MORRISVILLE, N.C. — Manufacturers and dealers aren’t working together to use digital marketing tools like mobile and digital video to their full potential, resulting in missed opportunities, according to a new report from digital marketing intelligence company Netsertive.

The report, “Kick Automotive Co-Op Into High Gear: Optimizing OEM Dollars for Video and Mobile Marketing,” was released in partnership with Borrell Associates. It explores the evolving role of digital media in co-op advertising and includes insights gathered from top automotive manufacturers and over 50 automotive dealers nationwide.

“While the automotive industry is known as an early adopter of leading-edge digital marketing trends, our research found that many manufacturers and their local dealers aren’t fully utilizing today’s most impactful online media — mobile and digital video,” said Brendan Morrissey, CEO and co-founder of Netsertive. “Despite the fact that dealers depend on these channels to drive customers through their doors, the majority of manufacturers’ co-op programs don’t fully support them, representing a huge missed opportunity for automotive brands.”

In fact, co-op advertising is thriving in the automotive space, accounting for more than 50% of dealer marketing budgets — but most aren’t satisfied with these programs. While automotive co-op advertising programs boast almost 100% utilization by dealers, 65% describe their relationship with manufacturers as “complex,” while 43% consider it “frustrating.” Too many rules and restrictions and too much paperwork are dealers’ chief gripes.

Dealers are driving the auto industry’s digital transformation, with 90% of them buying online media via co-op programs, focusing primarily on paid search (77%), search and display/targeted display (54%) and search re-targeting (52%). Conversely, automotive manufacturers report that they still favor traditional media for promoting their brands — television, in particular — over digital channels.

“There’s a clear opportunity here for OEMs to learn from dealers, and vice-versa, to strengthen marketing plans,” said Gordon Borrell, CEO of Borrell Associates. “What surprised me — and I’m sure will surprise OEMs — is that more dealers now view TV commercials as less effective than digital video advertising or TV and digital combined. I think it’s also curious that 90% of Tier II dollars continue to be spent with traditional media, which is wildly out of step with where car buyers are looking.”

The report also examined trends in mobile advertising. While two-thirds (74%) of dealers feel mobile advertising is important to their co-op marketing efforts and 57% place mobile media among their top three most effective marketing strategies, less than a third (29%) of manufactures provide co-op support of mobile.

A full 65% of dealers currently utilize mobile marketing, mostly in the form of mobile-optimized websites and mobile search advertising (57%). Still, 68% of dealers consider their use and knowledge of mobile advertising to be competent or neutral, signaling a need for further education.

When it comes to digital video, 61% of dealers use video in online advertisements, only 34% of manufacturers support the use of digital video with co-op funds. One-third of dealers (31%) expect to decrease their spend on traditional television advertising in favor of digital video, while only 15% expect to spend more on broadcast television next year, according to Netsertive.

And manufacturers are missing major opportunities to target Millennial car buyers in local markets. While 52% of dealers report that sales to Millennials comprised up to 40% of 2015 sales, an increase over the previous year, only 20% of manufacturers currently offer co-op advertising aimed at targeting this group.