A decade ago, the nation's auto dealers were spending the lion's share of their ad budgets on newspapers and local magazines.
"Online spending was negligible," according to Kip Cassino, executive vice president at Borrell Associates.
Many local magazines have vanished, and newspapers have seen their print classified auto ad revenues plunge from $4.8 billion in 2001 to $1.2 billion last year. However, online media has absorbed much of the fallout, and now receives the bulk of auto dealers' ad dollars.
Indeed, dealers are now earmarking 32% of their budgets for online media buys, according to a new Borrell report authored by Cassino.
"The biggest beneficiaries are a few key players at the local level that serve dealerships with everything from listings, photos, leads, Web site development, keyword buys and search engine optimization," according to Cassino.
"It's difficult to sort all the players because of the various partnerships to share traffic, leads and content," he added. "But the most formidable players at the local level are the ones who sell directly to the dealers."
They include Autotrader.com, with revenues of $720 million last year; daily newspapers -- including Cars.com -- with online auto revenues of about $525 million; and local TV stations, with revenues of $300 million.
Other contenders include Vehix, Autobytel, Dealer.com, Source Interlink Media -- Automotive.com and MotorTrend.com -- eBay Motors and Yahoo Autos.
In Borrell's ongoing surveys of small and medium-sized businesses, auto dealers clearly have the highest interest in the Web among other local advertisers. They buy banners and listings principally from local newspapers' Web sites, but are also buying ads on local directory -- "Yellow Pages" -- sites, and local radio and TV sites.
"It's really not surprising, especially for the newspapers, TV and radio stations that have merely leveraged their existing sales relationships into online buys," notes Cassino.
As such, only 13% of auto advertisers said they did not plan to buy online banners, or listings from any local media company this year. That percentage is considerably smaller than for local retailers, health-care professionals and real-estate agents, who shun local sites at a higher rate.
Going forward, Borrell is forecasting a sevenfold increase in targeted banners, from $165 million in 2010 to $1.2 billion in 2015, and a 2.5-fold increase in video advertising, from $107 million to $263 million.
"While dealer advertising via video sounds like a great idea, we must note that $262 million is a virtual drop in the bucket when spread across all local markets," Cassino adds. "Video is a fantastic branding format, and we believe auto dealers won't see nearly as much branding value with fragmented audiences online as they see with mass audiences in television."