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Auto Ad Dollars Going More Digital

And downward for radio, according to Borrell Associates

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.