipped from 52% of
respondents in 2006 to 45% in 2007. The ability to compare
vehicles and get a full range of product information also remained
consistently high.
8%
Native language
8%
Schedule test drives
7%
Online information on latest advertisement
5%
Zippy graphics
4%
to purchase or lease a new or used vehicle in the next 18 months;
*includes transaction price, retail list price and dealer invoice price
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Online Media Tools
The ideal auto site would give shoppers the ability to find the most
relevant information and compile professional reviews all in one
place, according to Autobytel and Kelton Research.
US Customer Satisfaction with Select Automotive

Sites, 2008 (based on a 100-point scale*)
Honda.com
Features of "Ideal" Automotive Web Site according to

US Adult Broadband Users, May 2007 (% of
respondents)
Ability to search for information across the entire Internet to
deliver the most relevant information
37%
Access to multiple professional reviews all in one place
34%
Access to vehicle photos and videos
26%
Help locating repair shops
24%
Chrysler.com
79
FordVehicles.com
79
Chevrolet.com
77
Toyota.com
77
NissanUSA.com
76
Total (average)
78
Note: *using the American Customer Satisfaction Index (ACSI)

methodology
Source: ForeSee Results based on the American Customer Satisfaction
Index (ACSI), "Online Customer Satisfaction: Driving Loyalty and Sales in the
Automotive Industry," March 31, 2008
093699
Access to user-generated content (eg blogs or reviews)

21%
Access to used classifieds from across the entire Internet
(including sources eg craigslist)
17%
Help locating aftermarket accessories from across the entire
Internet
15%
Note: n=1,001 ages 18+
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Less important but still necessary are videos and photos, usergenerated content such as blogs and customer reviews, and
listings of local repair shops.
Hondas agency, RPA, created a dog-lovers site, DogCars.com,
which named the Element (a Honda model) the Dog Car of the
Year in December 2007. By March, the agency was running ads
on dog-centric sites and cable TV showing the Elements
functionality from the perspective of dog owners.
Comparing manufacturer sites, ForeSee Results found that Honda
did the best job satisfying customers and driving sales and dealer
visits. (On a 100-point scale, the industry average was 78. Only
Honda, Chrysler and Ford exceeded that measure.)
www.eMarketer.com
093699
However, in a broader survey of auto sites conducted by Nielsen

Online and measuring unique visitors, e-commerce site eBay
Motors received double the traffic of the next-closest site, Kelley
Blue Book. Ford ranked third, while Hondas site ranked only 10th.
Top 10 Automotive Web Sites among US Internet
Users, Ranked by Unique Visitors, November 2007
(thousands)
1. eBay Motors
11,388
2. Kelley Blue Book
5,407
3. Ford
5,350
4. AOL Auto
4,992
5. Edmunds.com
4,983
6. Yahoo! Autos
7. AutoTrader.com
4,372
3,937
8. SIM Automotive Network
9. MSN Autos
3,602
10. Honda
3,561
3,790
Source: Nielsen Online, "NetView" as cited by Marketing Charts, January 9,

2008
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Dealers Need to Get up to Speed

Internet users are finding and engaging local dealers online in
growing numbers, and their experiences shape future loyalties.
Rapid responses to e-mail inquiries are expected, and
appreciated, as is relevant information. A Polk study of new-car
buyers found that 68% who received a response purchased a car
from the responding dealer.
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Online Media Tools
According to NADA, between 2001 and 2006 the average monthly

total of unsolicited Web inquiries to dealerships grew from 96 to 320.
Average Monthly Total of Web-Site-Generated,
Unsolicited Prospects according to US Automobile
Dealers, 2001-2006
2001
Some dealers may be driving customers away even when they do

respond. Although 38% gave a price quote in their first e-mail
response, almost the same percentage asked online inquirers for
more information, according to J.D. Power. But including a price
quote in the response can increase customer loyalty by 3.4
percentage points, Polk reported.
95.6
2002
118.0
2003
116.0
2004
115.7
US Automobile Dealers' Responses to Online Price

Inquiries, May-June 2007 (% of respondents)
Provide a price quote in first e-mail response
38%
2005
227.9
2006
Provide a price quote after asking shoppers for more information

35%
319.9
Source: National Automobile Dealers Association (NADA), "2006 Dealership

Internet Survey" as cited by Internet Retailer, May 2007
084181
Invite shoppers to visit the dealership to discuss pricing

18%
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084181
Use of broadband has raised consumers expectations for rapid

response. For auto dealers, that means shoppers and owners
want responses to queries faster than ever beforeor they will
find another dealer. A survey of new-car buyers online
experiences showed that 47% of those who preferred an e-mail
response from a dealer thought 10 to 24 hours was an acceptable
turnaround time, according to Polk.
These expectations are not limited to the US. Capgeminis survey
found that 39% of respondents worldwide expect a dealer or
manufacturer to answer their e-mail in four hours or less, with
10% demanding an immediate answer. Only 2% would accept an
answer more than two days later.
Slow response times are more costly to dealersalthough they
can affect a shoppers decision to change manufacturers as well.
Almost one-half of all respondents told Capgemini they would look
for another dealer if they did not receive a fast enough response.
Source: J.D. Power and Associates, "2007 Dealer Satisfaction with Online
Buying Services Study" as cited in press release, September 10, 2007
087848
While Internet users generally are not surprised to be asked for

more information, there are only certain types of information they
are willing to give to automakers and dealers. Contact information,
vehicle preferences and buying history are acceptable. More
personal information, such as future purchase intent, lifestyle and
research history were considered off-limits by most respondents.
Information Internet Users Worldwide Are Willing to
Share with Manufacturers/Dealers, 2007 (% of
respondents)
Future vehicle preferences
Look for another dealer
2005
2006
2007
43%
51%
48%
Look for another manufacturer
5%
4%
7%
Both
13%
17%
18%
Neither
5%
2%
2%
Call the dealer
23%
15%
14%
Call the manufacturer
2%
1%
2%
Don't know
9%
9%
9%
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70%
Contact information
69%
Vehicle buying history
68%
Future purchasing intention

Prior research history
Reaction of Internet Users Worldwide to an

Automotive Dealer/Manufacturer Taking Too Long to
Respond to a Web Query, 2005-2007 (% of
respondents)
www.eMarketer.com
087848
Lifestyle information
56%
40%
39%
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Woe to dealers who abuse the privilege of e-mail

communications. Consumers want to believe they are getting the
most out of the arrangement, and they do not want to be blitzed
with marketing promotions.
For all the inroads the Internet has made in the auto-buying
process, dealers still have the advantage of being close to their
markets. However, more consumers say they are ready to buy a
car online.
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Online Media Tools
Trends to Watch
Capgemini found that 20% of respondents were likely or very

likely to buy a car online in 2007, compared with just 2% in 2001.
Among those who were very likely, US respondents were most
willing at 8%, and Europeans were close behind at 7%.
Rough Road Ahead
Third-party sites are well ahead of dealers with e-commerce sales

programs. From eBay Motors to Carmax.comand even
Overstock.commore than 20 third-party sites sell vehicles
online, often including everything from online loans to delivery.
As the economy tightens and gas prices continue to soar,

consumers will become even more considered in their purchases.
More and more people will hold off on buying cars. Those who are
inclined to pull the trigger will come face to face with a credit
crunch that restricts what they can borrow.
That is a double whammy for automakers, hitting sales as well as
financing divisions such as Ford Motor Credit and GMAC.
Dealers are slowly catching up.

They are adding online features that allow visitors to view
inventory, schedule sales and service appointments, fill out
finance applications and see the manufacturers suggested retail
price. However, far feweractually, a decreasing number of dealer
respondentsoffer visitors the ability to order a vehicle online.
With pickup presumably scheduled to take place at the dealership,
there would still be time to build some customer loyalty into
the transaction.
Web Site Features of US Auto Dealerships, 1999 &
2006 (% of respondents)
View stock
72.1%
94.4%
Link to manufacturer's Web site
67.2%
69.1%
Schedule service appointment
41.8%
75.5%
Schedule sales appointment
A Green Light
Green will continue to be a hot-button issue, less, perhaps, for
environmental reasons than for economic ones.
Autobytel reported that its top 10 requested vehicles in 2007 were
fuel-efficient modelseven if they are more expensive and
smaller than their siblings. And even though trucks and SUVs
accounted for one-half of US sales last year, they were missing
from Autobytels most-requested list.
Welcome to the Fuel-Economy Economy

Thanks to Corporate Average Fuel Economy (CAFE) rules bearing
down on the industry, most mass-market cars will have to get at
least 35 mpg by 2020.
But according to David Cole of the Center for Automotive
Research, advances in non-food-based fuels will greatly reduce
the cost of filling up a gas tank within the next 10 years. He expects
rapid changes in auto design and manufactureperhaps even by
the end of the decadecreating new opportunities and
challenges for the industry.
41.8%
Boomers Step Off the Gas
68.3%
Fill out finance
39.8%
75.5%
View manufacturer's suggested retail price
38.7%
88.0%
Order online
27.3%
A major concern for the industry is what will happen when 70some million baby boomerslifelong gear headsstart retiring
and stop buying cars.
Another concern is that many skilled workers will exit the
workforce, possibly leaving automakers without enough workers
for at least some period of time, according to the Center for
Automotive Research.
25.8%
Consumer Designs
Link to financial, insurance, other auto sites
With so many of their potential buyers on the Internet, auto

marketers have to remain alert for new online developments,
good and bad.
10.5%
25.1%
Submit payment
4.1%
They should beware of citizen media and viral efforts to connect

with the challenged attention spans of consumers who find
something new one day yet shun it the next for being stale.
7.2%
1999
2006
Source: National Automobile Dealers Association (NADA), "2006 Dealership

Internet Survey" as cited by Internet Retailer, May 2007
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16
Trends to Watch
Conclusion
But they must also be ready to react quickly to true, innovative

citizen research and developmentinput from enthusiasts not on
the payroll that could significantly cut costs. Already, many car
companies are hiring vice presidents of consumer insights to
manage input from devotees, according to one longtime
automotive hand.
And now, a few final words about online auto

marketing, from Patrick McKenna, manager
of marketing communications, BMW of
North America.
Light at the End of the Tunnel

A bright spot is that, in the US, with its century-long love affair with
the automobile, the downturn in demand will almost certainly
reverse itself once the economy improveslikely with a
vengeance, as newly moneyed drivers ditch their old clunkers in
favor of the latest and greatest new ride.
eMarketer Interview
Patrick McKenna, Manager of Marketing
Communications, BMW of North America
eMarketer: According to a published report, BMW
allocated nearly one-half of its ad budget to online
media (an estimated $15 million to $25 million) to
promote the 1-Series. Whats that all about?
P.M.: BMW is certainly not new to digital media, but
this particular launch is certainly the highest
percentage of e-marketing that weve had to date.
Were doing a program on Facebook. Users get to build
their own 1-Series and send their model to friends.
Were hoping to lure new consumers to the brand,
many of whom thought they couldnt afford it.
eMarketer: How does this compare with online
marketing for other models?
P.M.: For other models, we typically dont spent more
than 15% of our annual ad budget online.
eMarketer: What else are you doing to promote the
1-Series?
P.M.: We ran banners on Facebook to download
various applications. One was an online graffiti
application with a contest, Draw what drives you.
The contest ran from March 29 through April 5. We had
9,046 entries and gave away models, miniatures of the
graffiti-inspired cars. People spent hours interacting
with this, which is really amazing.
We had a road trip and getaway application that ran in
May and a virtual car-key toss. Banners drove traffic to
BMW groups on Facebook. We also promoted the
program through various Federated Media sites, such
as Boing Boing and Lost Remote.
With the road trip, as the originator you can see where
the car has been. Its going across the US and the
world. Its a really fresh, new look at a road trip. We
could easily say heres our recommendation for great
driving routes, but we think this plays up the
engagement. Well have virtual road trips from one
Facebook page to another. Were not sure how that
17
Conclusion
will work but the gist is to get the shopper, and his or
her friends, involved [with the application] and not to
cram the message down their throats.
With the car-key toss, you can toss the keys to the 1Series to a friend who might have had a tough day and
say have a great drive!
eMarketer: What are you learning from this type of
social media so far?
P.M.: Were learning that there is a real interest in
BMW and the 1-Series and that theres an interest in
these Web tools. Theyre relevant and fun. People are
willing to spend the time if the idea captures their
interest. We looked at Facebook as a great
communications vehicle, but we quickly came to the
realization that if we ran conventional Internet
advertising, it wouldnt be seen as a tool for
engagement with our advertising.
eMarketer: What are your biggest challenges in terms
of building and implementing effective online
marketing programs?
P.M.: Weve been really fortunate. We have agencies
working with us that are trying to push the limits.
Were doing things that have never been done before
and thats one of the goals we set for ourselves. We
dont just want to run a conventional ad on Facebook
or Yahoo!. The agencies and the media partners have
helped us understand the parameters. For example,
on MSN when the car drives onto the screen, all the
attributes of the car spin out and land next to sports
and news headlines. For a few seconds, we have
infiltrated the editorial.
18
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June 2008

Online Advertising Spending by the US Automotive

Auto marketers are following their customers. Research shows

Even as new-vehicle sales decline, automotive marketers will

Note: includes auto manufacturers, national dealer associations, individual

Copyright 2008 eMarketer, Inc. All rights reserved.

Online advertising spending by the US automotive

Online advertising spending by the US automotive

Growth in online advertising spending by the US

Note: includes auto manufacturers, national dealer associations,

Crude oils price increase since the beginning of the decade is

Green: The New Black

Automotive Marketing Online

According to car-buying Web site Autobytel.com, Ford, Saturn and

1. Automotive (access and

$13.65 $15.17 $14.86 $14.05 $13.17 $70.90

$13.20 $13.80 $13.90 $14.25 $13.90 $69.05

5. Media and advertising

$8.66 $9.14 $10.06 $10.30 $10.75 $48.91

$7.52 $8.40 $8.57 $9.48 $9.11 $43.10

$6.67 $7.86 $8.51 $8.70 $9.22 $40.98

4. Misc. services and

$6.61 $7.34 $7.88 $8.74 $8.99 $39.57

6. Medicines and proprietary

$5.92 $6.93 $6.87 $7.68 $8.10 $35.51

$4.74 $5.31 $6.13 $6.51 $7.81 $30.50

9. Automotive (dealers and

$6.28 $6.65 $6.25 $5.83 $5.44 $30.45

10. Insurance and real estate

$3.54 $4.53 $5.49 $6.58 $6.37 $26.51

The Kelsey Group in December 2007 forecast global automotive

Note: includes outdoor, Internet (display advertising only), radio (network

Overall ad spending, like new-car sales, is not expected to stage a

Automotive Marketing Online

Spending Shifts Online

eMarketer estimates online ad spending by the entire automotive

Note: includes video and paid search; *automotive manufacturers,

Borrell predicts that online auto ad spending will increase by 13%

Manufacturers Media Mix

Total Advertising Spending by US Auto

Note: includes auto manufacturers, national dealer associations, individual

By 2012, automotive online advertising will hit $5.6 billion, or 11%

Note: *excludes paid search and broadband video ads

Spending Shifts Online

Put into perspective, total online spending last year by automakers

% of respondents who said 16.9%

Ford Motor Co.

% of respondents who said 17.0%

% of respondents who said 19.0%

Source: BIGresearch as cited in press release, April 15, 2008

comScore data showed that the top three automakers accounted

Top US Auto Manufacturer Online Advertisers, Ranked

Ford Motor Co.

Suzuki Motor Corp.

Note: home/work/university locations; *based on all publisher sites where

Many auto marketers are starting to use their decades-long

Automotive Marketing Online

Spending Shifts Online

Dealers Divvy Spending Differently