With the U.S. auto industry’s recovery expanding further, Borrell Associates made a prediction that expenses related to national and local advertising will increase by almost 14% in 2012, to $30.8 billion. The Virginia-based consulting firm also said that around 40 cents of each media dollar will be shifting toward digital. Borrell, which monitors local ad spending, said in its report that the rising trend for digital media will persist "largely unabated” and would aversely affect print, radio and direct mail.
CEO Gordon Borrell said that the company anticipates that the industry, which includes dealers and dealer associations, will spend almost $11.9 billion on search buys and online banner ads and that there will be trending toward repurposing manufacturers' agency spots for local video usage "tailored to their own purposes."
The $11.9 billion figure that the firm came up with signifies an overall increase of 39% from last year. In a summary of the report, it said that broadcast advertising isn’t anymore expected to be at the “top of the buying funnel.” The factors that influenced Borrell's conclusions are more availability of co-op advertising budgets, and the shift in marketing strategy to target potential buyers through their mobile devices. Borrell also found that almost 90% of the additional dollars – approximately $3.7 billion -- will be intended for digital.
Eleven marketing channels were examined for their spending data. These are newspapers, radio, TV, cable, magazines, outdoor, cinema, online, direct mail, directories and telemarketing. It also looked at the spending patterns by five types of auto advertisers such as manufacturers, franchised dealers, independent dealers, dealer associations and private-party sellers.
The report gives a conservative prediction of total sales of light trucks and cars of 13.5 million units. In the first quarter, the U.S. sales rate was 14.5 million. However, the report said that there may be “speed bumps” due to higher gas prices and limited credit.