• by Shankar Gupta , February 17, 2006

Automakers will drastically increase their spending on online marketing in the next two years, according to a study released Thursday by eMarketer.

The study, authored by eMarketer Analyst Lisa Phillips, predicts that automakers will up their online ad spend to $2.7 billion in 2007, from $1.4 billion last year. "Automotive advertising online will continue to grow at double-digit levels, at least through 2007," the study states. "eMarketer predicts 35 percent growth in the automotive category this year, following 38.2 percent growth in 2005."

Anecdotally, the trend up appears to be borne out. Sarah Fay, president of Isobar U.S., said that her firm has observed increasing interest in online ad buys from its automotive client, Hyundai-KIA. "We're seeing significant increase to budgets," she said, adding that the company more than doubled its online spend. "I think that they recognize that people walking into the dealerships have been online before they get there. There's been a strong recognition that online plays a big role in online considering."

According to the study, one major area of interest for automakers is behavioral targeting. "The biggest buzz in online automotive campaigns surrounds behavioral targeting," the report stated. "It is a tantalizing prospect for automakers, since consumers enter and leave automotive sites in unpredictable paths, but leave clues about where they are in the shopping process."

Fay pointed to search as another area where automakers are actively pursuing customers. "Search is huge, and I think search is huge for most categories right now," she said. "Sophisticated marketers are recognizing that they need to be where people are searching for companies or products in their categories. That is certainly the case in the auto world."

Another recent study, by Experian Automotive, which analyzed buyers on the cars.com Web site, found that consumers increasingly begin their buying cycle online. The study, released this week, found that over 61 percent of shoppers who contacted a seller on cars.com ultimately purchased a vehicle. Of those buyers, 79 percent purchased within 90 days.