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Auto Dealer Digital Marketing is the Canary in the Media Coalmine

We’ve been tracking the advertising behavior of small and medium businesses (SMB’s) for years, noting the dramatic increase in social media and promotions instead of traditional advertising spending (see video below).

A recent report published by Borrell Associates on the Automotive Advertising outlook adds fuel to the fire. Here are some highlights:

  • $35 billion each year is spent in automotive advertising (two-thirds of it is local) making it the second largest advertising segment;
  • Digital media will garner two-thirds of that spend ($22.7 billion) next year;
  • Automotive marketing spend is up 17% this year, with 95% of that going to digital;
  • In more than 90% of auto purchases, a consumer starts with online research;
  • Auto dealers are spending more than $2,400 per new vehicle on marketing – most of it in the form of promotions, incentives and loyalty programs which is almost 5 times more than what they spend on advertising.

Dealers are able to do this because they have become local publishers.  They understand how using their own earned and owned media properties to publish their own specials gives them leverage to cut traditional ad spending without suffering a loss of sales (which are up 5% this year).

Auto dealers are often the trendsetters in local marketing as they have money to spend, and many vendors and media outlets want a portion of that spending.  Other local SMB’s should take note of this success and follow in these footsteps, as I suspect they will.

How can national brands in other categories influence channel spending at a local level? There are a few ways to do this, such as:

  • Show leadership with marketing plans, co-op policies and media programs;
  • Leverage content, apps and online infrastructure to help fill the void left by traditional media;
  • Develop local microsites, mobile-friendly landing pages and digital media templates in marketing portals;
  • Focus on mobile ads, particularly location targeted campaigns because according to BIA/Kelsey less than 10% of this spend is generated by local SMB’s today, but is projected to grow quickly to 33% by 2019.

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