With Newspapers Suffering, AutoTrader.com is Selling Car Ads

Howard Polirer, a spokesman for AutoTrader.com, describes his site as "the number one car classified destination in the industry." That claim is based on what he says are more than 14 million unique visitors per month. In a very down economy, traffic was up 20 percent in December over the previous year. The site has 40,000 dealers nationwide as paying customers, and offers 3.5 million new and used car listings.

Newspapers are crying the blues that they've lost all their classified advertising to the web. In the third quarter of 2008, automotive classifieds in newspapers fell 29.2 percent to $563 million, according to the Newspaper Association of America.

The culprit that gets mentioned the most often is Craigslist, whose postings are mostly free (some job listings, porn and brokered apartment listings in New York City are exceptions). By contrast, Autotrader ads cost between $17 and $49, depending on the package chosen and by location.

Asked to explain why people would pay for online classifieds when there are free alternatives, Polirer said AutoTrader.com offers "better functionality, plus we have more inventory than everybody else."

Paid ads helped AutoTrader.com take in $600 million in 2008, Polirer said. To increase name recognition, the company is a major media buyer, with a $100 million annual marketing budget. The site advertises extensively on television, and major sports events are favored.

There's little doubt that consumers are shopping for cars on the Internet, if not actually buying them there. According to a J.D. Power and Associates report last October, 75 percent of new vehicle buyers are using the Internet to shop, up from 70 percent in 2007. The total time shoppers spend researching auto information online is also up, by 12 percent.

AutoTrader.com spokesman Mark Scott said, however, that only 10,000 people a year in the U.S. actually go through the whole process of buying a car on the Internet and take delivery without visiting a dealer first and kicking the tires. And most people seeking information from a dealer will make a phone call rather than sending email, he said.

Ironically, AutoTrader.com is owned by Cox Enterprises, which also owns newspapers hard hit by the classified downturn, including its flagship, the Atlanta Journal-Constitution.