It All Comes Down to the Culture

Executive Interview: The Leading Edge: Auto Advertising in Transition had very much the same ring to it as yesterday’s session on real estate in transition. At The Kelsey Group’s ILM:07 event, the final panel each day was on two of the most rapidly changing classified advertising verticals. Since home and automobile buying are typically the two biggest transactions a consumer makes, it is no surprise that buyers (and the huge number of people interested in houses and cars) are using the Internet to get as much information as they can.

David Schwartz, local category director at Yahoo!, shared with the audience quantitative research Yahoo! had conducted about how consumers decide which automobile to buy and what dealers are doing to attract buyers. Not surprisingly, Internet activities such as using search engines and Web sites have grown dramatically, although they are still second to people who select a dealership because they know it/drive by it or based on friends’ recommendations.

What is most interesting is that the “newest influence in a consumer’s decision about where to shop is the dealer’s reputation,” which is amplified by user reviews. In fact, online reviews are now the third most important reason about where people shop after price and a professional staff, but before location and loyalty. Like most every other industry, dealers are still not putting sufficient resources against the online opportunity.

Jim Riesenbach, president and CEO of Autobytel, said “the Internet has revolutionized car buying for consumers in the last 10 years.” The change is a function of the amount of information that is available and where consumers get that information. Like real estate, newspapers, radio and TV, ad dollars are moving online. Riesenbach predicts an increase of 20 percent in online ad dollars in each of the next few years. In the automobile industry, Riesenbach says dealers make a profit of $300 selling a used car, but lose $20 on every new car.

Successful dealers are incorporating the Internet into the culture of their operations. Both Schwartz and Riesenbach believe that dealers will soon be generating new revenue from Internet marketing that emphasizes service, parts and accessories.

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