A report published this week by Zenith Media forecasts a 21% dip in automotive industry ad spending across 10 key markets worldwide, making the sector one of the hardest hit by the current economic crisis.
“That’s two-and-a-half times faster than the decline of the ad market as a whole in these markets,” says Zenith, which is projecting a 9% drop for the industry overall.
However, Zenith forecasts a rapid recovery in 2021. “Automotive ad spend is poised to outperform the market in both 2021 and 2022, with 10.5% growth in 2021 and 11.4% growth in 2022,” Zenith says — though the 2022 projection ($31.9 billion) is expected to fall slightly short of 2019’s spend of $32.8 billion.
In the U.S. market, Zenith reports that ad spending on car brands will decline by 21.9% this year but will increase by 11.6% in 2021 and 17.3% in 2022.
“Initially, the large decline in 2020 will make the comparison easier in 2021,” Zenith says. “But delayed purchase decisions, and persistent reluctance to use shared and public transport are expected to lead to the first growth in passenger car sales since 2017, fueling sustained growth in automotive advertising in 2022.”
While television and radio will continue to play important roles in messaging, both are expected to lose ground to digital advertising, which Zenith predicts will be the only channel to grow between 2019 and 2022.
“Digital advertising is the most important single-channel for auto brands, but automotive advertising is less digital than the market as a whole,” the report says. “Automotive brands spent 42% of their budgets in digital channels in 2019, while the average brand spent 49% digitally. Automotive brands are also less prominent in magazines and out-of-home.”
Radio Viewed As ‘Particularly Relevant’
And while TV is the second-biggest channel for auto advertisers, Zenith says auto advertisers also spend more on radio than other segments because it’s “a particularly relevant medium given that a large proportion of radio listening takes place in the car… Television and radio will remain important media for automotive advertising, with relatively restrained declines of 6% and 7% respectively between 2019 and 2022.”
Out-of-home, cinema, and print ad spending are all expected to drop by double figures.
And while Zenith says the coronavirus crisis has played a major role in the 2020 downturn, it may also influence sustained growth in car buying. “Personal safety will continue to drive consumers’ desire to avoid public and shared transportation for the immediate future,” the report says. Global Web Index data shows that people have an increased desire for flexibility when it comes to working from home and using alternatives to public transport post-pandemic; as lockdown eases and people return to work, we will likely see a resurgence in private car ownership.”
“Growing environmental concern will drive interest in electric vehicles,” the report adds. “Brand messaging should be tailored for new entrants, and for changing attitudes post COVID-19.”
Zenith believes that auto brands “will need to develop new ways of communicating with consumers, whose expectations for how to research, choose and buy cars are shifting online, a trend that the pandemic has accelerated.”
Access the full report here.