With Automotive sales leveling off compared to the past few years, Wells Fargo analyst Marci Ryvicker hosted a call with investors on the state of auto advertising. Automotive has been radio’s biggest spending category for many years. Ryvicker’s conclusion from the call…
The biggest takeaway from the call was that auto advertising should remain relatively stable at $13B as long as 16 million units or more are sold. Ryvicker also highlighted the following:
1) While digital (really search and mobile rather than display) will continue to gain auto ad dollars, such market share will likely come at the expense of “other” old media (print mostly.) rather than television.
2) Digital comprises only 5% of Tier 2 (regional dealer associations) auto adv. (MUCH lower than we realized); the remaining 95% still goes to the stations.
3) As incentive spending comes down, advertising should go up – maybe not 1-for-1 but there should still be an incremental benefit. We highlight the notes from our call below and also recommend that you check out some of the cool charts we have in the text – especially the one that shows how little auto is as a percent of total revenue, esp. for the guys who now have 45% revenue exposure to retrans.
