Borrell Study Sees Online Media Grabbing Most New Auto Ad Dollars
May 15, 2012 at 3:51 AM (PT)
BORRELL ASSOCIATES has released a new report which forecasts mixed news for media depending on auto advertising. Radio and TV are seen as largely flat, with online media pulling in the lion's share of increases. Radio's opportunity would seem to be on its web presence, rather than on air, for growth. Direct mail, Yellow Pages and Magazines are seen as losing more ad dollars to other media.
Writes BORRELL, "In the after effects of the Great Recession, the auto industry continues to adjust its marketing dials to find the optimum mix of advertising dollars. Gone are the days where broadcast advertising dominated the top of the buying funnel, where people dreamed about owning a car, and when print dominated the lower end, where people were ready to buy. The mix has become far more complicated, with digital media continuing to dominate."
"Auto ad spending recovered last year, seeing a 9.5% increase, and is coming back even stronger this year," notes BORRELL. "Buoyed by expanded TV spots and an anticipated 39% increase in online media buys, we are forecasting that auto advertising will rise about 14% this year, to $31 billion.
If this hefty increase is realized, it will mean $3.7 billion in additional ad spending. Nearly 90% of the increase will be earmarked for online media. Direct mail (down 8.4%), yellow pages (down 9.7%) and magazines (down 3.1%) will be the victims."
"When it comes to auto advertising, digital media continues to consume the largest share of budgets," continued BORRELL. "The auto industry will spend $11.9 billion in online advertising this year, a 39% increase over 2011. Overall, auto advertisers -- including manufacturers, new and used car dealers and dealer associations -- are earmarking 38% of spending for online media. The share is even higher for franchise dealers, nearly 44%. This increasing domination represents several trends at work:
* Greater availability of co-op credit for online advertising.
* Movement toward locating potential buyers on mobile devices.
* Growing adoption of the online form of their favorite advertising format: video.
Concludes BORRELL, "All indicators point to explosive growth in online advertising among all sectors of automotive during the coming five years. By the end of 2012, almost 40 cents of every auto ad dollar will be spent on digital media, and that trend will continue -- largely unabated -- through the foreseeable future."