BIA Advisory

Online radio ad spending will be among the winners as the automotive industry divvies up its marketing dollars in 2020, according to BIA Advisory Services. It forecasts the auto industry will spend $15.8 billion on local advertising next year, which is a projected 1.9% increase compared to this year. “Automotive ad spending will go up, but not as fast as the overall ad market,” said Rick Ducey, Managing Director of BIA Advisory Services. “There's some weakness in the sector and some budget cutbacks since ad spending is related to percentage of sales in many cases.”

The traditional three-tiered new car segments will continue to be where most of the local ad dollars originate. BIA estimates tier one manufacturer dollars will total $4.5 billion, tier two regional auto dealer associations will spend another $4.1 billion, and tier three local new car dealers will add up to $3.7 billion. On top of that, used car dealers are predicted to spend $316.2 million in 2020. Another $1 billion will come from the combination of three other sub-verticals, including other motor vehicle dealers, auto parts stores, and gas stations.

Analyzing which media will receive those dollars, BIA says the pressure will be on for traditional media in 2020. It forecasts broadcast radio budgets will be trimmed 2% next year. The dollars are still large, however, and will total an estimated $1.7 billion or an 11% share of local auto spending overall. The biggest share will remain with local TV stations at 23% or $3.7 billion. But that would amount to a 6% decrease in TV dollars compared to this year.

Expanding Share For Digital

Overall, traditional media will get 54% of the 2020 spend according to BIA, which projects digital spending to increase its share to 46% as its take of auto dollars rises from $6.6 billion this year to $7.4 billion next year. BIA’s long-term outlook in its Insights Into Local Advertising 2020 report expects digital to continue to capture a larger share through 2024.

“All incremental spending growth by auto is in digital,” said Ducey, who says price is one of the essential drivers behind it. “As budgets in auto marketing get slimmed down as the industry's sales get a bit challenged, auto marketers may start to look for cheaper impressions in digital media versus traditional media,” he explained. Ducey said digital media also enables more targeting, attribution, optimization, and other ROI metrics that the auto industry tracks. Consumer habit changes are also being reflected in the budget allocation.

“As with other business verticals where the product is a high consideration purchase, consumers are doing more online research including websites, social, apps, and search,” said Ducey. He pointed to a recent Google-Millard Brown-Polk study which showed that of two dozen marketing touchpoints for an Auto Intender on the path to purchase, 19 of them are digital. “It's how auto marketers can influence consumers, so they're allocating media spending into digital,” said Ducey. “Also, digital provides audience targeting, attribution and other ROI tools that linear media struggle with.”

For the radio industry, the growing attention to digital isn’t all bad. It’s also helping stations sell some of their new offerings to local auto dealers. BIA expects auto spending on digital radio to increase 10.3% in the coming year. That compares to an 11.3% increase in mobile spending and an 18.5% jump in spending on digital video OTT streaming services.

“The biggest digital ad format is digital video,” said Ducey. “Auto marketers value video, but like the audience targeting and attribution that they get on digital ad platforms.” But he also notes radio and TV stations aren’t sitting idly by and watching those dollars evaporate. “Traditional media have been developing and rolling out new competitive solutions to challenge digital’s current and growing dominance,” Ducey said. – Frank Saxe