"Lady and gentleman, start your engines!"

With the qualification of Danica Patrick in last year's Indy 500, the Memorial Day classic began somewhat differently. And now it looks like automotive advertising is taking on a different look, too. After idling on the sidelines for a number of years, automotive advertisers are racing online.

"The automotive industry is the largest advertiser in the world. In the US alone, the industry spent more than $17 billion in the first 11 months of 2005," says Lisa Phillips, eMarketer Senior Analyst and author of the new Automotive Online: Gearing Up for Greater Spending report. "But, despite the fact that almost 70% of consumers use the Web at some point in their automotive purchases, the industry has been slow to commit to online advertising and promotion."

Online advertising among the top 10 auto manufacturers accounted for just 2.5% of their total ad spending in January–November 2005. But things are changing.

Thanks to tight online inventory, higher prices and changing tactics, eMarketer projects that automotive advertisers will spend close to $2.7 billion on Internet advertising in 2007.

"The industry's foot is definitely coming off the brakes and onto the accelerator this year," says Ms. Phillips. "Automotive advertisers are gearing up for an online advertising surge, but it's going to come at the expense of other media."

Overall advertising budgets will not increase in 2006. In fact, General Motors already cut $200 million out of its $1.5 billion national advertising budget, and will move more spending online, according to AutoWeek. And TNS Media Intelligence reported that through November 2005, online ad spending grew by 12.1%, while spending in traditional media declined 2.5% in the category.

"Today, the roughly 70% who go online most likely visit a search engine first, then delve into manufacturer, third-party and dealership sites in no particular order or timetable," says Ms. Phillips. "The Internet has turned the idea of an orderly buying process, or "funnel," into ancient history and the auto industry has to find ways to react."

Where is the industry turning?

"Behavioral targeting, a tool that tracks a visitor's online behavior and serves up ads based on the pages they've viewed or features they've interacted with," says Ms. Phillips. "With the funnel effectively dead, behavioral targeting looks like a light on the horizon. Most of the major independent sites offer some form of this technique and several manufacturers are already testing it."

To get up to speed on this latest development in online advertising, turn right to eMarketer's new Automotive Online: Gearing Up for Greater Spending report today. Visit www.emarketer.com.

Article Source: www.emarketer.com