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Thursday, October 18, 2007

Traditional Media Generates More Buyers than Online?

I received my usual newsletter this morning from Auto Remarketing and one article really caught my eye. It says that according to a recent study, traditional media translates into more buyers than online advertising. These results are shocking to me, so I'm curious about the details of their research methodology. What cities/towns did they conduct their research in, and how exactly were certain markets weighted differently?

"Art Spinella, of CNW Research, found that used-car dealers are spending more money on the Internet than ever before. However, overall, most of the marketing funds are still going into traditional media, such as newspapers, spot TV and local radio". This makes sense to me based on cost alone. Traditional media has been losing market share for years while online media has been gaining. The newspapers, TV, radio, etc. have had to combat this loss using significant rate hikes just to maintain flat revenue gains.

What surprises me is the finding that "more than 44 percent of people who entered a dealership and purchased a car or truck indicated traditional advertising methods were what drove them to a store".

I'd like to learn a little more about this research, because frankly, I can't believe some of the claims.

4 comments:

Ai-Dealer said...

Let's break down exactly what CNW said...

1) share of buyers-to-shoppers ratio favors the old-fashioned methods... I don't think that will ever change... the Internet elicits earlier-in-the-sales-funnel inquiries... 3rd party lead providers get paid for generating leads... newspapers get paid for printing ads

2) the typical dealer put slightly more than 61 percent of his advertising budget into traditional media and generated an average of 204 shoppers... 44 percent of people who entered a dealership and purchased a car or truck indicated traditional advertising methods were what drove them to a store... so 61% of ads for 44% of buyers

3) "The conversion rate for Internet advertising was a dismal 4.5 percent even though it generated far more phone calls and e-mails about advertised vehicles," Spinella said. "But 95 percent either went elsewhere or were merely window shopping with little or no intent to buy." News flash... the internet is easy to inquire over... going in to a dealership requires much more effort - serious shoppers only

Try these stats...

http://wardsauto.firstlightera.com/EN/Microsites/1/Dealer+Impact/WhyGoDigital.htm

...1 in 10 use radio or TV
...2 in 10 use newspaper + print
...8 in 10 use THE INTERNET
...yet dealers spend 70% of their ad money on TV, newspaper + print

http://www.mediabuyerplanner.com/2007/10/09/one-in-five-in-market-consumers-would-buy-a-car-online/

Working email and the phones to get Internet lead consumers to come in to the showroom is difficult work + will never be as easy as selling to a consumer who comes in on their own... but try to survive these days with just newspaper, radio + TV ads... you'll be hearing crickets in the showroom.

Jake said...

I agree with what you say Brian. Shoppers walking the lot are obviously the most serious shoppers as a group. I think even at a 5% lead closing ratio for internet leads it has to be more effective than traditional media.

7% of newspaper readers are looking at the classifieds. For a major newspaper like the Philadelphia Inquirer, that translates to less than 25,000 car shoppers.

More than 90% of visitors to an online auto classified site are looking to purchase a vehicle. Autotrader.com had 13 million visitors in January of this year. 90% of that would be 11.7 million shoppers. Sure that's nationwide, but I just find it hard to believe that traditional media contributes such a high percentage of sales.

CS said...

Hah. I just got done reading Ryan Gerardi's bewilderment on this very same post over at his new Auto Conversion blog. I agree.

Anonymous said...

I agree with what you say Brian. Shoppers walking the lot are obviously the most serious shoppers as a group. I think even at a 5% lead closing ratio for internet leads it has to be more effective than traditional media.