Borrell Has Tough Auto Ad News For Radio
Notes: The Big Shift In Advertising
July 30, 2013 at 7:19 AM (PT)
Auto advertising has always been important to the fortunes of radio, and BORRELL ASSOCIATES has released a forcast titled, "2013 Automotive Advertising Outlook -- Watch The Road Signs."
They write, "For decades, media fortunes rose and fell with the success of the biggest advertisers in most towns -- car dealerships. When car sales rose, so did ad spending. Even when car sales declined, manufacturers would increase their ad spending, providing an insulating effect in lean years. No more."
What happened? BORRELL notes, "Digital media has reshaped the long-touted car-buying funnel. It’s been compressed it into a shot glass where researching a purchase has become so easy (compared with a 15 years ago) that consumers conduct their search to just a few months -- and do nearly all of it online. The pattern isn’t set by any means. In addition more dollars being diverted to digital media, the big shakeout of the Great Recession has given us fewer dealers, which means fewer competing commercials. Add the emerging threat of direct-to-consumer sales, the growing power of manufacturers’ websites as lead generators, and the dynamics of governmental regulation on what dealers can do with car loans, and it’s easy to see that the shakeout is by no means over."
What's ahead? BORRELL is "forecasting auto advertising to be a $32.8 billion category this year, up 2%. Car sales are up 8%, rebounding to an estimated 15.6 million vehicles and approaching that of pre-recession years when 17 million cars were sold. But automotive advertising is no longer an old reliable seesaw for local media. The big trouble cuts across the largest traditional media outlets, with one exception:
* Newspapers are getting hit hardest, with auto advertising down 29.3%
* Broadcast TV is forecast to be down 16.7% this year
* Radio is forecast to see a 15.9% decline
* Direct mail is up 22.9%, a big surprise
* Online and mobile advertising are up 18.7%
"Automotive advertising continues to be in perhaps the deepest transition of all local advertising categories," BORRELL adds. "The first wave of migration involved print classified listings, which played a role at the lower end of the buying funnel now dominated by digital media; the second wave involves branding-type broadcast advertising, now in the early stages of its migration to digital. Within five years, annual spending by dealers and manufacturers on digital video advertising will go from $2 billion to more than $9 billion -- most certainly at the expense of local radio and TV."
The Big Shift In Advertising
"Because of its size, the auto industry is closely watched by media outlets and networks of all sizes," concludes BORRELL. "Local dealers are often the biggest advertisers in town, and auto marketing leads all other categories in national ad spending. When the industry makes big changes, the effects are felt across the nation, from the biggest agency on MADISON AVENUE to the smallest radio station in MONTANA. This year, newspapers, radio and broadcast TV, will all see their share of ad spending drop. This change has already begun. TV and radio numbers were flat to down when first quarter results came in. The downward track will likely continue."