Auto Ad Dollars Going More Digital

And downward for radio, according to Borrell Associates
Publish date:

For decades, car and truck ads have been hefty advertisers for radio. Those days are gone, according to a new study from Borrell Associates.

This year, for the first time, more than half of those life-sustaining dollars will be spent on digital media, according to Borrell’s research. “At $35.5 billion, automotive is the second-largest advertising category, behind general merchandise stores. Times are good. Car sales are up 5% this year and ad budgets are up 17%. Things should likewise be good for everyone in the advertising business, as long as that media involves digital. Online media accounts for 95% of this year’s increase,” writes Borrell Associates EVP Kip Cassino.

Several circumstances converge to affect auto advertising dollars.

Since 2004, the number of franchised dealers has dropped 18% while the number of new vehicles sold per dealership has increased 18%. The increase in sales and decrease in competition has reduced the per-vehicle price of advertising for a new car by 21%, to $522, according to the data.

More than 90% of car purchases start with research via digital media. Empowered consumers are transforming dealerships from “stores” to fulfillment centers.

Dealers are now spending $2,404 per new vehicle — nearly five times what they spend on advertising — in the form of rebates, loyalty programs, contests and incentives.

Manufacturers spent $116.7 million in radio ads in 2012, bringing radio’s share of the total auto manufacturing ad spending world to 1.1%. That compares to 2013, when manufacturers spent $114.8 million In radio ads, and the share was 1%.

For 2014, Borrell forecasts auto manufacturers will spend $103.5 million on radio ads — for a 0.8 share of the ad pie.