Over-the-air radio will capture 11.1% of local automotive ad spending this year and grab another 1.4% from digital sales, for a total 12.5% of auto’s share of wallet, according to BIA Advisory Services. That equates to $1.9 billion of the $15.15 billion BIA forecasts for locally activated auto ad spending in 2019.
While radio’s vehicle dollars are expected to hold steady through 2023, over-the-air sales will dip to 9.6% of all local media spending in the automotive category as radio’s digital sales grow to 1.6%. That adds up to 11.2% of the $16.7 billion locally activated auto spending forecast for 2023.
Traditional media’s hold on auto dollars is becoming increasingly strained, according to BIA Managing Director Rick Ducey. “What we’re looking at in our forecast going to 2023 is that all of the local advertising growth in the auto sector is going to be in digital channels,” he said. By 2023, digital is expected to take 50 cents of every dollar as its share climbs from its current 39% to 51%.
Radio companies with strong digital assets can improve their chances to compete for the growing share of auto dollars going to digital, experts have said. “Radio has an opportunity on the digital side as we’re showing at least some relative growth there versus decline on the radio over-the-air side,” Ducey says. But the upside is limited if the assets are confined to just radio station websites and mobile apps. “The game is to create new inventory that’s relevant to audiences, data-driven and shows performance,” he contends—while pointing to new inventory opened up by podcasting and other digital audio channels, and performance marketing as potential growth drivers.
Geotargeting To Match Trading Zone
Digital audio allows broadcasters to geo-target ads to match a local dealer’s trading zone. Over-the-air radio could offer similar geotargeting options, if the FCC approves ZoneCasting technology developed by GeoBroadcast Solutions. The single-frequency network, which has been tested in a handful of markets, would allow a radio station to divide its signal based on a market’s geography, enabling it to air different commercials, news, traffic and weather based on where a listener is located. In the Worcester-Boston market, Cumulus Media hot AC WXLO plans to implement the technology, assuming it receives FCC approval. “If the FCC moves to allow zoned broadcasting, this reduces waste and makes campaigns more efficient and effective for advertisers who could concentrate their broadcast buys to better match their digital geotargeting,” Ducey says.
In addition to Cumulus, other top radio groups are taking steps that Ducey believes could lead to “positive FCC action” on the technology becoming a reality for radio. He sees geotargeting for over-the-air audio programming and in-car RDS and HD Radio display inventory as “potential growth drivers for local radio.
Beyond improved targetability, another way for radio to protect and potentially grow its share of auto dollars is through better attribution and accountability. This is digital media’s forte and an issue the TV industry is scrambling to address. “Local radio’s ahead of local TV in the attribution business,” Ducey says. With the auto sector facing some significant challenges – retail sales fell 3.5% in the first half of the year to their lowest six-month total since the first half of 2013, according to J.D. Power and Associates – attribution and geotargeting could help radio get a bigger piece of the auto ad pie. “With attribution studies showing how upper funnel radio activations actually create lift for lower funnel digital KPIs [key performance indicators] like site traffic, app downloads, form fills and even dealer lot foot traffic, we’re certainly expecting to see some share of wallet coming back to radio,” Ducey says.
To effectively compete with the data-driven campaigns offered by digital channels, radio’s attribution efforts have to provide “a convincing and actionable case” on the campaign level, Ducey contends. One-time segment level studies, case studies and testimonials alone won’t cut it.
Townsquare Media, for one, is harnessing the power of data from its DataSqrd team to pair digital and audio together to increase the impact of auto ad dollars. “By knowing more about the consumers we are trying to target, their behaviors, interests and intent to purchase, we create a more educated buy,” Cristina Cipolla, VP of Business Intelligence & Revenue Optimization, explains. Data also helps the company select the right stations and digital outlets for each auto dealer’s campaign. The process involves bundling broadcast ads on local stations with digital solutions – including display ads on its own websites along with targeted audience extension campaigns and other digital marketing services – to create a high reach and frequency campaign with multiple touch-points. “Real-time digital insights then help us to constantly improve and ensure we’re meeting and surpassing our clients KPI benchmarks throughout their campaigns,” Cipolla adds. That allows it to quickly adjust creative, spot lengths and dayparts to make the campaign more effective. “Utilizing data to support these campaigns and optimize allows us to preserve and grow auto ad dollars,” she says.
Tracking All The Touchpoints
During the eight-month process that consumers typically take to buy a new car, automakers want to track all of the touchpoints the buyer is engaged in, from exposure to advertising to online search activity. The use of big data is allowing dealers to “deconstruct” their media exposure to show attribution. “When used properly, big data provides dealers a schematic on how consumers are making decisions to buy or not buy,” says Jeff Greenfield, Chief Attribution Officer at analytics firm C3 Metrics. “Add to that schematic the cost of media and dealers can determine ROI at an incredibly granular level.”
Greenfield believes one of the biggest issues radio currently faces is “its inability to prove that a consumer was actually exposed to an ad. When someone solves this, it will be another game changer for the radio market,” he says.
C3 Metrics, which uses data and analytics to help marketers get better ROI from their advertising, has been working with auto clients since 2011. Greenfield predicts “explosive growth” in auto ad spending at radio in fourth quarter. This will mainly come from large Tier 1 automakers “looking to leverage the daytime working/streaming listening audience,” he says, with 20% coming from “forward-thinking” local dealers (Tier 3) aiming to boost their fourth quarter sales.
“Radio does work and brands are looking for more radio opportunities in which to invest,” Greenfield says. – Paul Heine