Streaming audio and podcast are poised to have a bigger increase in local auto advertising in the next five years than any other media. That is according to Borrell's just released 2022 Local Automotive Advertising Outlook. It projects online audio ad spending this year will total $131.7 million, a 20% year-over-year increase. But a larger growth story is also at play.
With double-digit increases expected in both 2023 (+16%) and 2024 (+13%), by 2025 Borrell forecasts that total will rise to $176.4 million. If true, it would mean that between 2021 and 2025 local auto ad spending on streaming audio and podcasts will rise 23% -- that would be larger than the 20% growth estimate for streaming video/OTT and it would be nearly double the 12% projected growth for targeted banner ads and listing sites.
“The story about the shift to digital forms of media isn’t new,” the report says. “The past five years saw average annual growth for all forms of digital except email advertising, while print and broadcast media saw declines. For the next five years, we see less of an annual decline for traditional forms of media and accelerated growth for digital media – especially streaming video and audio advertising.”
Across all media, Borrell says local automotive dealers are expected to push spending up another 9% to $9.47 billion in the coming year. Digital captures the lion's share of dealer spend with a predicted 12% boost over 2021, from $6.4 billion to $7.15 billion, accounting for three-quarters of total estimated spend vs. traditional media's 25% share. Borrell says spending on traditional media in 2022 is expected to increase 0.9% – up from $2.30 billion in 2021 to $2.33 billion for 2022 – driven by greater local dealer ad spend on newspapers, out-of-home, direct mail and cable TV.
In audio, radio as usual commands the third-largest share of traditional media ad spending behind newspapers and broadcast TV. But dealer spend on AM/FM is forecasted to decline 4.8% from 2021's $444.4 million to $422.9 million for 2022. Broadcast TV is also expected to have a lower spend, down 6%, with magazine and other print media aside from newspapers following suit with a 7.4% drop.
“In 2020, local car dealers began spending more on OTT and other forms of streaming video advertising than they did on broadcast media (radio & TV) combined,” the report says. “By 2023, they will spend more on OTT then they will spend on paid search. Of 17 different types of media, targeted banners (which includes paid social media ads) will remain dealers’ largest single spending category, with OTT rising to No. 2 within two years.”
Following a year where dealer spend was up 15% to $8.71 billion, Borrell's report suggests the increases for 2022 are necessary, even during a time when what new and used cars on the lot are selling so quickly that dealers hardly need to advertise them.
“The fact is, dealerships have a new urgency and new reasons to advertise,” the report says. “We believe that 2022 marks the beginning of a transition where dealerships will respond to major changes in the automotive marketplace by spending more to rebrand themselves, educate consumers about what their stores offer and drive buyers to their websites to interact. Whereas total spending by dealers declined at an average annual rate of 2% in the past five years, we're forecasting it will grow 3% annually over the next five.”