Auto Ad Spend Slows As Trade Tensions Rise

Advertising expenditure by automotive brands will grow by 0.8% in 2019 -- down from 1.5% in 2018, according to Zenith’s inaugural Automotive Advertising Expenditure Forecasts, issued today. Total auto expenditure this year will be nearly $35.8 billion globally.

According to the study, auto brands are expecting a tough 2019. They face continued tension in trading relations, particularly between the U.S. and China, and the possible imposition of car import tariffs in the U.S., making it more expensive for manufacturers to source raw materials and parts, as well as to sell across borders.

Automotive advertising is at a crossroads, according to the new report. Automotive brands are particularly dependent on television advertising, which accounted for 54.5% of category spend in 2018. That was well above the 32.9% global average across all categories.



The ongoing declines in linear TV ratings have left the auto companies with higher prices and lower reach. Auto firms have found it more difficult than brands in other categories to make full use of the possibilities of internet advertising — almost no one will finalize an auto purchase online. 

Auto brands are behind the market as a whole in embracing internet advertising, spending 22.9% of their budgets online in 2018, compared to the global average of 40.6% for all categories.

Zenith predicts the internet’s share of automotive ad spend will rise to 25.6% by 2020, partly because consumers now conduct much of their research and consideration of auto brands online.

Apart from print, which continues to suffer from the ongoing decline in circulation figures, the rest of traditional media is holding onto automotive advertising. Zenith expects radio, cinema and out-of-home to either maintain or fractionally increase their share of automotive advertising between 2018 and 2020.

Radio, which many consumers experience in their cars, works well for automotive brands — attracting 7.3% of auto ad spend, compared to 6.0% of ad spend across all categories globally. 

Auto spending should pick up a bit next year, with growth of about 2%, per the report.

The U.S. is the biggest auto market, spending nearly three times more than the next-biggest market, China. U.S. ad spend by auto brands has been in decline since 2012, with a 12% decline between 2012 and 2018. Spending in the category in China grew 47% over this period.

India is predicted to be the fastest-growing auto ad market between 2018 and 2020, with average growth of 12.8% a year and Brazil is expected to see 8% annual growth. 

The report asserts that auto brands need to stay relevant to millennials, who may be putting off their car purchases by creating new services and experiences for those who don’t own a car.

To attract tech-savvy drivers, brands should emphasize their semi-autonomous technology in their communications and form partnerships with tech companies that can make drivers’ lives easier.

Brands also need to demonstrate how they use technology to provide a more connected driving experience that saves time and creates convenience. Tech platforms like chatbots and VR offer brands the opportunity to deliver a dealer experience online, and perhaps, overcome a lack of dealerships in particular locations.

The research covers Australia, Brazil, Canada, China, France, Germany, India, Italy, Russia, South Korea, Spain, Switzerland, the UK, and the USA. These markets account for 74% of all car sales by volume, according to the International Organization of Motor Vehicle Manufacturers. More from the report can be found here.


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