Auto Dealers Driving More Ad Money to Digital

BY Kathy Crosett
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If you’re selling advertising in the automotive vertical, you know the drill. Manufacturers shell out Tier 1 ad money for national campaigns. They establish regions for their dealers and spend more money on Tier 2 campaigns. And dealers, with financial incentives from the manufacturers spend Tier 3 ad money in local markets. The just-​released statistics from the National Auto Dealers Association show how much Tier 3 spending is changing.

2017 was a great year for auto sales. In total, dealers moved about 17.14 million vehicles off their lots. To do so, they spent $9.74 billion in advertising. That spending level is slightly lower than what dealers spent in 2016. Put another way, the average dealer spent about $629 for each vehicle sold.

The NADA also provides average ad budget data for dealers: $583,638. Capturing a share of that spending could be a significant boost for your media company. But, of course, not all of the advertising funds go to one media format.  As the following list shows, digital formats continue to gain at the expense of other media:

  • Digital $321,000 55%
  • TV $87,546 15%
  • Radio $58,364 10%
  • Direct mail $42,022 7.2%
  • Newspaper $35,019 6.2%
  • Other $38,520 6.6% 6.8%

With digital media being the only format to score a bigger piece of the auto advertising pie, dealers may be selling themselves short. For example, TV continues to drive vehicle purchasers into dealerships. Earlier this year, one dealership cut its TV advertising to find out what would happen. In addition to a 17% sales drop, the dealership also realized that online searches for its name dropped significantly during the one-​month experiment.

That experience is an important reminder that media formats work hand in hand for the benefit of a retailer. In addition, each dealer serves a unique market. They don't have to match their media mix to the industry average. With your help, they can deploy the mix that works best for them.

Your auto dealer clients may be interested to know that TV ads are tops for causing Sports Car Shoppers to take action. To learn more about which ad formats influence specific types of car shoppers, check out the AudienceSCAN profiles available on AdMall from Salesfuel.