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Auto newspaper ads on decline

November 18, 2010

In a reflection of a major shift in media and advertising strategies this decade, auto-classified revenue in newspapers dropped significantly last month, and has declined steadily since 2004.


According to the Wall Street Journal, a combination of Web competition and changes in the auto industry has led to a drop in spending on newspaper auto classifieds and a loss in revenue for seven consecutive quarters.


Deutsche Bank analyst Paul Ginocchio said automotive advertising revenue is "trending down significantly" in the first quarter of this year as well. Ginocchio noted that Japanese carmakers are a major factor in the trend because they spend less per unit on advertising and devote less of their media mix to newspapers.


Another factor: a rise in big dealerships over the past two decades. Ginocchio said big dealerships tend to dedicate a smaller part of their media budget to newspapers as compared to smaller dealers.


Dealer Wes Lutz, who owns Extreme Dodge/Hyundai in Jackson, Mich., attributes the drop to the influence of the Internet. "Eight out of 10 customers who walk into our dealership have already looked at our Web site," says Lutz.


The high customer demand from the Internet has caused Lutz to create a new "Internet manager" position, a job that requires replies to all Internet inquiries within an hour.