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New Survey Shows Dealers Turning to Paid Search Advertising to Generate More Sales Leads

SEATTLE - Feb. 9, 2006 — The Cobalt Group, the leading provider of marketing services to the retail automotive industry, today announced findings from a recent survey regarding Internet search engine marketing. The survey, sponsored by Cobalt and conducted by independent market research firm, The Hebert Group, surveyed 300 dealers located throughout the U.S. to assess dealer attitudes, awareness, usage and investment trends with regard to Automotive Paid Search advertising¹.

Internet search engines have rapidly become a focal point in the consumer vehicle purchase process: more than two-thirds of all car shoppers use the Internet to buy autos, and more than 70% start their process at an Internet search engine, such as Google, Yahoo! or MSN².

'The Internet search engines are becoming a crucial way for dealers to connect with in-market car buyers,' declared John Holt, CEO of The Cobalt Group. 'That's why we felt it was important to sponsor this market research. We're delighted to share these results with the industry, to help promote greater awareness of an exciting new Internet advertising medium.'

Internet Paid Search advertising enables dealers, OEMs (and other advertisers) to pay to appear on the first page of Internet search engine query results, and thereby connect cost-effectively to prospective car buyers. Consequently, many auto dealers are eagerly embracing this new advertising tool, to generate more sales leads more efficiently. Some key findings of the survey:

• One third of dealerships surveyed said they are already paying to advertise on search engines
• About half of dealers currently advertising on search engines intend to increase their Paid Search budget in the next 12 months
• Dealers are funding Paid Search programs by
  1. Increasing their overall advertising budget, or by
  2. Shifting dollars from other advertising programs. In this latter group, the most common response was a shift away from "print or paper advertising."

Dealers' insights into Paid Search objectives, success factors and metrics include:

• Dealers currently investing in Paid Search use it to target a 50-mile radius local metro area (versus a larger, 100-mile+ radius)
• Having a high-quality website is the most important factor in the success of a Paid Search program
• The top reasons named for investing in a Paid Search program were:
  • Getting more leads, and
  • Promoting brand presence online, and as a defense against competitors
• The majority of dealers ranked Paid Search success measures, as follows

1.       Increased sales leads

2.       Vehicle sales

3.       Increasing the number of website visitors

The survey also indicated that dealers want — and need — more education and more help with Paid Search advertising:

• The majority of surveyed Dealers were willing to invest in a service provider to help manage their Paid Search program. Dealers indicated they would prefer to buy from either their website provider or their 3rd party lead provider.
• Only 21% of survey respondents were dealership executives that felt knowledgeable on the topic of search. Many executives deferred to middle managers (who did not have budgetary control) to make the critical decisions for a Paid Search program).

¹The Cobalt Group contracted Hebert Research, an independent market research firm, to conduct a statistically significant survey of U.S. auto dealers with annual sales of over $20 million. Dealers were randomly selected from a pool of 3,200 contacts, representing an even mix of brands and geography. In the survey, dealers were asked a variety of questions regarding their attitudes about Paid Search advertising.

²JD Power 2005 Autoshopper.com Study; Yahoo! Complete 2005 auto study.

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