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Auto ad spending to increase 14% in 2012; online is king of the hill

May 11, 2012
Automobile advertising is projected to increase by nearly $4 billion this year, to $30.8 billion, and most of that increase is earmarked for online media, a research and consulting firm that tracks local advertising forecasted.
The firm, Borrell Associates, said all indicators point to explosive growth in online advertising among all sectors of automotive during the coming five years. By the end of 2012, almost 40 cents of every auto ad dollar will be spent on digital media. That trend will continue largely unabated through the foreseeable future, Borrell added.
Direct mail (down 8.4 percent), yellow pages (down 9.7 percent), magazines (down 3.1 percent) and radio (down 17.5 percent) will be the projected victims of the surge in online activity.
Borrell’s chief executive, Gordon Borrell, said the firm foresees the industry, including dealers and dealer associations, spending $11.9 billion on search buys and online banner ads, and trending toward repurposing manufacturers’ agency spots for local video usage “tailored to their own purposes.” The $11.9 billion figure marks an overall increase of 39 percent from 2011.
“Gone are the days when broadcast advertising dominated the top of the buying funnel,” stated a summary of the report. Among the factors contributing to Borrell’s findings are greater availability of co-op advertising budgets, and the movement of targeting marketing to reach potential buyers via their mobile devices.
The spending data examined trends for 11 marketing channels: newspapers, radio, TV, cable, magazines, outdoor, cinema, online, direct mail, directories and telemarketing; and examined spending patterns by five types of auto advertisers: manufacturers, franchised dealers, independent dealers, dealer associations and private-party sellers.
The report conservatively forecasts total sales of light trucks and cars of 13.5 million units (the U.S. sales rate was 14.5 million during the first quarter). But the report says higher gas prices and restricted credit could cause some “speed bumps.”
Most of the automobile ad spending will occur in the May-to-August frenzy, when dealers push Memorial Day, Independence Day and Labor Day sales. This differs significantly from other businesses, which tend to advertise in late spring and into the fall as the holidays approach.