Media companies have long relied on auto manufacturers and dealers to spend big on promoting new cars. Even as the world has moved from print to online formats, the auto industry has provided steady revenue for media companies. But one niche operator intends to disrupt these relationships in a significant way.
AutoTrader.com has been around for a long time and has transformed itself into an online powerhouse. In the process, this firm has managed to capture $1.2 billion in local online ad revenue. According to a recent Borrell Associates report, up to 20,000 auto dealers – that’s nearly 2/3’s of the total – now spend some ad money on the site. AutoTrader CEO Chip Perry, who is planning for an IPO, also envisions a future where consumers will shop for a car and purchase the vehicle while online instead of at a dealership.
Some wonder how far auto dealers will go with this. It’s worth wondering, as Borrell Associates does in its blog post, whether consumers will begin showrooming vehicles and leave the dealers to be providers of little more than test drives and service.
If online auto specialty websites capture more of the ad dollars that have traditionally gone to other media companies, it's not only the auto buying process that would change. The ad selling model could shift and not in a positive way for ad sales reps.
For now, this development is more speculation than anything and may be the narrative that Perry is spinning ahead of his roadshow on the way to the IPO. In the meantime, media companies should be checking in with their auto clients to step up their services and ad offerings.[Source: Gordon, Borrell. Auto Advertising. Dawn of a New Era? BorrellAssociates.com. 14 Jan. 2013. Web. 21 Jan. 2013]