The continuing evolution and convergence of TV and video and a growing proliferation of ad units and platforms mean that brands and agencies today face a greater array of advertising choices than ever before. How are the myriad options impacting the automotive industry? What are the dominant trends in this historically important category? What’s ahead? We dive into eMarketer’s research to find some answers. Here are five key trends:
Marketing costs are a huge, and variable, portion of auto advertisers’ budgets
Comments from executives at some of the world’s biggest automotive brands suggest there is significant investment allocated toward marketing campaigns each year. Not only is there big money at stake, executives emphasize that this investment is highly dependent on the “boom” and “bust” cycle of consumer demand for cars, making it more complicated for the ad industry to anticipate demand. “Marketing costs are significant—I view it as significantly variable, depending on where the industry’s at,” said Charles K. Stevens, Executive Vice President and CFO of General Motors, during the company’s Q1 2017 earnings call.
Automotive is leading the way with digital advertising
The percent of ad budgets spent on digital vs. traditional campaigns is higher in the automotive industry than in any other category except retail. 12.9% of auto industry ad budgets in 2017 will go to digital. In addition, spending is expected to increase by 17.6% this year and continue to grow by double digits through 2021.
TV remains dominant
While the share of digital is growing in auto industry ad spending, TV still leads the way on most industry media plans. Auto-related companies are expected to spend more than $11 billion on TV ads in 2017, more than any other industry.
Video spending is on the rise
Video ads will account for 18% of the automotive industry’s digital spend in 2017, growing to $1.9 billion. That’s nowhere near the estimated $11 billion that will be invested in television this year, but it may be a sign of a greater split between the two formats in the years ahead.
Manufacturer spending is outpacing dealers
Among the top ad spenders in the auto sector, manufacturing brands are spending more than dealers. In 2016, manufacturers spent more than $9 billion, compared with more than $5 billion spent by dealers.
Much like other consumer industries impacted by the increase of digital, automotive advertising is evolving. Digital ad formats are clearly on the rise for the big spenders of the automotive world. But don’t rule out the continued importance of TV advertising, which continues to dominate the industry’s budgets.