Media companies and mobile marketing platform providers who gathered at the Borrell Associates Local Mobile Advertising Conference in Chicago this week, heard about the growing opportunity in the automotive sector. The good news is the automotive vertical market is growing quickly. The bad news is that competitors are entering the mobile space daily, competing to siphon off the flow of money that has been going to traditional media.

Total U.S. automotive advertising this year will reach $22.6 billion. Of that, $1.1 billion will be spent on mobile.  During the conference, two leading players in the mobile vertical space talked with C. Lee Smith, President and CEO of Ad-ology Research, about their  strategies in the automotive marketplace.

In introducing the topic, Smith noted the following about the mobile auto advertising market based on statistics from both Borrell Associates and Ad-ology Research:

  • Automotive is the 2nd largest growth category this year.
  • Automotive is the #2 offline ad category.
  • Automotive is the #3 online ad category.
  • 44% of ad sales managers expect local mobile growth in the category this year.

In addition, auto dealers are interested in mobile marketing. About 10% call themselves very familiar with the format and another 34% say they are somewhat familiar. Overall, 36% intend to use mobile advertising this year, a number that is higher than most other verticals.

Smith also highlighted data from the Auto Buyers Forecast produced by Ad-ology Research. Despite the tough economy, 34.6% of consumers plan to purchase a car within the next year.  And 50.7% of U.S. adults who will buy or lease a car this year have a smart phone.

With the market set for spending by both consumers and marketers, what are media space providers offering for mobile solutions? Sharon Knitter, Senior Director of Mobile for Cars.com, a venture owned by several leading media companies, explained her firm’s process of developing display products for manufacturers and dealers and the delivery to many smart phone platforms and tablets.

Both Knitter and Jose Puente, Director of Mobile Strategy at Autotrader.com likened the atmosphere in mobile marketing to the Wild West. Various platforms, ad products and general confusion on the part of both manufacturers and dealers make for a complex marketplace. Some auto dealers have jumped into the mobile space on their own. They understand that consumers are ready to engage with them. However, Knitter cautioned that mobile is not the sole route to an auto buyer and, for now, mobile strategies are augmenting other forms of marketing. But Smith pointed out that 73% of auto buyers believe sites like autotrader.com and cars.com are solid alternatives to traditional advertising.

Knitter and Puente have had success selling mobile ads to both manufacturers and dealers. They note the key is to keep the product simple, such as one ad on a mobile page, because of limited screen space. In response to Smith’s questions, they also agreed that mobile video has great potential as technology is now catching up. Media companies that prove adept at using mobile video could build better revenue streams from automotive advertisers.

For now, many media companies remain on the sidelines, unsure of how to proceed in the new mobile world. Puente advises new entrants to find the right tech-savvy partner to work with. Knitter says it’s important to just jump in with an app and then adjust it based on user feedback.

There’s little doubt that the market is fast moving, a fact which led Smith to remind the audience that “there is no finish line but there must be a starting point.” Those who wait might find their opportunity shrinking rapidly.