Auto Industry shifts slowly to Online.

Old media habits die hard.

An automakers’ top advertising priority is getting its name into a consumer’s “consideration set” and then helping that shopper reach a dealership. To that end, the 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 Media Intelligence 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 million.

Put into perspective, automakers’ combined online spending last year equaled General Motors’ 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 last year for each media channel—64% in television and just 6.5% online—illustrates 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 manufacturers—GM, Ford and Toyota—and 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 viewers—about 8.5%.

US Advertising Spending vs. Influence to Purchase among Leading Automotive Advertisers, by Media, 2007

comScore Ad Metrix data showed that the top three automakers accounted for the majority of display ads, commanding 80% of the category’s online page views.

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 three-minute, 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 million—solely 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.

Toyota’s Scion brand last year added a broadband channel accessible through its Web site that featured a video newsletter by rapper Slick Rick. GM’s 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-Benz’s 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.

Courtesy of http://www.emarketer.com