Released Thursday, Borrell Associates’ annual automotive advertising assessment finds that “dealers have begun an even stronger scale-back of expenditures in broadcast and print media,” as “dealers’ love affair with digital media is thinning the traditional-media pack.” Dealership consolidation and stagnation are also major factors in an auto advertising category expected to be $37.5 billion this year.
All told, auto advertising will be a $37.5 billion category this year, up about 0.8% from last year. But the most important part of that category – local car dealerships, which account for two-thirds of that spending – isn’t growing at all.
Among the several factors at play:
- A six-year growth jag for new-car sales is ending. New-car sales have grown an average of 11% per year since 2010. But not this year. We’re expecting about 17.5 million new vehicles to be sold this year, compared with 17.4 million last year, up 0.5%.
- There are fewer advertisers. Due to dealership consolidation, there were 750 fewer in 2015, twice the loss seen in 2014. The average midsize market has 16 fewer dealerships than five years ago – 7 fewer new-car dealers and 9 fewer used-car dealers.
- Consolidation is creating bigger dealerships that spend less on per-car advertising. Next year, for the first time, large dealerships (selling 400 or more cars per year) will outnumber small. Mega dealers (selling 750 more per year) now represent 28% of new-car dealerships. On a per-vehicle basis, the biggest dealers tend to spend half as much as the smallest dealers.
- Per-vehicle advertising costs continues to slip. The average in 2016 is shaping up to be $518, down 15.6% from five years ago and down 22% from its peak of $664 in 2009.
- Dealers’ love affair with digital media is thinning the traditional-media pack. To the detriment of some media companies, dealers have begun an even stronger scale-back of expenditures in broadcast and print media. They’re clearly utilizing traditional media companies that offer strong complements to dealers’ digital Requirements.
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