General Motors announced last week that it is going to spend 50% of its ad budget, or $1.5 Billion, ONLINE over the next three years. eMarketer predicts that U.S. Online ad spending will increase by 23% in 2008. The Kelsey Group just reported that 62% of dealers plan to increase their online spending in the next 12 months.
In spite of those trends, the typical dealership owner/general manager has always been slow to catch on when it comes to leading edge ideas or technology, including the Internet. (Not referring to Dealer Refresh readers, of course.) They reluctantly agree to be online, but have a near-coronary when an effective Internet presence is going to cost them 5% to 9% of their advertising budget. "Highway robbery," they say. Yet they'll spend $40,000, $80,000, $100,000 a month in hard-to-measure "traditional" advertising without blinking an eye because that's what they've always done - and it's an ego-booster to see their picture in the newspaper or on TV. And they'll run their car prices in the paper for the weekend at $2,000 to $5,000 less than what their Internet prices are. (This weekend, 6 of the dealers in my area were guilty of doing just that in Saturday's paper. I track that.) Then they wonder why the Internet isn't bringing the response the paper brought. Of course, that 2-day weekend newspaper ad also costs considerably more than the AutoTrader.com bill does for the entire month.
AutoTrader.com has recently had price increases. Cars.com has recently had price increases. Both companies have issued press releases during the past year announcing new enhancements, partners and capabilities that benefit their dealers and car shoppers, and there will always be more. Anyone who claims that their price increased with "no additional perks," as I Got Scrooged claims, obviously didn't pay attention when given the opportunity to see a current product demonstration of the myriad of new marketing and merchandising tools available to them. I think that's probably safe to say for both ATC and cars.com.
And I say "tools," because having an effective Internet presence takes work on the dealer's part, not just signing up and waiting for the phone to ring. (I know, I'm preaching to the choir here.) Yet most of a rep's time is spent re-training Internet Managers to use the available tools consistently. Or training new IMs because the dealer goes through them like shop rags. They'll do it for a while and results are good, but then they get busy on other projects or get transferred or get lazy, they stop doing it consistently, the results drop off and the dealer thinks it the solution that's not working. Not so.
My point is that Internet advertising is going to become a larger and larger part of the forward-thinking dealer's advertising budget. Why? Because that's where the eyeballs are going. Dealers who think they can compete effectively on the Internet for $750 a month like in the good old days are sadly mistaken. (Likewise, Superbowl ads weren't always $3 million apiece, but they are now.) They may not like it, they may gripe and moan about how AutoTrader.com is supposedly sticking it to them, but there is no disputing that ATC's online audience has grown tremendously since the good old days - while newspaper and traditional media audiences have dropped like rocks. ATC's available tools and solutions for reaching new and used car shoppers have never been greater and they are working very well for the tens of thousands of dealers who utilize them with consistency.
By the way, I was behind a lady at a convenience store last week who bought a gallon of milk for $5.00! Five dollars! It was the same size gallon of milk as it was in 1972 when it was $0.99 per gallon and my brand new Monte Carlo was only $4,200. The plastic jug even looked the same as it did 35 years ago. At least ATC is bringing a bigger audience and more features for the increased cost.
Let the flames begin. Dear God, I wish this thread would just die a peaceful death.
