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What Online Auto Advertisers Can Learn From Real Estate, Travel

  |  January 31, 2008   |  Comments

Auto marketers must look beyond lead-generation branding.

Vertical local sites' and directories' success can be attributed to many factors. In a column last October, I pointed to several: local content competes more effectively within the major search engines' SERPs (define), advertisers get a return on their investment, and consumers find the information they seek.

Now, vertical local sites' and directories' success is starting to affect other online advertisers. Industry sectors that haven't paid much attention to local search, such as automotive, have begun to see the value of making local search investments.

Several verticals, or categories, have experienced a lot of online growth in the past several years, most notably real estate and travel. Real estate sites such as Trulia and Zillow.com are great examples of how a smart combination of technology and content can create a very powerful online franchise.

The two types of vertical sites differ in the impact they've had on the marketplace, however. Real estate sites, for now, can still push leads to the local marketplace, that is, to a local agent or office location. In the travel category, online sites such as Expedia have upended local travel agents' ability to compete for customers. In coming months, we'll see how vertical local sites and directories affect some new industries, particularly automotive.

Auto Sector Sees Online Growth

Like real estate and travel, the automotive sector is experiencing interesting growth trends online. According to The Kelsey Group, the category itself is mature and well-defined online, with large brands conducting active campaigns, much like the landscape in the real estate and travel categories. While automotive marketers currently allocate less than 5 percent of their overall spending to online, that number should grow to 13 percent by 2011, according to Kelsey.

When it comes to online spending, the automotive business has nowhere to go but up. There are more than 265,000 business locations in the broader automotive category, representing about $1.2 billion of yellow page advertising spend annually, according to ad-spend data from my company. The sheer number of locations makes it one of the larger categories overall.

The raw number of prospects combined with the advertising dollars currently spent in this category makes automotive a very lucrative business. According to our analysis, there are nearly 110,000 new and used auto dealers in the U.S. that spend nearly $250 million annually in print yellow pages advertising. If the online portion of the auto category grows by 8 percentage points over the next several years, the dollars at stake will be substantial.

Auto Sites Still Focused on Branding, Lead Generation

Consumers can find a lot of great content and tools at automotive sites. They can compare the gas mileage and torque of four vehicles, then look at pictures and videos of their favorite vehicles. For the most part, though, the advertising or monetization aspects at many of these sites, though not all, consist of branding and lead generation. There's nothing wrong with either, but they don't provide consumers with a well-rounded product.

This is likely to change in the near future. According to Kelsey, growth in auto ad spending online will come at the local level. This bodes well for the many new automotive sites launching this year; my company has partnered with four new upstarts in as many months. From what I've been told and exposed to by these new entrants, they're creating sites with advertising products specifically for local business owners.

This approach can build on the strengths of existing sites that are well ingrained and branded in the online category. When I do a local search for a new car or auto service at any of the major search engines, it's clear local car dealers and service shops understand the Internet's value.

Big Opportunity for Automotive Players

Most car dealers and service shops are very well represented online within the local SERPs with great content. We could conclude, in fact, that this category doesn't need online local advertising help. However, I'd argue there's still a great opportunity here.

Actually, the number of automotive-related local search queries far outpaces local businesses' willingness to move dollars online. Despite the high number of relevant automotive results available, the industry should offer consumers more, given their interest level.

All told, automotive is well positioned for success, particularly given there's a large base of local businesses that understand the value of online efforts. All they have to do now is take advantage of that knowledge.

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Brian Wool

Brian Wool is VP of content distribution at Localeze, a Chicago-based local search company. Established in 2003, Localeze specializes in connecting consumers with local merchants through online content collection, enhancement, and distribution. An expert in local Internet search marketing, Brian leads the distribution efforts at Localeze and is responsible for content delivery to over 35 leading search engines, Internet yellow pages, and local directories. Brian previously held various sales and marketing positions at comScore Networks and Claritas.

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