Automotive Advertising is Changing – Are You Ready?

 

One thing is sure – automotive advertising is evolving.

At $35.5 billion, automotive is the second-largest advertising category, just behind general merchandise stores. Revenue from car sales are up 5% this year and ad budgets are up 17%. Internet media makes up about 95% of this year’s increase.

 

Since 2004, the number of franchised dealers has declined 18% even though the volume of new vehicles sold per dealership has risen 18%.

 

People won’t be calling used vehicles clunkers anymore. Their price has risen 28% in the past 5 years and is almost $20,000 now. You will see two times as many used cars as brand new ones sold this coming year, many through the lots of new-car dealerships.

 

As documented in a recent study conducted by the Interactive Advertising Bureau (IAB), 96 percent of shoppers research online prior to making a large purchase, especially when thinking about a new car. During this time, prospective auto buyers were much more likely than the general population to be affected by digital ads, email campaigns, etc.

 

As a result, more and more dealers are employing data and the internet.

 

All signs indicate sales of 16.3 million new cars and light trucks this coming year, a return to levels the industry hasn’t seen since before the Great Recession. Helped by development in the national economy, declining oil prices, abating unemployment, and consumers’ need to upgrade an aging vehicle population, dealers are once more emptying their lots of vehicles more rapidly than last year’s forecasts had predicted. Sales are up 5% over last year.

 

The recovering and reformed car industry has attracted the attention of the nation’s greatest investor, Warren Buffett, who recently purchased the nation’s fifth-largest new-car dealer, renaming it Berkshire Hathaway Automotive. The new company plans to buy even more dealerships.

 

Buffett commented that the industry enjoys high sales volume and comparatively low capital investment, allowing “substantial” profits despite the fact that margins can be low.

 

Although sales are higher, the very best providers of auto advertising know that dealers need multiple, powerful channels and ways to reach the public.