Auto Dealers Moving Fast Toward Online Video, Web 2.0 Marketing

Agencies and media companies with online video expertise stand to see their revenue hit the fast lane if they win some auto dealerships as clients, a new study suggests.

More than half the auto dealers who responded to a survey by The Kelsey Group said they plan to include online video clips on their company Web sites during the next 12 months. Only one-third of the dealers said they currently have video on their sites.

Additionally, the Princeton, NJ-based research company learned that dealerships are “rapidly adopting” Web 2.0 marketing efforts, such as online reviews and social media involvement. The Kelsey Group said these interactive methods are “becoming an integral element of the marketing mix” for auto dealers.

In the online survey conducted last month, 59 percent of the responding dealerships said they plan to use online video on sites during the next 12 months, up from the current 33 percent, according to The Kelsey Group.

The company’s research corroborates other reports, including one last summer by Borrell Associates, that said traditional local media will continue to lose ground to Internet advertising.

Auto dealers are “shifting more of their media mix online, with 62 percent planning to increase online media spending in the next 12 months, compared with only 17 percent for traditional media,” the research group said in a statement. Meanwhile, 46 percent of dealers surveyed said they plan to decrease spending on traditional media during the next year, compared with only 8 percent for online media.

In an interview, Steve Marshall, The Kelsey Group’s research director, said about 200 dealers responded to the survey. Based on the responses, Marshall said the percentage of auto dealers using customer ratings and reviews will rise from 29 to 43 during the next 12 months. Currently, only 15 percent of the dealers said they are involved in social networking site marketing but 33 percent said they plan to try it during the next year, said Marshall.

“A car dealer will set up their own site on MySpace or Facebook or Yahoo Groups,” said Marshall. “Or they will…put up a blog post or link on a relevant site.”

He said 28 percent of the dealers said they plan to place video ads on Web sites other than their own — such as YouTube — something currently done by one in five of the dealerships.

Dealers also plan to increase their mobile advertising quite a bit. Marshall said only 5 percent currently use mobile but 15 percent said they’ll be involved a year from now.

While Marshall said most video ads for car dealerships have a “down-home” quality and are “a little unpolished,” he added it’s clear the ads aren’t being done in-house.

“Answers to other questions [in the survey] are consistent with a pattern of hiring this work out simply because they don’t have the internal resources to do production,” said Marshall. He also said it doesn’t appear car manufacturers are helping pay for the online video and other Web 2.0 initiatives. “The purpose of these ads is not to support the brands,” said Marshall, noting many of the videos are simple clips showing showrooms and display lots.