Car Dealerships Driving Demand for Digital

Fri Aug 11, 2017

Kathy Crosett

Last year, auto dealers spent over $36.3 billion advertising new and used vehicles. Consumers auto-dealerresponded to these pitches and purchased 17.55 million vehicles. In 2017, analysts are predicting a drop in the sales of this very cyclical industry. For example, Kelley Blue Book believes the final numbers for this year will be about 17.1 million vehicles. Auto dealers are responding to the consumer pullback by boosting ad spending. The experts at Borrell Associates anticipate a 3.2% increase which would bring total spending to $37.4 billion.

Auto dealers and manufacturers are following the general trend of shifting more ad money into digital formats. In fact, well over half of auto dealer ad spending is now digital as these numbers from Borrell show:

  • Online digital 58%
  • Broadcast TV 9%
  • Newspapers 8%
  • Direct mail 7%
  • Radio 5%
  • Cable TV 4%
  • Other print 4%
  • Cinema 2%
  • Telemarketing 2%
  • Outdoor 1%
  • Directories 0.4%

As the shift to digital ad spending continues, local dealers will increase their outlay in these formats by about $1.4 billion this year. Some of this spending will be funded by co-op ad programs provided by manufacturers. In total, the amount going to digital 5 years from now will increase until it averages about 66% of dealership spending.

While the digital shift in the automotive industry is a key trend, Borrell analysts have picked up on another one. Manufacturers appear to be pulling back on ad spending and dealers are increasing their marketing budgets. “Over the next five years, we’re forecasting that manufacturers will trim ad budgets at an annual rate of about 1%, while dealers will increase theirs 4% annually.”

If you’re selling to automotive dealers, ask them how their media mix compares to the industry average. Then pitch your best rates and packages to help them increase market share in this competitive industry.

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About Kathy Crosett

Kathy is the Research Director for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel.

View all posts by Kathy Crosett
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