Things look terrible for Detroit, and they are, and that has certainly hurt spending in what's long been among the largest ad categories. Spending on traditional media is in a long slide.

But that's not been the case for the internet. Carmakers and dealers are in fact shifting more and more ad dollars to the web, and the pace is expected to accelerate further, at the expense of traditional media, especially print. 

A new forecast has internet automotive spending rising by 22.7 percent this year alone, reaching $2.8 billion, and by 2009 online will be the No. 2 ad medium for carmakers, behind only broadcast TV and ahead of newspapers. Between 2006 and 2011, online auto advertising is forecast to grow 83.8 percent. (See chart, below.)

“In terms of share points, the newspaper is going to lose the most,” says Peter Conti, senior vice president at Borrell, which issued the forecast. It forecasts newspaper spending will tumble to $3.2 billion by 2011 from an all-time peak of $4.9 billion in 2004.

More and more, Detroit sees the internet as the most efficient means of reaching consumers in the actual research and shopping phase of the car purchase cycle, with television still the medium of choice for branding.

But cable will get a larger and larger share of TV spending, predicts Borrell. Between 2006 and 2011, broadcast will grow marginally, from an estimated $10.6 billion to $11.7 billion. But Borrell forecasts that cable spending will increase by 45.7 percent, from $2.7 billion to $3.9 billion.

Borrell's forecast is consistent with other spending reports on automotive, most recently a report by Nielsen Monitor-Plus showing that in 2006 local newspapers saw a 41 percent decline in auto ad spending in the shift of spending to the internet.

And Borrell reports that despite the most recent rounds of spending cutbacks, responding to tumbling sales against imports, carmakers and dealers will actually be spending more in the coming years, if at a slower growth pace than in years past. It forecasts growth of 1.7 percent a year on average over the next five years, down from a compound annual growth rate of 3.7 percent during the last five.

“There is a slowdown,” says Conti. “We hear from the manufacturers that they are slashing their overall budgets, but at the same time they are increasing their online budget, only they don’t have to spend as much online to get as much bang for the buck.”

In looking at the media that will suffer the most in the online shift, newspapers will be hurt the most but the pain will also spread across print to directories, magazines and direct mail.

To describe why TV is holding up, Conti points to what he calls the car-buying funnel, the process whereby folks narrow the number of models under consideration over a six-month period before they buy.

The early part of the process is the dreaming phase, when advertising media with strong branding capabilities, like TV, work well and will continue to do so.

It’s the shopping phase, the more local part of the process, which has been the most disrupted by the internet. Traditionally at the end of the cycle people may have picked up a newspaper to see where the best deals are. “But looking at the paper has diminished greatly in the cycle,” says Conti. “It has really gone to the internet.”

The report also looks specifically at used-car sales, an area that tends to be a local business and in which ad dollars are also moving to the internet. In fact, by 2008, Borrell forecasts that online will have passed newspapers as the No. 1 medium for used-cars advertising. 

The study also looked at which types of internet advertising will dominate the auto category in the future.

To date paid listings and banner ads have made up the bulk of local online auto advertising. But video and paid search are expected to take off. Borrell believes these two areas will grow from 29 percent of the local online advertising market to about 76 percent by 2012.