Report: Dealerships Poised To Spend $9.4B In Advertising

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Borrell Associates forecasts $9.4 billion in automobile dealership spending in 2022 on advertising and marketing, up 8.8% compared with 2021, reports Mediapost.

The report -- 2022 Local Automotive Advertising Outlook, released Monday -- details how the events of the past 24 months have altered the advertising environment for local auto dealerships, and what this means for their future advertising plans.

The industry spent $38 billion last year -- 4.5 times more than it did on advertising -- to maintain an online presence through search engine optimization (SEO), web maintenance and hosting, online video production, social media management, and other digital marketing services.

The data shows that 2022 marks the beginning of a transition. An increasing amount of a dealership’s advertising and marketing budget will go toward rebranding, educating consumers about what their stores offer, and driving buyers to their websites to interact. Educating consumers on electronic vehicles will become important too.

Dealerships will become complete local fulfillment centers, where consumers can sell vehicles, buy new ones, get them serviced, qualify for financing, or pick up a car they bought online. This follows two years of vehicle sales rising and falling, prices skyrocketing, inventories plummeting, profits soaring, and semiconductor shortages.

An underlying trend continues to emerge — the insatiable consumption of video advertising outside of broadcast TV.

In 2020, dealerships began spending more on over-the-top (OTT) and other forms of streaming video advertising than they did on broadcast media like radio and TV combined. By 2023, they will spend $1.9 billion on OTT -- more than they will spend on paid search, according to Borrell data.

Dealers are scrambling to remain relevant and plan to spend more of their ad budgets on digital media than traditional media.

In 2022, the new advertising environment is shifting from new cars on the lot and manufacturer’s rebates -- which are both in short supply -- to other things like buy-back vehicles, meeting online buyers in person, provide answers to questions about electric cars, parts and service, and insurance and financing.

Meanwhile Radio World reports, Fred Jacobs, founder of consulting firm Jacobs Media, wrote in a series of recent blog posts about how radio has fit into the dash historically and who will dictate its path to the future. He even contemplates a world where in-dash entertainment systems in new vehicles are no longer considered a standard feature.

Jacobs says this is the perfect time for the radio industry to dig deep for the answers to many questions about its future.

“So, the idea that some automakers are rethinking their 90-year policy of radios solidly positioned in the center of their dashboards — now known as head units — should send shockwaves throughout the radio business from Napa to New York,” Jacobs wrote in the fall.

He argues that it would be a mistake to assume that traditional AM/FM radio will always be in the dash and offered as a free feature to car buyers. He said broadcasters who are oblivious to recent developments are putting future success at great risk.

Jacobs told Radio World: “It is an imperative broadcast radio stays front and center on those auto display screens. Properly enabled radio station mobile apps appear on both CarPlay and Android Auto. And metadata support and dash display is more important than ever.”

Hybrid radio in connected cars will present radio broadcasters opportunities to “attract an audience outside of a station’s signal range,” Jacobs says.