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US Online Automotive Dealer Advertising Executive SurveyJupiter Research

Selling Cars with Google 104:

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Internet Generating New Car Sales Leads

A dealer survey revealed that the portion of dealers generating over 10% of their new car sales from online leads jumped from 36% in 2004 to 51% in 2006.

JupiterResearch/NADAguides.com Executive Survey (7/07), n = 106 (US); JupiterResearch/NADAguies.comExecutive Survey (9/06), n = 98 (US); JupiterResearch/NADAguies.com Executive Survey (5/05), n = 162 (US)

36%

59%

5%

38%

55%

7%

51%

34%

15%

0%

10%

20%

30%

40%

50%

60%

70%

More than 10% 10% or less Not sure/don't measure

2004

2005

2006

Internet-Generated New Car Sales 2004 - 2006

% o

f D

eale

rs b

y In

tern

et-

Genera

ted S

ale

sas a

Share

of O

vera

ll S

ale

s

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Internet-Generated Used Car Sales 2004 - 2006

Internet Generating Used Car Sales Leads

A dealer survey revealed that the portion of dealers generating over 10% of their used car sales from online leads jumped from 40% in 2004 to 56% in 2006.

• Used car sales tend to be more profitable, making this a critical aspect of a dealer’s business

JupiterResearch/NADAguides.com Executive Survey (7/07), n = 106 (US); JupiterResearch/NADAguies.comExecutive Survey (9/06), n = 98 (US); JupiterResearch/NADAguies.com Executive Survey (5/05), n = 162 (US)

10%

54%

6%

43%

54%

6%

56%

32%

12%

0%

10%

20%

30%

40%

50%

60%

More than 10% 10% or less Not sure/don't measure

% o

f D

eale

rs b

y In

tern

et-

Genera

ted S

ale

sas a

Share

of O

vera

ll S

ale

s

2004

2005

2006

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Dealers Increasing Online Ad Spending

Survey data reveals that 47% of dealers in 2006 allocated over 10% of their overall marketing budget to the Internet, up from 35% in 2005.

• 43 % of dealers spent more than $30,000 in online advertising in 2006, up from 14% in 2003

• 28% spent over $50,000 in 2006, up from an average of 12% between 2003 & 2005

JupiterResearch/NADAguides.com Executive Survey (7/07), n = 106 (US); JupiterResearch/NADAguies.com Executive Survey (9/06), n = 98 (US); JupiterResearch/NADAguies.com Executive Survey (5/05), n = 162 (US); JupiterResearch Executive Survey (7/04), n = 133 (US)

Dealers’ Online Advertising Spending 2003 - 2006

31%

23%

20%

14%13%

27%

13%

24%

22%

15%

19%

13%

22%

34%

11%

14%

12%

24%

43%

8%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Perc

enta

ge o

f D

eale

rs

2003

2004

2005

2006

Less than $5,000 $5,000 to $10,000 $10,001 to $30,000 More than $30,000 None/not sure

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2007 Dealer Internet Ad Spending Growth

Survey data reveals that 47% of dealers are increasing their online ad spending in 2007, while 44% said they were maintaining current spending levels.

JupiterResearch/NADAguides.com Executive Survey (7/07), n = 43 (dealers w/conversion rate of new car leads to sales greater than 10%, US), n = 46 (dealers w/conversion rate of new car leads to sales equal to 10% or less, US)

Expected Change in Dealers’ Online AdvertisingSpending by Lead-to-Sale Conversion Rates

16%

44%

30%

7%

2%

13%

22%

54%

7%

4%

0%

10%

20%

30%

40%

50%

60%

Conversion rate of new car leads to sales greater than 10%

Conversion rate of new car leads to sales equal to 10% or less

Increase by 25% or more Increase by 1 to 25% Stay the same Decreased by 1% to 25% Decreased by 25% or more

• Dealers who are able to successfully convert leads into sales are more likely to increase their online advertising budgets (60%) vs. those who are not as successful (35%)

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Dealer Online Ad Spending Breakout

Dealers spending <$30,000 in online marketing tend to spend more money onthird-party lead sources than any other online advertising tactic.

JupiterResearch/NADAguides.com Executive Survey (7/07), n = 53 (dealers w/online advertising spending of $30,000 or less, US), n = 45 (dealers w/online advertising spending greater than $30,000, US)

Dealers’ Online Advertising Budget Allocation

49%

28%

11%

5%3% 4%

31%28%

7%

17%

2%

15%

0%

10%

20%

30%

40%

50%

60%

Ave

rage O

nlin

e A

dve

rtis

ing

Spendin

g A

llocatio

n p

er

Tactic

Third-party sources

Online classifieds

Search engine keywords

Online sponsorships/

banner type ads

Special lead sources

Other

Dealers with online adspending less than $30,000

Dealers with online ad spending greaterthan $30,000

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Dealers are Utilizing Paid Search & Display

Survey data shows that 74% of dealers are planning to use paid search & 66% are planning to use online auctions in 2007.

JupiterResearch/NADAguides.com Executive Survey (7/07), n = 106 (US); JupiterResearch/NADAguides.com Executive Survey (9/06), n = 98 (US)

Dealers’ Use of Online Advertising Tactics in 2005 & 2006, Planned Use in 2007

Expected 2007

2006

Perc

enta

ge o

f D

eale

rs

92%

82%

74%

66%

61%

79%

51%

43%47%

62%

76%

40%

45%

39%

76%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2005

Third-party leads

Online classifieds

Search engine keywords

Online auctions

Online sponorships/banner-ad types

• This is an expected increase of 85% in the use of paid search & an expected increase of 47% use of online auctions in comparison to 2006

• 61% are planning to use display advertising in 2007, an increase of 47% from 2006

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Dealers Use Online Advertising for Branding

Survey data demonstrates 74% of successful dealers (those who convert more than 10% of Internet leads into sales) use online advertising to increase the number of email leads.

Only 51% of less successful dealers invest in online advertising to increase e-mail leads.

JupiterResearch/NADAguides.com Executive Survey (7/07), n = 54 (dealers w/more than 10% of newcar sales generated online, US), n = 36 (dealers w/10% or fewer new car sales generated online, US)

Reasons for Dealers’ Online Advertising Usage

91%

74% 72%

63%

69%

51%54%

71%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

More than 10% of new car sales generated online

10% of fewer new car sales generated online

Perc

enta

ge o

f D

eale

rs T

hat A

dve

rtis

e O

nlin

e,

by

Share

of

New

Car

Sale

s G

enera

ted O

nlin

e

Driving traffic to dealership website

Increasing number of email leads

Increasing number of phone leads

Display inventoryonline

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Dealers Use Online Advertising for Branding

Survey data demonstrates that 82% of successful dealers (those who convert more than 10% of Internet leads into sales) use online advertising to increase the number

of consumers who see the dealership name.

Only 69% of less successful dealers invest in online advertising for branding.

JupiterResearch/NADAguides.com Executive Survey (7/07), n = 54 (dealers w/more than 10% of newcar sales generated online, US), n = 36 (dealers w/10% or fewer new car sales generated online, US)

82%

76%

56%

69%

57%

46%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Increasing number of consumers who see dealer name

Building customerloyalty

Increasing dealer’s brand awareness

More than 10% of new car sales generated online

10% of fewer new car sales generated online

Reasons for Dealers’ Online Advertising Usage

Perc

enta

ge o

f D

eale

rs T

hat A

dve

rtis

e O

nlin

e,

by

Share

of

New

Car

Sale

s G

enera

ted O

nlin

e

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Dealer Online Advertising Challenges

55% of dealers surveyed claim that determining which tactics will yield thehighest-quality leads is their biggest challenge. Almost all dealers find it difficult

to plan & implement online advertising.

Notice that only 19% cited competition with offline media budgets as a challenge.

JupiterResearch/NADAguides.com Executive Survey (7/07), n = 106 (US). Question: Please indicate top three challenges in planning online marketing & advertising. Select up to three.

Challenges Dealers Face in Planning & Implementing Marketing & Advertising

55%

38%

31%

26% 26% 26%

19%

14%

7%

0%

10%

20%

30%

40%

50%

60%

Perc

enta

ge o

f D

eale

rs

Determining which

advertising & marketing

tactics bring the highest

quality leads

Internet advertising & marketing is getting more complicated

everyday

Lack ofstaff that

understands how to use

online marketing & advertising

Performance tracking

Increasing competition

online

Capturing valid lead

information

Competition with offline

media budget

Management commitment

Don’t see any challenges

w/implementing online

marketing

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Key Takeaways

Dealers are generating more new & used car sales leads from the Internet. However, almost all dealers still find online marketing & advertising challenging to plan & implement.

Dealers are utilizing online advertising for both lead generation and branding purposes.

Planning & implementing online advertising is easier than it seems!You can learn how easy it is to actually plan & implement onlineadvertising. More information is availabe at: www.adwords.google.com

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Thank you & stay tuned for future videos…