Report Predicts Auto-Ad Spending Will Grow 14% This Year
As the U.S. automobile industry motors toward a broad recovery, Borrell Associates forecasts that national and local advertising spending will rise nearly 14% in 2012, to $30.8 billion, and that about 40 cents of every media dollar will be channeled toward digital.
According to a report prepared by Borrell Associates, a Williamsburg, Va.-based consulting firm that specializes in tracking local ad spending, the trend toward digital media -- at the expense of print, radio and direct mail -- will continue "largely unabated."
CEO Gordon Borrell said that the firm foresees the industry, including dealers and dealer associations, spending $11.9 billion on search buys and online banner ads, and trending toward repurposing manufacturers' agency spots for local video usage "tailored to their own purposes." The $11.9 billion figure marks an overall increase of 39% from 2011.
"Gone are the days when broadcast advertising dominated the top of the buying funnel," stated a summary of the report. Among the factors contributing to Borrell's findings are greater availability of co-op advertising budgets, and the movement of targeting marketing to reach potential buyers via their mobile devices.
According to Borrell's prognostications, nearly 90% of the additional dollars -- or an estimated $3.7 billion -- will be earmarked for digital.
The spending data examined trends for 11 marketing channels: newspapers, radio, TV, cable, magazines, outdoor, cinema, online, direct mail, directories and telemarketing, and examined spending patterns by five types of auto advertisers: manufacturers, franchised dealers, independent dealers, dealer associations and private-party sellers.
The report forecasts total sales of light trucks and cars of 13.5 million units but says that higher gas prices and restricted credit could cause some "speed bumps." Inventories are up, and some car companies are authorizing aggressive incentives for consumers.
Most of the automobile ad spending will occur in the May-to-August frenzy as dealers push Memorial Day, Fourth of July and Labor Day sales. This differs significantly from other businesses, which tend to advertise in late spring and into the fall as the holidays approach.