Auto Industry Expected To Spend $15.1 Billion On Local Ads This Year

According to a report from BIA/Kelsey, the auto industry is expected to spend more than $15.1 billion on local advertising this year, with 77 percent of it being spent on traditional media.

The report, “Insights into Local Advertising – Automotive Vertical,” clearly indicates that television and other traditional media continue to be mainstays for the auto industry, although growth in digital advertising is increasing.

The research company estimates that the auto industry’s spend will represent 11.1 percent of the $137.9 billion total local advertising market. However, the report, which includes auto dealers, other motor vehicle dealers, auto parts and accessory stores, tire dealers, and gas stations, projects that all growth in local advertising for the automotive vertical category will occur in online/digital media, reaching 30 percent of the total local advertising by 2019, up from 12 percent in 2015.

“The auto industry and television came of age together as keystones of 20th-century American culture,” said the report’s co-author, Mark Fratrik, SVP and chief economist, BIA/Kelsey. “The two industries remain closely tied, with the auto industry being dependent on over-the-air television advertising, and all auto vertical subcategories relying heavily on traditional media to get their message to their audience. Despite traditional media’s dominance in the current automotive marketing mix, digital advertising is on the rise, and will represent nearly one-third of automotive local ad spending by 2019.”

The company explains that pure online advertising, consisting primarily of search, is the largest digital automotive channel.

There are currently approximately 17,600 new vehicle auto dealers in the United States, and BIA/Kelsey estimates that the average auto dealer will spend about $640,000 on local advertising this year. Out of this total, the company estimates spending to be 33.9 percent for TV, 14.7 percent for newspaper, 12 percent for online and 11.6 percent for over-the-air radio. However, as mentioned earlier, digital advertising is on the rise, and it’s predicted that it will reach 30 percent of local advertising spend by 2019.

Overall, the report shows that traditional media continues to dominate auto industry advertising spend, but the move toward digital advertising is significantly increasing over time.