Auto dealerships dropped their overall ad budgets 27 percent, but increased Internet ad spending 45 percent in the first three quarters of 2009, compared to the same time period in 2008, according to new data from Nielsen.

The data points to an ongoing trend of the auto industry’s continuing shift from traditional to online advertising.

Philip Zelinger, president of Ad Agency Online, instructed his affiliated automotive advertising agencies to shift their focus from conventional automotive advertising media to social networking-based marketing channels last month.

Online auto ad companies have been steadily growing their tool sets in response to the increasing demand. Autobytel, for example, expanded its New Car Leads Program to include inventory-based leads using Vast.com, an automotive search and advertising platform. The system enables dealers’ inventory to be automatically listed across the Vast.com network, which includes automotive sites such as AOL Autos, Overstock Cars and AutoMedia.

Because the VIN number is included in each inventory-based consumer lead transmitted to Autobytel dealers, the system provides specific information about which individual vehicles consumers are considering. The program is pay-for-performance, and dealers will only pay for the leads that they get.

At the end of September, Autobytel also relaunched its Email Manager program, which features real-time “Dealer Alerts” sent as soon as a consumer clicks on any of the links in an email. Another company that is targeting this industry with email marketing solution is CityTwist, a geo-targeted email marketing company, which recently partnered with Aspen Marketing Services, to provide geo-targeted email advertising campaigns for its automotive clients.

CityTwist allows businesses to advertise directly to subscribers within a specific geographic market through email while receiving real-time tracking on open and click-through rates.