Borrell's 'Annual Automotive Outlook' Has Bad News For Radio

Radio, Newspapers And TV Take A Hit

Once upon a time, radio salespeople fought over lucrative car dealer accounts. BORRELL has released its new, "Annual Automotive Outlook," which shows how much that has changed.

"If any single ad category were responsible for reshaping the face of local media, it would be automotive," writes BORRELL. "For decades, car and truck ads have swollen newspapers, screamed from radio stations and transformed local car dealers into TV celebrities.

"No more. This year, for the first time, more than half of those life-sustaining dollars will be spent on digital media. The local newspaper’s auto advertising bonanza is long gone. Radio’s has only recently disappeared. Local TV stations may be next on the chopping block.

"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."

The report outlines the new mechanics of this important category, including:

• The new competitive dynamic. Since 2004, the number of franchised dealers has dropped 18% while the number of new vehicles sold per dealership has increased 18%.
• The new ownership dynamic. That increase in sales and decrease in competition has reduced the per-vehicle price of advertising for a new car by 21%, to $522. It’s the type of efficiency that has attracted investors like WARREN BUFFETT to move in. Investors won’t manage dealerships the way family owners did.
• The new luster of old cars. Used cars are no longer synonymous with clunkers. The price has risen 28% in the past five years and is approaching $20,000. There will be twice as many used cars as new ones sold this year -- many from the lots of new-car dealerships.
• The new consumer dynamic. More than 90% of car purchases start with research via digital media. Empowered consumers are transforming dealerships from “stores” to fulfillment centers.
• The new marketing mindset. Now that dealers have their own media channel in the form of the Internet, they’re discovering that they need to come up with “news” programming on a regular basis. Specials and rebates are their versions of breaking news. They’re 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.

« see more Net News