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Is Automotive Advertising Running Out of Gas?

November 20th, 2018   ||    by Callie Wheeler   ||    No Comments

Recent headlines about automotive advertising may be creating some panic and uncertainty about its relationship to television. But is that the right response? At first glance, headlines may be alarming, but digging deeper tells a different story.

Ford’s Shifting Strategy

According to The Drive, Ford recently announced it has ceased advertising its Fiesta, Focus, Taurus, and Fusion cars. The company will only market the Mustang, creating a stir as many wondered what would happen to its advertising budget with the majority of its car lineup off the table.

Initial reaction is, understandably, worry about the health of the television-automaker relationship. But further inspection reveals this move has nothing to do with TV’s effectiveness and everything to do with Ford’s product: those resources will be reallocated to trucks, SUVs, and crossovers. For advertisers and broadcasters who understand automakers, though, this shouldn’t come as a surprise.

Automakers’ TV Spend

Reporting on Ford’s announcement, MediaPost reveals how automakers’ spend is allocated across channels. Television receives about a third of their automotive advertising budgets—for the top five automakers, that’s a third of a total $16 billion a year when including local advertising.

And those numbers aren’t just indicative of the auto industry’s reliance on television, but hint at the strength of the relationship overall: on its own, automotive advertising makes up about 25 percent of local broadcasters’ advertising sales. Even with digital advertising growing, automakers are still heavily investing in television.

Why TV Is the Right Fit for Automakers

Automotive advertising takes place at three levels, or tiers, as Forbes outlines. Tier one is the OEM (original equipment manufacturer) —like Ford—and is often driving awareness, introducing new products, and creating brand identity. Tier two is made up of regional associations and will usually push regional deals while complementing national campaigns, while tier three—dealerships—will work to drive traffic to their specific locations.

The first two tiers heavily invest in television to create awareness, excitement, and recognition. The OEM or manufacturer is tasked with creating brand identity and the emotional tie to the automaker’s brand, and there is no better place for that than TV. Thinkbox found that television effectively drives emotional stories, with one study showing viewers are more likely to find emotionally engaging ads on television over social media.

The Future of Automotive Advertising

Automakers are considering creative ways to reach audiences — see the Genesis sponsorship of the Monday Night Football halftime break, for instance — but television is still at the center. Due to its unparalleled reach and effectiveness at creating and raising brand awareness, broadcasters are seeing continued investment in the channel.

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