Consolidation Hits Auto Dealer Ad Spend


BorrellAutomotiveThe auto industry came back from the recession with a vengeance as new car sales climbed to the highest levels seen this century. Auto advertising will be a $37.5 billion advertising category this year, up about 0.08% from last year. But one part of that category, local dealerships, is seeing a stall.

Local dealerships account for about two-thirds of auto ad spending, according to Borrell & Associates.

There are fewer advertisers. Due to dealership consolidation, there were 750 fewer in 2015, twice the loss seen in 2014. The average midsize market has 16 fewer dealerships than five years ago – 7 fewer new-car dealers and 9 fewer used-car dealers.

Consolidation is creating larger dealership that spend less on per-car advertising (think half) and for the first time next year dealership that sell 400+ cars a year will outnumber small, according to Borrell. Those that sell 750+ per year now represent 28% of new-car dealerships.

Per-vehicle vehicle adverting costs is about $518 now, down 15.6% from five years ago and down 22% from its $664 peak in 2009.

Dealers’ increasing use of digital media is “thinning the traditional-media pack,” according to Borrell. Three of the top 5 sources of new leads “in their own perception,” involve digital, and they now consider social media and Web ads to be on par with television advertising.

Dealers typical ad spend in 2016 for television ads is $594 (in millions), radio is $587 newspapers at $1,237 and digital at $8,236.

The information is in the report “2016 Auto Outlook-The Thinning of the Media Pack.”