For Chris Carlson, the battle between his Torrance, Calif., Honda store and the dozen or so dealerships located within a five-mile radius is waged online on a daily basis. On this battleground, having an effective online advertising campaign can be the difference between winning and losing.

“The hurdle we face now is the fierce competition. I’ve got five Honda dealerships within 15 to 20 minutes of me,” says Carlson, the sales and marketing manager for Scott Robinson Honda. “But by the same token, the competition has kept our numbers rolling because we’ve done more to be seen and found.”

Armed with an average monthly budget of $40,000, Carlson reaches his customers through the dealership’s Website, microsites and social-media outlets. He also has a blog, and manages the dealership’s Facebook, Twitter and YouTube accounts. He’ll even employ banner ads, video clips and press releases when needed. And while he doesn’t use any television or radio ads, he’ll occasionally run a newspaper ad to round out his strategy.

Name: Chris Carlson

Title: Sales and Marketing Manager

Dealership: Scott Robinson Honda

Location: Torrance, Calif.

Average Monthly Ad Budget: $40,000

Type of advertising: Internet and occasional newspaper

“I think all the Internet has done has made a customer a more educated customer, and I think that’s a good thing,” he says. “You can’t run from the inevitable; every customer is an Internet customer.”

Carlson’s use of the Internet isn’t unique. In fact, with marketing experts saying the Internet will have the same impact on marketing strategies as it did for all areas of commerce, dealers across the country are attempting to get their fingers around this new marketing medium. Experts warn, however, that expectations need to be managed, especially when it comes to the Web 2.0 craze.

Next Big Thing or Bloated Expectations?

In a Deloitte survey released in January on how the auto industry connects with the tech-savvy Generation Y, results showed that although social-media sites and blogs have become the preferred mode of communication for this age group, it does little to sway purchasing decisions. In fact, nearly 60 percent of Gen Y respondents said they do not seek out advice or information on blogs or social-media forums before purchasing a vehicle. What they do turn to, however, are online search engines and manufacturer Websites.

Experian Hitwise’s January trend report on the top search engines showed similar results. The online intelligence service revealed that automotive was one of six categories to experience double-digit growth in the amount of traffic flowing from search engines between December 2008 and 2009. Accounting for 72.25 percent of all automotive searches, Google led the way during a four-week span ending Jan. 2.

Coming out of a year where dealers spent 23 percent less per month on advertising, according to Mudd Advertising, it’s clear why online advertising is all the rage among marketers. However, some experts warn not to ignore the branding power offered by traditional mediums, such as print, radio and TV advertising. The strategy that works, marketers say, is one that meets consumers on their own turf.

“A very small portion of the population is going to be in the market at any certain time, so why do you want to talk to everybody?” says James Bell, an analyst for kbb.com. “You just want to talk to those people that are interested in consuming your product.”

[PAGEBREAK]

Like many dealers last year, George Grubbs, a third-generation dealer, became a disciple of the online marketing craze, with 100 percent of his dealership’s advertising going digital. “We made a big transition last year toward online and we’re going to make an even bigger one this year,” he says. “The biggest thing we noticed was we were spending all this money trying to get people to come to our store. What we realized was that it’s more important to reach people where they are.”

Name: George Grubbs III

Title: Executive Manager

Dealership: Grubbs Infiniti

Location: Dallas, Texas

Average Monthly Ad Budget: $50,000

Type of advertising: Internet, e-mail marketing, direct mail and billboard

In January, Grubbs was hard at work on his ad budget, which, despite a $15,000 increase for online ad spending, will not exceed $50,000 per month this year. His strategy includes Website upgrades, banner ads, search-engine marketing and paid-search listings for his inventory. Grubbs also was weighing the possibility of hiring a social-networking coordinator, a consideration many dealers are struggling with these days.

“I’m excited about it because for the last year I’ve been the Twitter guy and I’m tired of Tweeting,” he says.

One thing Grubb’s budget won’t include is radio and TV spots, a decision that was based on the Internet’s ability to track the effectiveness of his campaigns. “Online is much easier to track for return on investment,” he notes.

Tracking Car Shoppers and Ad Dollars

According to the J.D. Power and Associates’ 2008 New Autoshopper.com Study, 75 percent of new-vehicle buyers that year used the Internet during their shopping process, up from 70 percent in 2007. The study also found that shoppers spent a total of six-and-a-half hours online researching automotive information.

In a survey conducted by Edmunds.com, 75 percent of online auto shoppers said they read dealer reviews, with one out of four saying that dealer reviews and ratings do weigh into where they purchase their vehicle. It’s one of the reasons why dealers are flocking to the Internet.

“My sense is that smart dealers are really focusing more on the [Internet], because that’s where the shoppers are,” says kbb.com’s Bell. “It’s just more cost-effective because they can monitor what they’re spending. It’s not just a shotgun approach.”

[PAGEBREAK]

Chris Mudd, president of direct marketing for Mudd Advertising, agrees. “The key is tracking … We have to know where these people are coming from and how they’re being followed up,” Mudd says. “This online way allows us to do that, unlike traditional media, where we don’t really know who’s directly responding to a TV, radio or print ad.”

He adds that the actual dollar amount dealers spend isn’t as important as how it is used, as advertising budgets can vary by the number of stores a dealer has, customer demographics and location.

Mudd points to his company’s “Hypercasting” program as an example, saying that the online craze doesn’t have to come at the expense of traditional advertising mediums.

As he describes it, the program offers a customizable, time-sensitive, interactive marketing solution that uses a combination of print, TV, radio and Internet advertising to drive traffic to one URL.

“What we’re talking about is being more efficient with every ad dollar that we spend,” he says. “Every dollar has to be more accountable today than it was two, three years ago.”

According to a Mudd survey of 92,165 car buyers on what brought them into the dealership, the Internet was the top lead-generating medium (19.6 percent). Not far behind were customer referrals (16.9 percent) and television (14.3 percent).

To reach his tech-savvy BMW and mature Mercedes-Benz consumers at his two Minnetonka, Minn.-based dealerships, Matt Mahoney spends $12,000-$15,000 per month per store on a well-rounded advertising plan. The strategy includes radio and television spots, banner ads, paid-search listings, dealership Websites, and a monthly electronic newsletter. The Internet manager also manages the dealerships social-media accounts.

Name: Matt Mahoney

Title: Internet Manager

Dealership: BMW of Minnetonka and Sears Imported Autos - Mercedes-Benz

Location: Minnetonka, Minn.

Average Monthly Ad Budget: $12,000-$15,000 per store

Type of advertising: Internet, television, radio and occasional newspaper

While it’s obvious the prospect of engaging consumers in a free-fl owing conversation isn’t lost on him, he even admits the Web isn’t a foolproof way to sell cars. “The Internet doesn’t sell cars; it gets you the lead for the car,” he says. “You still need the guy sitting at the desk on the show floor to sell the car, but they need the traffic to do that.”