2019 auto adspend slows as priorities shift gear

Advertising expenditure by automotive brands is lagging behind the market, and has been slower to embrace online advertising, though the share of auto budgets to devoted online advertising is increasing. Auto ad is predicted to grow by 0.8% in 2019, down from 1.5% in 2018, according to Zenith’s inaugural automotive advertising expenditure forecasts. Zenith has conducted its first exclusive survey of automotive advertising in 14 key markets across the world, building on its authoritative Advertising Expenditure Forecasts. It calculates that automotive advertising expenditure totalled USD$35.5bn across these markets in 2018.The US is by far the biggest auto market according to the report, with USD$18bn in auto adspend for 2018, nearly three times more than China, the next-biggest market, which stands at USD$6.3bn. However, US adspend by auto brands has been in long-term decline since 2012, with a 12% decline in adspend recorded between 2012 and 2018. Conversely, auto adspend in China grew 47% over this period. Zenith points out that auto brands are expecting a tough year in 2019 as they face continued tension in trading relations, particularly between the US and China, and the possible imposition of car import tariffs in the US making it more expensive for manufacturers to source raw materials and parts, as well as to sell across borders. Zenith forecasts 2.0% growth in 2020, when the Summer Olympics in Tokyo and the UEFA Euro 2020 football championships will provide valuable showcases for auto advertising.Television dominates auto advertising, but internet ads are growing fastMore than 50% of all automotive advertising expenditure goes to television – 54.9% in 2018, well above the 32.9% global average across all categories. Television remains the best channel for conveying emotional brand images and sustaining them over time. Zenith expects television’s share of automotive adspend to fall from 54.9% in 2018 to 54.4% in 2019, and then to 53.1% in 2020, as auto brands have been steadily shifting more of their budgets to internet advertising, which includes advertising on all the online video services that deliver television-like content over the internet. It forecasts the internet’s share of automotive adspend to rise to 24.4% by 2020.However, the report also points out that auto brands are some way behind the market as a whole in embracing internet advertising, spending 20.9% of their budget online in 2018, compared to the global average of 40.6%. The fact that vehicle sales are almost exclusively finalised offline makes it more difficult for auto brands to optimise their online activity for sales than for brands in most other categories. Jonathan Barnard, Zenith’s head of forecasting and director of global intelligence, said, “Auto advertising is currently lagging behind the market, and has been slower to embrace online advertising, though the share of auto budgets to devoted online advertising is now rising rapidly.”Apart from print, which continues to suffer from the ongoing decline in circulation figures, radio, cinema and out-of-home are expected to either maintain or fractionally increase their share of automotive advertising between 2018 and 2020. Radio – which many consumers experience in their car – works particularly well for automotive brands, attracting 7.2% of auto adspend, compared to 6.0% of adspend across all categories globally.Auto brands face unique communications challengesAuto advertising is underperforming the ad market as a whole, which is growing at 4% a year. New technology and evolving consumer needs pose a fundamental challenge to the way the auto industry does business. The rapid growth in consumer demand for SUV models has led to much higher competition among suppliers. This means advertisers need to target their advertising at potential SUV buyers more effectively, and assess the return on investment of their advertising more rigorously, both by channel and by model. Zenith points out that embracing green fuels to attract potential green buyers, leveraging new connected technology and new models of ownership to reach tech-savvy and younger consumers, as well as using new digital channels to reach active buyers online, will be key to unlocking faster brand growth over the next few years.“'Mass advertising is central to maintaining brand consideration,” said Ben Lukawski, Zenith’s global head of strategy. “But more personalised messages, targeted using behavioural cues, can reach consumers when they are actively considering an auto purchase and are most open to persuasion, guiding them down the path to purchase.”