WILLIAMSBURG, Va — Like car sales, automotive advertising is up this year — and those dollars are increasingly being directed at digital media. In fact, for the first time, new- and used-car dealers will spend more on digital marketing than on all other media combined, including television.

In its 2013 Automotive Advertising Outlook report, Borrell Associates projects automotive advertising to be a $32.8 billion category this year, up 2 percent from 2012. So far this year, car sales are up 8 percent and are on pace to close 2013 at an estimated 15.6 million units sold. And that total is expected to climb even more as the industry returns to those prerecession levels.
The Williamsburg, Va.-based firm, however, found that while marketers are shifting ad dollars toward digital, the migration away from traditional media is far from over.

So far this year, online and mobile advertising are up 18.7 percent. But the firm also found that direct mail has shot up by 22.9 percent this year, as manufacturers work harder to drive leads to dealers.

“Automotive advertising continues to be in, perhaps, the deepest transition of all local advertising categories,” the study states. “The first wave of migration involved print classified listings, which played a role at the lower end of the buying funnel now dominated by digital media; the second wave involves branding-type broadcast advertising, now in the early stages of its migration to digital.

“Within five years, annual spending by dealers and manufacturers on digital video advertising will go from $2 billion to more than $9 billion — most certainly at the expense of local radio and TV.”

Borrell predicts that broadcast television advertising will be down by 16.7 percent this year, while radio is expected to decline 15.9 percent. Hardest hit will be newspapers, with automotive advertising expected to be down 29.3 percent.

The rise of digital media has compressed the longstanding car-buying funnel into a shot glass, where consumers spend half as much time looking for a car as they did five years ago. And they’re spending almost all of that time on social networking sites and other digital media.

Social media, the report says, is already a billion dollar spending category for manufacturers alone. Today, nearly all of the manufacturers have more than one million Facebook followers. Ford, Audi, Chevrolet and Honda are the social media leaders, with two to four times the followers of any other automotive brand.

This is likely to trickle down to dealerships, the study predicts, where creative ideas for contests and other promotions can be used to drive qualified leads.

“The utility and ease of interactive media has compressed the search time to three months and severely curtailed the use of newspapers and magazines in the process,” the report states. “Branding media such as TV and radio still play a role, but even that appears threatened as more and more video shows up on tablets and other mobile devices.”

The report suggests that dealers should look to targeted advertising — especially online — to make the most of their investment. In fact, franchised dealers will spend $2.1 billion on targeted display ads this year, most of it allocated to social media.

Untargeted banners, however, are a losing bet, with the firm forecasting a rapid decline in such advertisements.

“This year is likely to be remembered by many auto marketers as the year things began to change again,” the report predicts. “In five years, things may be dramatically different, and the good old days of auto advertising will be gone.

“The world of auto marketing is becoming more and more complex, and we expect that it will take metamorphic change to survive it.”