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Sunday, June 24, 2007

Online vs. Television Advertising for Auto Dealers

So these days a lot of auto dealers use online advertising or cable TV ads. Which works better now, and what does the future hold for each? BlogPro Automotive recently posted an article to their blog and Auto Industry Startups posted their own article, both discussing behavioral targeting and how it can be applied to online advertising. I was speaking with someone a couple of days ago about a TV ad for a local dealership and asked if they had seen it. Their response was a reminder that as technology changes, so does the effectiveness of advertising. They told me that they are rarely home during the time this dealer's ads run, so they're always seeing the TV show by watching it on TiVo. As a result, they don't subject themself to the commercials by virtue of a fast-forward button. It really got me thinking....as TiVo and digital video recording becomes even more mainstream, how much will the advertisers be hit with inefficient advertising? Cable advertising, like online, can be very specific - targeting certain neighborhoods or demographics is common. How much data does that little cable box collect anyway? When will it start letting the company know things like my typical viewing habits? When will they start targeting advertising based on those habits - if I always watch comedies but throw on a sappy Lifetime movie on a Friday night will they start showing me anti-depressant ads? It's a joke, but it's also a very real possibility.

Back to my original questions: as DVR becomes more mainstream, how will TV advertising change for car dealers? I'm sure the cable companies give out viewer numbers/reach when trying to sell advertising spots, but how accurate are those numbers when you take the "commercial skippers" into account? At this point I can't imagine internet users leaving a reputable site because of advertisements, but what's down the road? Popup blockers have already impacted online ad conversion rates. The bottom line in our present world of advertising is that online currently offers a high level of targeted advertising. The more targeted, the higher the conversion rates, in theory at least. The targeting is getting to be more and more precise (behavioral targeting being a great example of the next level), and who knows how precise it will get. So is it better to have highly targeted ads to a small group of prospects, or is it better to have a broader reach with lower conversion percentages? This is obviously a debatable issue, since car dealers use both. As someone who isn't paying the advertising bills at a dealership, I say you cover your bases with diversification.

1 comment:

yhurg said...

Jake,

You bring up a good point about the DVR situation. Traditional off-line advertising has definitely been affected by Internet advertising and DVR, but it certainly still is and probably always will play a major role in advertising as a whole. The price for off-line advertising will continue to go down, or at least appear to, as Internet advertising costs rise to more comparable levels. But people like a good TV commercial and even with DVR we still keep an eye out for them, so I think Internet advertising and DVR will only encourage off-line advertising to evolve accordingly.

Your question, "is it better to have highly targeted ads to a small group of prospects, or is it better to have a broader reach with lower conversion percentages?" really hits it (the subject) on the head. While on the surface marketing and advertising appear to be a numbers game, truly effective marketing is accomplished by creating an emotional want or need with the consumer. This is where the Internet can really gain its edge, especially with the vast number of Web 2.0 sites coming out. I see marketing in social networks becoming a science and an art very quickly. Not so much on the lines of displaying behaviorally-targeted ads to site visitors, but using the sites themselves as a means to an end for promoting your product.

Take for instance, Squidoo. I am presently working on a page now that goes in to great length about how a site like Squidoo can be used by millions of people to advertise autos on the Web in ways not being done today. Check it out and let me know what you think. I plan to write a post about this on my blog shortly. Here is link to that page:

www.squidoo.com/autoconversion

Talk soon, Jake. Nice post.

-Ryan Gerardi