What Advertisers Need to Know About Shifts in Auto Ad Spend

Kris Estrella  | 

The auto industry has always been an advertising leader. Few other industries come close to reaching the levels of innovation, sophistication and creativity that characterize auto campaigns. And, auto has always been one of the industry’s Big Spenders, driving a huge portion of both traditional and digital ad revenues each year. As such, trends in the category are often indicative of broader marketing shifts so it’s instructive to take a good look at the annual numbers—and what’s behind them.

According to recent reports from Zenith, eMarketer and our own Video Benchmarks, auto advertising is approaching a crossroads. A combination of market shifts, declining TV ratings and changing consumer behaviors have put downward pressure on ad revenue growth and pushed brands to reassess their marketing communications and paid advertising.

TV Still Dominates But Sees Declines
At present, Zenith projects that overall auto ad spending will increase a mere 0.8% over the $36 billion invested in 2018 as manufacturers wrestle with higher costs associated with new tariffs on materials, trading tensions, green technology investments and slowing sales. The impact of those challenges is being felt most keenly in the ad spend allocated to both traditional linear TV and connected TV. More specifically, television’s share of auto ad spend has fallen from 55% in 2017 to a projected 52% in 2020. While that’s still 33% higher than what other verticals put toward TV, the drop is reflective of the changing TV landscape as well as the new imperatives brands must embrace to move today’s information- and technology-enabled auto shoppers through the sales funnel.

Our Q2 2019 Video Benchmarks report, which for the first time separated out ad performance metrics for autos, showed the category to be a bit below other verticals in the percent of impressions served to CTV. According to data from our AdBridge™ ad serving platform, auto ad impressions in Q2 landed at 45% while advertisers as a whole hit the 50% milestone for CTV.

Readying for the Renaissance
As auto brands hold steady on all forms of TV, they are continuing to grow digital investments. According to eMarketer, auto digital ad spend will grow 16% in 2019 to $16 billion. While that’s low compared to other verticals, it’s still the second-largest in overall ad spend this year, accounting for 12% of total US digital ad spending. And it’s mostly video that’s behind the growth numbers. Auto video ad spend will grow 22% to $5 billion in 2019 and in 2020, auto advertisers are expected to spend $6 billion on video.

For auto, the emotional connection forged through sight, sound and motion is especially appealing to advertisers and explains digital video’s growing prominence. “Luxury in general does really well with video because you can showcase the product in such a dynamic way,” Joe Barbagallo, department manager of digital, social and CRM at auto brand Jaguar Land Rover North America, told eMarketer. “Where everything from a wristwatch to a car that costs a considerable amount of money, you sort of want to see it from all angles. And video traditionally has always been the greatest at showcasing that in a product.”

Bespoke Creative Matters
One aspect of the new frontier for auto advertising borrows from the old: excellence in creative. But as auto brands embrace more digital activities, one key challenge is understanding that creative success can be unique for every platform and the right creative matters, especially within the social space.

More specifically, Toyota told eMarketer that it has learned how much more important it has become to conceptualize creative ideas and develop assets specifically for Twitter or Snapchat, or any other social partner after finding that re-using creative straight from broadcast or digital was not driving optimal performance. The company said it aims to keep pace with the evolving social landscape by making Toyota creative appear as native as possible.

The lesson here is that while fragmentation is having a marked impact on auto’s long-time, tried and tested campaign approaches, the basics still hold true. Top-flight creative is always an imperative—but as for the ways and means of getting that creative everywhere, auto brands will have to be willing to explore a range of new avenues—as they already seem to be doing.

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