The trick now is to convince the site's thousands of local franchises to use the ads.
Autobytel has created an ad product tailored to local car dealers. The offering, called Local Connect, officially launched in late February.
The company still must convince the thousands of dealer franchises that typically buy sales leads from it to use the data-driven ads. Of the 3,700 franchises across the country that use Autobytel for lead generation purposes, about 50 have signed on to use Local Connect. Around 10 of those advertisers actually have the ads up and running.
When users search Autobytel's MyRide vehicle sales and information search site for new and used auto dealers in a particular region, results pages display sponsored-link style units. These can launch an expanded ad featuring video and close-up photos of vehicle interiors and parts. The ads also link to the dealer's site, and provide a contact e-mail address and dedicated 866-number. "We provision the number for the dealer so we can show trackable results," said Tara Wagoner, director of dealer and consumer operations at Autobytel.
The key is not necessarily the video or photos or dedicated phone line. Rather, it's the fact that the ad product mimics the timely, specials-oriented ads dealers have grown accustomed to buying from print newspapers, a medium that is losing audience and typically costs more than the Internet. Like they do in their local papers, dealers can promote weekly specials on new vehicles, targeting them down to DMA levels or smaller regions based on users' IP addresses.
Local Connect ads for used cars are more automated than those for new vehicles, presenting information from dealer inventory data feeds which are updated daily. Dealers can choose which cars to advertise and which to leave out of the ads. Geo-targeted used car ads from multiple dealers in the same region can be rotated throughout MyRide as well as on Autobytel's network, which includes sites like Overstock.com, AutoMall, and ESPN Cars.
However, dealer's new car specials ads get exclusive treatment. The site ensures only one advertiser's ads are served for a given period of time to users in the targeted area.
"That's what they all want," said Gordon Borrell, president of local ad research firm Borrell Associates, of auto dealers. "They want exclusivity, and they want their advertising to be limited to a certain geographic area." The exclusivity, as well as the timeliness of the ad content means the ad offering is "positively geared toward newspaper advertisers," added Borrell.
Autobytel competitor Cars.com already has inherent relationships with newspaper firms. The site is owned by Classified Ventures, a collaboration of newspaper publishers Belo Corporation, Gannett Company, The McClatchy Company, Tribune Company and The Washington Post Company. The car sales and research site offers something similar to the Local Connect product. Cars.com users viewing new and used car dealer listings can "Click for Specials," which opens a new window showing vehicle images, a list of specials on specific models, links to the dealer site, and an 800-number.
According to Borrell Associates, auto advertisers will spend around $3.4 billion on online advertising this year, up from $2.8 billion last year.
The ads for new and used cars are sold as a package to dealers for a flat fee based on the dealer's county and its population and income levels. The ads usually cost between $500 and $700 per month for dealers, according to Mark Garms, Autobytel's SVP dealer operations and strategy. Advertisers don't pay any additional amount if the ads result in leads or sales.
Still, lead generation advertising has been the standard goal for auto advertisers, including dealers, and a primary way sites like Autobytel earn revenue from them. According to Autobytel President and CEO Jim Riesenbach, the site sold about 3 million leads to auto manufacturers last year.
As opposed to the typical lead gen offering, "This really puts Autobytel in the car buying funnel," said Borrell Associates VP Pete Conti. "That's the prefect time to inject local advertising, which has been lacking."
Getting local dealers to put more money towards this type of online advertising remains a challenge. "Eighty to 90 percent of our total [ad revenue] is still national," said Riesenbach. "It's still very early."
Note: Autobytel sold about 3 million leads to auto manufacturers last year, not 3 billion as originally reported.
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Kate Kaye was Managing Editor at ClickZ News until October 2012. As a daily reporter and editor for the original news source, she covered beats including digital political campaigns and government regulation of the online ad industry. Kate is the author of Campaign '08: A Turning Point for Digital Media, the only book focused on the paid digital media efforts of the 2008 presidential campaigns. Kate created ClickZ's Politics & Advocacy section, and is the primary contributor to the one-of-a-kind section. She began reporting on the interactive ad industry in 1999 and has spoken at several events and in interviews for television, radio, print, and digital media outlets. You can follow Kate on Twitter at @LowbrowKate.
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