Ad spending by dealers has increased dramatically over the last two years, and the increase has resulted in bidding wars on third party sites like Edmunds.com and Cars.com. Online ad spending by car dealerships was up to $32 million in 2007, and that number has more than doubled each year since 2005.

It’s a new plan of attack for car dealers to be involved in online advertising, but it’s on the upswing. “Buying space on the Web was never part of the strategy until recently, but now it’s 50% of the conversation,” said Pat Primm, a Cleveland area auto dealer.

Online ad pricing is measured in cost per thousand impressions — or CPM — and an ad spot that came with a $4 CPM price tag two years ago now costs $34. Advertising profits for Edmunds.com went up 64 percent in 2006 and another 93 percent in 2007. CEO Jeremy Anwyl says that “dealers and dealer associations are coming in after years of spending 90% of their ad budgets on TV. They are just now realizing that’s too much.”

While the third party websites are clearly the winners in this equation, the loser is the brand identity. With so many voices trying to tell the same story and sell the same product, the message being portrayed by the original equipment manufacturers can easily become diluted and confused. David Harris, the manager of ebusiness and CRM for Suzuki, Brea, California says,

“Our goal is to make sure we are communicating a consistent message. All of a sudden . . . you have a wide variety of messages.”

This is all the more reason for dealers to make sure they have effective online brand marketing strategies in place. Manufacturers have huge budgets to spend on researching the most effective ways to get the car’s message across. It’s vital to the dealership’s success that dealer marketing not only doesn’t conflict with that, but leverages it to their advantage.

Online advertising has become the new normal for car dealerships across the country. Twenty years ago, local TV advertising was the most effective and prominent method of marketing for automotive dealers, and the game has changed. This report is just the newest data that shows that a focused online brand marketing strategy will be the ticket to surviving and thriving in this new world of car sales.