Start Your Engines…

This week, let’s talk about a surprising category for the Internet: automobiles.

Cars are the fifth most visible category in Internet advertising. This makes cars one of the few categories with major advertising both online and offline. Some aspects of auto advertising on the Internet are quite similar to ads in other media, while others are as different as a BMW is from a Yugo.

The Strategis “Net Presence” study revealed a lot about the state of online auto advertising – who is doing it, where, how, and how much. The study approximates the online advertising visibility of all companies with an online advertising presence. “Net Presence” is the name for that composite measure of Internet advertising visibility.

Deep Pockets, High Stakes

The auto category is an important bellwether, since autos are the leading overall category for ad spending in the U.S. One recent study showed that 40 percent of new-vehicle buyers used the Internet for assistance with their auto purchase. Another survey reveals that auto advertising is the only category among the top ten that is more strongly related to traditional brand building than it is to online transactions, web sites, and computers.

Why is this category different? Primarily because people are shopping online, but not closing the deal. Yet another recent study indicated that 92 percent of those using the Internet said that a relationship with a local car dealer is important. There’s the rub. Cars break down and can’t be repaired online. Also, most people want to kick the tires before they put $20,000 on the table.

However, the Internet is a fantastic medium for getting pricing information on a product that is usually sold after haggling. Besides, Internet users can compare features, different models, and repair records.

Carmakers.com

The Net Presence study revealed that, as with television advertising, virtually all the carmakers are advertising online. A lot of the banner ads closely paralleled offline ads for the same models. Unlike many other online ad categories, there is some congruence between market share and ad spending for automakers. Finally, there is a disproportionate share of car ads on sites with corporate ties to ABC and NBC, indicating that online advertising on sites like GO, Snap, and ESPN are often part of larger advertising arrangements.

There are also some major differences. Familiar carmakers like General Motors, Toyota, Ford, and others account for 52 percent of auto-related Net Presence, or online visibility. But Internet newcomers like Autobytel, Autoweb, AutoConnect, and others comprise the remaining 48 percent.

Also, while autos and auto sites may be a major category for online advertising, the 5 percent overall auto-related share is much smaller than that of the overall market. Finally, cars are highly targetable on the Internet; a sample of 51 searches for the word “cars” on 17 top sites with search engines revealed that 69 percent of the banners returned with the search pages were for carmakers or car sites – with GM, Autobytel, and Honda leading the way.

GM Is Hitting Homers

So, who’s the Mark McGwire of online car advertising?

The Net Presence study revealed that, as with television advertising, virtually all the carmakers are advertising online. A lot of the banner ads closely paralleled offline ads for the same models. Unlike many other online ad categories, there is some congruence between market share and ad spending for automakers. Finally, there is a disproportionate share of car ads on sites with corporate ties to ABC and NBC, indicating that online advertising on sites like GO, Snap, and ESPN are often part of larger advertising arrangements.

There are also some major differences. Familiar carmakers like General Motors, Toyota, Ford, and others account for 52 percent of auto-related Net Presence, or online visibility. But Internet newcomers like Autobytel, Autoweb, AutoConnect, and others comprise the remaining 48 percent.

Also, while autos and auto sites may be a major category for online advertising, the 5 percent overall auto-related share is much smaller than that of the overall market. Finally, cars are highly targetable on the Internet; a sample of 51 searches for the word “cars” on 17 top sites with search engines revealed that 69 percent of the banners returned with the search pages were for carmakers or car sites – with GM, Autobytel, and Honda leading the way.

Ford and Toyota tied for second, with about 17 percent share each, counting Ford’s announced acquisition of Volvo, which has a strong online presence. Ford is well behind GM online, but a July 29 story in The Wall Street Journal indicates that Ford has checked the generational winds and plans to shift part of its periodical budget toward online advertising.

Honda has a respectable ten percent Net Presence share, but DaimlerChrysler AG is not highly visible online, with a share of only 3 percent, most of which was comprised of Jeep banners, plus meager advertising for Plymouth and Mercedes-Benz.

Among auto sites, Autobytel is the top advertiser, with a 33 percent share of Net Presence among the non-carmaker auto sites, and it ranks 23rd on the Internet overall. Autoweb and AutoConnect are the second and third most visible, with 24 percent and 17 percent Net Presence, respectively.

The remaining 26 percent of online presence is divided between MSN’s CarPoint, CarSmart, AutoGiant, AutoTown, AutoNation, DealerNet, CarsDirect, Stoneage, and Autos by Internet. There is an obvious branding problem among the non-carmaker sites, as many of the names sound similar and undifferentiated. Okay, except for Stoneage.

Future Growth

Recent initiatives by GM and Ford indicate that auto-related Internet advertising will rise sharply in coming years. As anyone with a TV set knows, car advertising is heavily dependent on video and audio for building strong brands. The Strategis Group believes that 12 million U.S. households will have high-speed Internet access by 2003, so the possibilities for online brand building are growing. Internet advertising may yet prove to be a top medium for separating the BMWs from the Yugos in the auto marketplace.

Click here for data on top online carmakers ranked by Net Presence share.

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