Are Auto Ads Running Out of Gas?

The automotive industry is having a rough year, and the effects are spilling over into its advertising. In Q1 2008, online was the only medium for which automotive ad spending did not fall compared with Q1 2007, according to Bernstein Research.

The research firm said that even Internet ad spending by automakers rose only 3.8%, accounting for 8.6% of total advertising—down from Q4 2007 when it reached nearly 10% of the industry's total.

"After consistently leading the US in advertising spending, the automotive sector has dropped into the No. 2 spot behind retail," said Lisa E. Phillips, senior analyst at eMarketer.

Automakers have seen light truck and SUV sales plummet as well as increased demand for more fuel-efficient vehicles that will require retooling and change from the entire industry.

Autobytel reported that its top 10 requested vehicles in 2007 were fuel-efficient models—even if they are more expensive and smaller than their siblings. And although trucks and SUVs accounted for one-half of US sales last year, they were missing from Autobytel's most-requested list.

In this environment, advertisers large and small are using digital to make every dollar count. eMarketer estimates online ad spending by the entire automotive industry (excluding car rental and insurance) will reach $2.98 billion in 2008.

Note: article corrected and updated, 8/20/2008