National and local media companies have long counted on the auto industry as a significant source of revenue. During the recession, auto advertisers curtailed their spending. In 2012, the industry is recovering but the media companies are reporting a noticeable shift in the advertising mix being used in this sector.
Research firm Borrell Associates is out with its latest auto industry ad spending forecast and it’s looking good. Media companies can expect to see at least 14% more spending this year which will bring the total amount for the sector to about $31 billion. This increase translates to $3.7 billion in additional revenue that media companies can capture.
However, auto companies are planning some adjustments to the types of media that will realize the biggest increases. For one thing, nearly 90% of the increase will go to online. In total, about $11.9 billion, or 38% of industry spending will be for online formats. Auto advertisers will cut back on traditional media as they make this change. The largest cuts will be made to direct mail (-8.4%), yellow pages (-9.7%), and magazines (-3.1%).
Borrell analysts say that 3 factors are driving the shift to digital:
- More industry co-op funding is now digital
- Buyers are using their mobile devices for research
- Online video is seen as a favorite and effective advertising format
By year-end, about 40% of some auto franchise budgets will be allocated to digital and that trend is expected to continue. As more money is spent on digital channels, media concerns will likely be rolling out new solutions to maintain the business they have long enjoyed with their automotive clients.[Source: 2012 Automotive Advertising Outlook. BorrellAssociates.com. Web. 8 May 2012]