In a new report, Advertising Takes A Sharp Turn, Borrell and Associates writes that, due to a decline in both new and used vehicles, dealers are spending less on advertising and more on marketing. And pretty much every form of media is taking a big hit as a result.
Broadcast TV will get slammed, according to Borrell, down nearly 30%. Radio will be off 10%. Only cable TV and cinema will escape the color red, according to the new report.
Total automotive ad spending in 2018 is down 7.3%, to $34.4 billion. For 2019, Borrell is forecasting a 3.4% bounce-back. Over five years Borrell is projecting growth averaging 1.7% per year. And nearly all of that increase will go to digital. Sixty-seven of all automotive advertising now goes to highly targeted digital media, stealing from traditional print and broadcast that Borrell says are considered less efficient.
Dealers are now spending 41% less to advertise a new car than they were five years ago. It’s gone from $888 in 2012 to $518 this year. It’s now easier to hit a specific target, which means dealers can be more efficient with their ad buys. “Mass” media still plays a role in branding messages, but even that’s now being challenged as video advertising migrates to the digital environment.
In short, automotive advertising forecasts for 2023 point to striking changes in future spending. Borrell’s new model predicts that, five years from now:
- Print advertising will be significantly lower than 2018 levels
- Broadcast TV advertising will be significantly lower
- Radio advertising will be lower
- Cable advertising will be higher
- Digital advertising will be significantly higher.
The advertising piece of overall marketing expenditures is likely to remain in the $35-37 billion range, but marketing services are likely to get far more attention as manufacturers and dealers spend more time and money on their “owned media” channels.