Online Auto Ads Don’t Work?

    May 31, 2007

The next time you deal with a car salesperson – well, have a heart.  Odds are that he (or she) has had to deal with a whole lot of people who never closed the deal.  In fact, a new report indicates that, although online marketing is causing more in-person visits to car dealers than ever before, the conversion rate (to sales) has actually dropped.

Not that I have too much sympathy for those salespeople, as the numbers may indicate encouraging things about consumers.  You know – that they are shopping around and logically considering their options, rather than falling in love with one model’s heated cup holders.

eMarketer’s numbers (which were actually provided by Borrell Associates) are interesting regardless of one’s interpretation, however.  “Local online advertising by automakers, dealers and individual sellers will escalate to $4.2 billion in 2011, up from $2.3 billion in 2006,” predicts Lisa Phillips.  She goes on to note that the current $2.3 billion represents 11 percent of overall spending on ads.

Yet, as mentioned earlier, the payoff – shoppers becoming buyers – just isn’t happening.  “The NADA’s ‘2006 Dealership Internet Survey’ shows a monthly average of 319.9 unsolicited prospects visited dealer sites in 2006, compared with just 227.9 per month in 2005,” reports Phillips.

“But of the qualified leads these dealerships received – 52.9 in 2006, up from 29.5 in 2005 – the conversion rate to sales dropped, from 26.4% in 2005 to 19.2% in 2006,” she continues.

What could auto dealers do to increase that rate?  Well, it might be good if they somehow made their advertising more effective.  But, for better or for worse, they might also get some results by sprinkling a few more heated and cooled cup holders around.