A big industry calls for advertisers with even bigger budgets, right? 

Not so fast. (Get it?) 

The pandemic, coupled with an uncertain economy, has pushed car buying and related purchases to the back of many peoples’ minds. 

Sales of new vehicles in the US fell by about 15% in 2020, one of the biggest declines in decades. 

While car sales have recovered a bit since then, the recession and rising prices have prevented advertisers from returning to pre-pandemic spending levels.

Through July 2022, automotive-related advertisers decreased spending by more than 8% YoY ($4.3b vs. $4b).

That said, some automotive advertisers did spend—and those that did, spent big. 

Despite the overall industry spending less through July, six categories spent more, including Model/Brands (up by 2%), Automotive Aftermarket Parts & Accessories (up by 8%), Automotive Websites (up by 94%), Automotive Maintenance & Repair Products (up by 4%), Motorcycles (up by 40%) and Automotive Additives & Fluids (up by 23%).

These advertisers spent a combined $3.3b through July, driven by domestics, imports and SUVs. Advertisers for electric cars, including Chevy (Bolt EV), Kia (Kia EV6) and Volkswagen (Volkswagen ID.4), increased their investment as well. 

Clearly, automotive advertisers are all over the road. 

So, what’s the deal? 

We looked at our data to find out.

Tough Times for Dealerships (and Their Advertisers)

Few industries have gone unencumbered longer than the automotive industry.

Since the first Model T rolled out of Ford’s Piquette Avenue plant in 1908, the car-buying process has gone relatively unchanged. 

If you wanted a car, you went to a dealership. 

As technology crept into the industry and the Internet began to influence purchase decisions, some of this process went online. But for all intents and purposes, buying a car still required you to walk through showroom doors.  

That’s changing fast as consumers realize how easy it is to buy a car online.

This shift, which likely wouldn’t have happened for years if not for the pandemic, has forced advertisers working for dealerships to take their foot off the gas. 

Through July, both Used Car Dealerships and Auto Dealerships significantly decreased ad spending. 

New Dealerships scaled back their ad spend by 42% YoY due mainly to a 98% YoY decrease in TV spending. 

To make up for their dwindling TV presence, these advertisers increased spending on digital and print by 29% and nearly 1000%, respectively. 

Used Car Dealerships did the opposite, decreasing print and digital spending by 94% and 73%, respectively. These advertisers offset those decreases by increasing TV spending by more than 1,000%. 

Although these advertisers have traveled down different roads so far in 2022, the challenge in front of them is the same: The traditional dealership model is dead. 

In the short term, an increase in ad spending may follow, especially as the cost of cars normalizes. But the fact that Ford’s CEO recently expressed his desire to move away from dealerships doesn’t bode well for their future.

As a result, ad spending from these advertisers will likely continue to decrease in the long term as dealerships get locked out of the industry.

Hitting the Open Road

After more than two years of travel restrictions, people are hopping in their cars and boarding planes to make up for the lost time. 

They’re jumping into RVs, too. 

In 2021, the RV industry produced 600,000 RVs, surpassing the record by 19%. 

These advertisers are taking advantage of the road-tripping surge, increasing their spending by 7% YoY through July.  

Most of this spending came from RV dealerships, including Camping World, which accounted for 83% of the $10.6mm invested. 

While that’s not surprising—despite sky-high gas prices putting a damper on their strategies—their media mixes were a bit…odd.  

Instead of investing more in digital like other advertisers, RV advertisers decreased digital spending by 57% YoY. Then, they moved that money to print and TV, which increased by 22% and 230% YoY, respectively.

Why? 

The likely reason: the demographic of RV buyers. 

While this lifestyle is becoming popular with younger generations, most people buying RVs today are older. 

In fact, 66% of RV owners are ages 55+, while 42% are retired and 74% live with no children in the home.

RV advertisers are banking on the fact that people who fall into these buckets are generally less tech-focused and more likely to still consume content via TVs, newspapers and magazines. 

At the same time, the fact that people are less likely to buy RVs online probably has a lot to do with the increase in traditional ad spending. 

Still, to ignore the role of digital in the RV purchase would be a mistake, especially as younger generations and influencers shun the corporate world for a nomadic lifestyle.

So, while the traditional car dealership is under fire, RV dealerships may be fine for the time being. 

That said, it wasn’t long ago that buying a car online seemed outlandish. 

Are RVs next? 

Modern Cars, Old-School Ads

In 1952, Delta Democrat-Times published an article titled “Cheer Up! World Will Be Wonderful Fifty Years From Now!” In it, author Henry C. Nicholas did his best to predict the future. 

One of those predictions was that the atomic-powered flying car would be a thing.

Although we haven’t reached that point, the automotive industry is built on innovation. 

Despite that, many advertisers are sticking to old-school ad strategies that revolve around print and TV. 

Through July, Auction Services, Corporate Automotive Campaigns, Motorcycle Parts & Accessories and Trailer/Semi Trucks increased spending on these print and TV outlets.

For example, Auction Services like Barrett-Jackson Auction Company, Mecum Auctions and Raleigh Classic Car Auctions increased print spending from $2mm in 2022 to more than $3.6mm.

At the same time, advertisers for Motorcycle Accessories increased print spending by 22% YoY, including Decal Works & SoCal Racing, LeMans Corporation and Arai Helmet.

Meanwhile, corporate automotive campaigns from the likes of Nissan, Volkswagen and Geely Holding (Polestar and Volvo) drove an increase in print ad spending by 24% YoY. 

While the reason RV advertisers are decreasing digital spend makes at least a little bit of sense, there’s no logical reason for these advertisers to be doing the same. 

The car-buying journey is going online.

In fact, about 88% of car buyers researched their options online before going to a dealership.

Despite the clear signal from the market, automotive advertisers are stuck in their tracks.

As car buying continues to transition online and consumers look to cut out the intermediaries—and the ridiculous price tag that comes with them—these advertisers will have to adapt. 

That means more digital ads. It’s 2022, and people aren’t flipping through the newspaper to find their next ride.

The automotive advertisers that’ll win moving forward are the ones who are willing to forget what got them here and readily adapt to meet the shifting demands of the industry. 

It Makes Perfect Sense (and None at All)

The astronomical price of cars and the rising price of gas have put automotive advertisers at an impasse. 

Increase spending to generate demand or slow it down until the dust settles? 

Through July 2022, most industry advertisers are opting for the former—and it’s hard to blame them. 

But at the same time, one could certainly direct blame towards their apparent obsession with traditional ad formats.

Despite the automotive industry shifting online, many advertisers are sticking to old-school techniques. 

This likely has to do with ad teams staying in their comfort zone, but it presents an opportunity to get them thinking outside the box. 

The automotive industry is going online, and it’s time for these advertisers to respond.  
For more insights, sign up for MediaRadar’s blog here.

That’s largely thanks to the rising popularity—and expanding features—of car-buying apps. 

We encourage you to subscribe to our blog for the latest data surrounding the advertising industry. We will provide daily updates as COVID-19 continues to make its mark on the US economy.

The Auto Industry is Being Upended Post-Pandemic 

“Car sales are steeped in decades of traditions, regulations, and hard-sell tactics,” writes Sharon Carty at Car and Driver. “Although buying a car and making a large investment will always carry some level of stress, the changing way of doing business promises to make car sales lower-pressure events compared with the past, with prices negotiated online, test drives taken alone without a pushy salesman in the passenger’s seat, and financing and insurance sales taking place on the web.”

These websites and apps are looking to capture a sizable chunk of the US’s $840 billion used car market—and they aren’t just marketplaces designed to connect buyers and sellers (think Craigslist). 

Instead, used car apps are buying their own inventory, often directly from consumers. As a result, traditional dealerships are losing out on inventory and the newcomers face an opportunity to stand out—not just in user experience, but in the way they advertise their offerings.  

How Car Buying Apps Are Advertising

Yes, these apps are changing the way consumers shop for and purchase their vehicles. But how are they advertising? And how does that compare to car manufacturers and regional dealerships, two industries that have long had an advertising budget in the billions?

To help answer this question, we looked at ad advertising trends from eight car buying apps: 

• Carvana
• CarGurus
• CarMax
• Edmunds
• TrueCar
• Cars.com
• Autotrader
• CarFAX

To date, these car buying apps have spent $255.3 million in digital and TV advertising (that’s January through September of 2021). 

While these companies may be upending the auto industry, they’re sticking with tried-and-true advertising for the car market: the vast majority of ad spend (78%) is going to TV advertising. Within digital ad spend (which accounts for $56.5M) from these apps, investment in Facebook accounts for nearly 60%. 

Taken together, these two insights highlight that the advertisers are going after a similar market as car manufacturers and dealerships, rather than bringing in a Gen Z demographic. 

And it’s working: year over year, ad spend increased 38%, from $185M in 2020 to $255M in 2021. 6 out of the 8 companies we analyzed advertised in both 2020 and 2021; only TrueCar has had no advertising presence this year, and Autotrader is a newcomer to the advertising space. 

How Do Car Buying Apps Compare to Manufacturers and Dealerships? 

Advertising from national car brands like Ford, Nissan, and Toyota dwarfs that of the car buying apps above: these major brands have spent a total of $3.9 billion in 2021 so far. 

That said, growth is much slower, with an increase of just 26% from 2020 (compared to 38% from the apps, remember). And, as mentioned previously, the newer advertisers seem to be taking a cue from established auto brands: digital spend for both makes up 21% of their total ad spend. 

Car dealerships are another story entirely: year over year, ad spend from regional dealerships has increased 372% in 2021 ($1.9 billion in 2021, compared to $417 million in 2020). This is less than surprising, since regional dealerships were especially affected by the pandemic. The lowest trough of ad spend we saw occurred from April-July 2020, right after the economic effects of the pandemic began to take hold. It makes sense, then, that local dealerships would put their ad dollars behind economical formats: digital ad spend makes up 84% of total ad spend for the segment. 

What does this mean for the car buying apps of the future? Given that just 1 percent of used-car sales go through the three largest, publicly traded online dealers, there’s only room for growth. 

For more updates like this, stay tuned. Subscribe to our blog for more updates on coronavirus and its mark on the economy.

Between growing consumer interest, a policy push from the Biden administration and support from automakers themselves, we’ll see electric vehicles (EVs) become more of a norm than a luxury. 

Though the automotive industry went through the wringer last year and advertising plummeted, EV advertising in 2021 has already surpassed spending from the first seven months of 2019.

Electric vehicle ownership is slim, but sales growth outpaces overall market

For each of the last three years, electric vehicles sales made up about 2% of new car sales in the U.S. But 39% of Americans say they would very or somewhat seriously consider buying one the next time they were ready to buy a car, per Pew Research Center. 

The growth rate of sales of EVs is significantly outpacing that of gasoline-powered cars. According to the Wall Street Journal, plug-in vehicle sales more than doubled year-over-year during the first half of this year, which was much greater than the 29% growth rate of total vehicle sales. 

And hybrid sales cars grew 142% in the same time frame. 

A main driver here is the early adoption from high-income consumers with single-family homes that can accommodate plug-ins (and as a bonus, solar panels, which bring down the price of the charge.) 

People bringing in less income face higher barriers to entry, even if the desire to drive an EV is there. EVs are more expensive, the tax credit isn’t overly incentivizing to those in lower tax brackets, and those with low to moderate incomes are more likely to live in apartments with less access to charging stations. 

Even though these barriers exist, politicians, utilities companies (that benefit from increased demand of electricity) and automakers are implementing policies to push the sales of EVs further. 

President Biden signed an executive order, with the backing of automakers, that will direct half of all new vehicles sold in 2030 to be electric.

This is part of his climate change pledge and as a way to keep up competition with China’s leadership and production.

Europe and China already outpace the U.S. in EV adoption due to their more supportive policies and stricter regulations. 

“The biggest thing that’s happening here is there’s a realization, on the part of both labor and business now, that this is the future. We can’t sit by,” said President Biden.

Though the sale of EVs makes sense from a climate and business perspective, a bigger challenge will be changing consumer behavior. That job often falls on advertising teams. 

MediaRadar Insights

Electric vehicle ad spending has totaled $33 million so far this year, in a $2.9 billion automotive advertising market.

Though EV spending is only a sliver of total car advertising, it’s up 69% from 2019 where spend totaled $19.5mm over the same seven months. EV spending in 2020 was almost nonexistent. 

Note: This is spending from fully electric vehicles—hybrid vehicle ad spend is included in total automotive spend.

Top spending models in 2021 include: 

• Volkswagen ID.4
• Lucid Air
• Chevrolet EV
• Atlis Motor Vehicles
• BMW ix
• Nissan Leaf

Of the top spending models, only Nissan Leaf remained in the top six from 2019, where the top spending models were: 

• Nissan Leaf
• Hyundai Kona
• Iconiq Motors
• Volkswagen e-golf
• Pininfarina
• Lotus Evija

Notably, Tesla isn’t on this list because the company doesn’t use traditional paid advertising channels. CEO Elon Musk has famously said he hates advertising. Instead, the leader in modern, luxury electric cars relies on word-of-mouth marketing from its very loyal customer fanbase, in addition to the powerful influence of Musk himself.

But not every company has a CEO who has mastered Twitter as much as Tesla. So as EVs become more common on the road, we’ll pay attention to companies who are marketing their products using more traditional means. 

For more updates like this, stay tuned. Subscribe to our blog for more news.

Many have committed to purchasing thousands of new eco-friendly cars over the upcoming years, but fleet sales haven’t picked up steam yet. And advertising spend hasn’t either. 

We encourage you to subscribe to our blog for the latest data surrounding the advertising industry. We will provide daily updates as COVID-19 continues to make its mark on the US economy.

Which companies are the latest to make the electric shift?

Last week, Amazon’s first Rivian electric vans began delivering packages to customers. The company began testing Rivian’s all-electric vans in Los Angeles a few months ago as part of its pledge to achieve net-zero emissions by 2040. 

The first Rivian vans were deployed in the Denver area, but are planned to expand to 16 U.S. locations close to distribution centers. The vans have a 150-mile range. 

“From what we’ve seen, this is one of the fastest modern commercial electrification programs, and we’re incredibly proud of that,” Ross Rachey, director of Amazon’s Global Fleet and Products, said in a statement. Amazon uses other electric vehicles, and has already delivered 20 million packages via greener transportation. 

Other local businesses in Denver are also committed to travelling emission-free on deliveries and sales calls. Denver Beer Co. bought Nissan Leaf EVs for their sales team members.

“The Denver Beer Co Nissan Leaf EVs are one more step that we are taking to reduce our carbon footprint and environmental impact,” shared Denver Beer Co co-founder Patrick Crawford. “Every small step counts and we are looking for every possible opportunity to operate our brewery in the most sustainable way possible.”

JCB, one of the top manufacturers of construction equipment, is another early adopter of EVs. It recently added 40 new EVs to its fleet. “JCB is making great strides in developing low emissions technology to power its range of construction equipment and we are delighted to complement this strategy with the introduction of self-charging hybrid cars into our fleet,” said JCB chief operating officer Mark Turner.

Overall U.S. Q1 fleet sales are down YoY, but as businesses aim to reduce their environmental footprints and the economy rebounds, automakers will likely see increased demand. But will suppliers be able to keep up?

MediaRadar Insights

Even though the economy is coming back to life in many ways, the auto industry is struggling with the shortage of semiconductors. The Association of Fleet Professionals has warned that if the disruption isn’t resolved, fleet decision makers will need to give more lead time for purchases. 

This may be one factor contributing to lower fleet ad spend. In B2B fleet sales, spend in April 2021 was down 19% to $428kmm compared to $530k in April of 2020. 

Some vehicles—including vehicles from Ford, Jaguar Land Rover, Stellantis and Volkswagen— are already in reduced supply and are difficult to get a hold of. It’s not the most urgent matter to advertise a product that has a waiting list of a year or more.  

Another interesting trend coming out from the pandemic is that print no longer takes the majority share of ad spend in this category. In April 2021, print accounted for 49% of fleet automotive ad spend in the B2B industry. In 2019, print held 77% of ad spend in the same space.

The B2B fleet automotive industry didn’t experience the biggest hit in ad spending until late summer and early Fall. While we didn’t expect the number to still be down 19% in April, we expect to see growth in the upcoming summer months as companies look to modernize their fleets. 

For more updates like this, stay tuned. Subscribe to our blog for more updates on coronavirus and its mark on the economy. 

However, the push for new energy-efficient vehicles provides optimism for market recovery.

This pivot comes at a time when few people are leaving their homes and many are relying on businesses to bring the outside world to them in the form of packages and food deliveries, making reliable fleet vehicles even more important.

We see this optimism shining through in the ad spend: spending in the B2B automotive market bounced back quickly and is up significantly from last year.

We encourage you to subscribe to our blog for the latest data surrounding the advertising industry. We will provide daily updates as COVID-19 continues to make its mark on the US economy.

Changes in Commercial Fleets As Businesses Search for Eco‐Friendly Options

One big drive behind spending on commercial fleets is the industry’s move towards more energy‐efficient vehicles. 

Some companies have used all‐electric vehicles for over a decade. FedEx, for example, began using them in 2009. As recently as 2018, though, these vehicles were only used in California.

Other companies announced deadlines by which they aim to be gas and diesel‐free.

“All of our scooters and e-bikes are already electric, already powered by renewables,” says Andrew Savage, the head of sustainability at Lime. “We’re going to take the vans and the vehicles used to manage those programs and transition those to zero emissions as well.”

Other companies, like Ikea and Unilever, have the same goal in mind.

Announcements of new, energy‐efficient and sustainable car models coincide with Governor Gavin Newsom of California signing an executive order banning the sale of new gasoline cars by 2035. 

“To get to a carbon-free economy by 2045 we can’t get there without transportation,” Newsom said in a webcast. With this new legislation, EVs will most likely play a large part in fleet management over the next few years.

In January, UPS committed to purchasing 10,000 Electric Vehicles (EVs) for their fleet. Amazon expects to add 100,000 EVs to their fleet by 2030, and FedEx has integrated electric vehicles into their fleet for over a decade. 

eCommerce in B2B automotive on the rise 

At the same time, many automotive companies are turning to eCommerce to boost sales. 

This allows them to keep more accurate inventory and expand their customer base. TruPar, for example, increased online revenue by 25% and average order value by 70% since switching to an eCommerce platform.

eCommerce in the B2B automotive parts industry is expected to see revenues increase to $8,921 billion by 2030, primarily because:

• With online buying a necessity during the pandemic, the development of eCommerce platforms for auto parts couldn’t have come at a better time.
• In 2017, Amazon announced that they would sell brand name automotive parts online, so many manufacturers built platforms to remain competitive.
• eCommerce technology allows brands to streamline sales processes, cut costs, and maintain excellent customer service.

MediaRadar Insights

With much of the country shut down, ad spend initially fell dramatically in May—down 71% YoY. However, the drop didn’t last long. Since June, there has been consistent growth in spending. By August spending increased 47% YoY.

Despite new environmental pushes, companies aren’t buying too many new vehicles yet. Commercial fleet sales from nine manufacturers saw a 16.8% overall decrease in August compared to the same time last year, following a 6.3% drop from the previous month.

However, digital ad spend in the B2B automotive market is consistent with levels seen in January, before experiencing the effects of COVID‐19. While the pandemic impacted the commercial automotive advertising industry, its effects on advertising were short lived.

For more updates like this, stay tuned. Subscribe to our blog for more updates on coronavirus and its mark on the economy.

While not all consumer industries have recovered, these three sectors are increasing their advertising spending.

We encourage you to subscribe to our blog for the latest data surrounding the advertising industry. We will provide daily updates as COVID-19 continues to make its mark on the US economy.

Automotive

Ad spend from the auto industry is accelerating as the country reopens. During the week of July 13th, ad spend was up 7% year-over-year (YoY) with $73 million in spending. This is the first week since the beginning of the pandemic in March since ad spending was positive year-over-year.

Sales have not completely recovered but they are on an upward trajectory. Total car sales were down 17% YoY in June—a significant improvement than the 58% YoY dip in April. China, on the other hand is further along in recovery, and saw car sales increase 10.4% YoY in Q2.

According to data made available by Apple, driving direction requests (used as a bellwether for overall driving levels) have recovered from the pandemic dip, and are actually higher than they were pre-pandemic.

People are on the road even as the pandemic continues—and car brands are ready to sell more vehicles. 

Restaurants and Bars

Restaurants and bars are seeing ad spending slowly return to levels consistent with last year. The biggest drivers behind this recovery are the national chains. Over the past three weeks ad spend from national restaurant chains is down only 15% YoY (slightly better than all restaurants and bars).

The recovery in ad spend mirrors (but also lags) behind the recovery in sales at fast food chains, according to sales numbers provided by the NPD group.

Fast food restaurants, who make up a large portion of the chart above, made adjustments to their business model to cater to consumers in the new normal.

With an increased focus on takeout, drive-through, and delivery services, brands were positioned well to deal with the most recent surge in case counts.

“COVID acted as an accelerator for some of the trends that we already identified in our strategy,” said Matt Dunnigan, CFO of RBI (owner of Burger King, Popeyes, & Tim Hortons), noting that on average the company gets higher average revenue per order for take-out and  drive-through than for dine-in.

Local restaurants, however, slid further down than national chains. They were down as low as -75% in early May. They were on the road to recovery (-43% week of 6/22, right in line with national chains, but fell right back down at -70% with cases spiking). 

Hotels and Lodging

Hotel brands are increasing their ad spending as Americans roadtrip their way through summer. Spending is up over three times the low-point in late May. 

Choice Hotels owns about twenty different brands and they’re acknowledging that people will be on the road and encouraging them to stay in places they know that will be sanitary.

However, without the vaccine, it will still take time for restored confidence among consumers. According to STR, a hospitality industry data firm, U.S. hotel occupancy for the week ending July 18^th was at 47.5%. They note that this is the thirteenth week of increases in the past fourteen weeks, and much better than the low point of 22%, although it remains down 39% YoY.

The WSJ notes (also based on STR data) that surging cases in states like Florida and California threatened this recovery and dragged down the national recovery. From April 18^th to June 13^th, demand for hotel rooms was rising at a rate of 8.3% per week. Since then the rate slowed to 2.9%.

While spending substantially improved since May, hotel spending remains 2/3rds lower than the same point last year. 

As new infections continue to level off or decrease, we will continue watching the industries coming back to life. 

For more updates like this, stay tuned. Subscribe to our blog for more updates on coronavirus and its mark on the economy.

Despite the uncertainty, we’ve seen digital advertising from B2B auto advertising skyrocket.

There are several exciting advancements when it comes to fleets. Here are the latest trends.

We encourage you to subscribe to our blog for the latest data surrounding the advertising industry. We will provide daily updates as COVID-19 continues to make its mark on the US economy.

Fleets are back to work, but uncertainty remains 

Just like many sectors of the economy, sub-divisions within the fleet industry have been affected by the pandemic in different ways. For example, according to Geotab research, grocery store activity was at 93% of normal activity, whereas school busses dropped off completely. 

Long-haul fleets have continued operating during the pandemic, and the majority of fleets expect to see an increase of freight levels over the next three months.

When it comes to new car fleets, sales are slacking. There has been a decreased demand for auto sales from rental car agencies, government agencies and corporations. We see this in our own data. 

According to MediaRadar data, digital B2B automotive advertising has been up 87% YoY since April began. However, the creative is not around new car sales—it’s mostly focused on maintenance and parts. 

“If we don’t see a rebound in 2021, this will be a problem for automakers,” said Zohaib Rahim, economic and industry insights manager at Cox Automotive. “But right now they’re using all their production to supply dealers.” Essentially, companies that can supplement B2B losses with consumer purchases are in a better position to ride the recession out.

MediaRadar found that the top B2B advertisers in B2B auto right now include:

• Chevron
• Toyota
• Tenneco
• Stellar Industries
• Zhejiang Geely

Innovations in the semi-truck industry

For several years, there has been a push for autonomous and electric semi-trucks. This push has come from a shortage of drivers to meet shipping demands, a need for increased safety measures and demand for better energy-efficiency.

Fully self-driving semi-trucks are in testing and nearly here. 

“For the past two years, U.S. Xpress has worked closely with TuSimple to help define carriers’ needs for L4 trucks,” Eric Fuller, president and CEO of U.S. Xpress said. “We are interested in understanding how TuSimple technology can make our fleet safer and more fuel-efficient.” The trucks drive automatically while two humans—a driver and a technician—test how it operates. 

During the pandemic, the trucks have been delivering for the US postal service, UPS and McLain foods. Right now, TuSimple has a one to two year lead on its competitors. 

Right now there are forty trucks, but over the next four years, TuSimple will partner with Navistar to develop full production of the fully automated semis. 

Meanwhile, Tesla, Paccar and Volvo are all developing electric semi-trailer trucks. They will be launched in the U.S. between 2020 and 2021. States and local governments are offering tax incentives to encourage the transition to clean energy. 

Like all industries, the B2B automotive industry is facing a great amount of uncertainty. Yet, in the face of a difficult year, advancements still carry on. 

For more updates like this, stay tuned. Subscribe to our blog for more updates on coronavirus and its mark on the economy.

The increase in advertising spend among automakers and related services is occurring at different paces. Plus, creative has gone through a major revamp. 

Interested in the biggest changes? Let’s jump in. 

We encourage you to subscribe to our blog for the latest data surrounding the advertising industry. We will provide daily updates as COVID-19 continues to make its mark on the US economy.

Automakers are feeling hopeful

The car industry was looking good at the beginning of the year. Through February, US car sales were up 8% YoY. In late March, COVID-19’s impact began and many dealerships shut down. 

According to Edmunds, total April car sales hit their lowest level in 30 years in April, eclipsing the previous low of 655,000. 

Despite the steep drop, sales were looking more hopeful in May. 

“Retail consumers are coming out looking for cars and trucks,” said executive vice president of sales for Toyota Motor North America Bob Carter. “What hasn’t yet returned to the auto industry is the fleet commercial buyer, particularly rental car. Those sales continue to be suppressed at about 20%.”

In China, where the recovery is further along, May sales were up roughly 12% YoY.

Due to this optimism, ad spend from the auto industry is accelerating— it’s now almost double where it was at its lowest point.

When we look at the spend across different categories in automotive, we can identify interesting trends.

Luxury vs Mass Cars

Luxury automotive cars have seen their ad dollars recover much faster than mass brands. 

Comparing spending during the revival (5/17 – 6/6) to the three weeks prior, these are the increases among brands:

• Toyota: +34%
• GM: +120%
• Ford: +14%
• Nissan: +136%
• Mercedes Benz: +860% (It’s completely off the chart!)

Mass automotive remains by far the larger advertiser in terms of dollars, but the significant uptick among luxury carmakers reflects optimism in this sector. 

RVs

Americans have been itching to travel, but want more freedom to avoid crowds and to feel safe with their lodging. That’s where RVs come in. 

“On the road, opportunity is at your fingertips and you can spend time exploring all hidden gems between Point A and Point B that you’d miss from the air,” explains Jen Young, the cofounder and CMO of Outdoorsy. “RV travel also offers you the flexibility to change your plans and pivot your schedule in real-time.”

An all-American road trip is a classic vacation, and RVs make it more comfortable. 

Google searches around RVs have more than doubled its previous high. 

How have advertisers responded? RV company spend has increased 11 times YoY since May began.

It’s not only RVs that are responding. Automakers have tapped to this desire for a road trip by changing their creatives.

Changes in Creative

This spot by Kia is looking to play directly into the road trip trend.

The voice-over states: “It might be a while before we’ll see America from 35,000 feet, but the view from six feet is even better.” 

The Kia spot is being run heavily on national TV on networks like NBC, ABC, Fox, CBS and USA.

While the ad spend and creative changes are looking positive among RVs and cars, motorcycle brands have been slower to bounce back. Spend is still down YoY by almost half. 

Related Services

The car service industry is also on the rebound when it comes to ad spend. Here are some changes we’re seeing: 

• Dealerships are not completely back up to pre-pandemic levels, but have risen from the initial drop of 50%.
• After an initial cut of 38%, insurance is up 12% YoY.
• Car service spend, from mechanics and repairs shops, is up 12% YoY.
• Car maintenance, accessories, fluids, etc. was up YoY for the first time in ten years.

While some sub-sectors haven’t fully bounced back, the ad spend from the automotive industry as a whole is looking like it’s on an upward track. We’ll keep checking in as our economy transitions. 

For more updates like this, stay tuned. Subscribe to our blog for more updates on coronavirus and its mark on the economy.

Despite the added burden, automakers seem surprisingly hopeful about online sales and a rebound that’s on its way. More than other car brands, luxury automakers have the data to support their optimism. 

“In the last seven days, luxury searches on our site are up 25%,” explained CEO of Cars.com Alex Vetter to Penta. “The bounce is becoming very apparent.” Are pent-up consumers with steady jobs preparing for their next exciting purchase?

Luxury carmakers seem prepared for good sales numbers as the economy reopens. What have their ad numbers been the last two months and how have they shifted their creative approach?

We encourage you to subscribe to our blog for the latest data surrounding the advertising industry. We will provide daily updates as COVID-19 continues to make its mark on the US economy.

Overall Car Spending Is Down, But Luxury Sales Look Promising

COVID-19 has caused global car sales to drop over the last several months, with many automakers reporting that April was the worst month for sales in decades. 

According to the Wall Street Journal, industry-wide U.S. auto sales in April were down 50% YoY, and the selling pace was the lowest since 1979. Though overall sales dropped off, online sales helped soften the blow. Not to mention, a 50% cut felt better to automakers than the 80% drop-off in China. 

“It is really not doom and gloom,” said vice president of data and analytics at research outfit J.D. Power Tyson Jominy. “It’s pretty remarkable how quickly we’re actually rebounding.” Many predict a strong rebound in the States, just like China has seen.

BMW CEO Oliver Zipse told shareholders there was a “glimmer of hope coming from China.” Despite the 88% drop in sales for the luxury brand in February, sales were up 14% YoY in April. 

The 14% increase in sales YoY is impressive considering the massive cut just months prior and the fact that general passenger car sales are still down 1.5%. While the market is certainly different in China than the US, the rapid increase in luxury sales provides hope to U.S. counterparts.

Vetter reported that the bulk of online car shoppers are typically looking for vehicles under $20,000, but last month the number of searches for cars over $30,000 doubled. 

Why? Cars.com research shows that people are using their cars to go on leisurely drives to get out of the house, while others who previously used ride-hailing or alternative forms of transportation are looking for their own private vehicles. 

MediaRadar Insights

The total national auto advertising in April was down 25% MoM. This is significant because last year spend was flat between March and April, showing that this is not a seasonal drop.

When we narrow in on mass automakers compared to luxury car brands, we see big differences.

On average, the weekly ad spend of mass automakers dropped 30% MoM. The average weekly spend of luxury car brands also dropped, but not by nearly as much. Luxury ad spend experienced a 16% MoM decrease.

Luxury brands adjusted creative quickly during the pandemic to reflect how they are now doing business.

Brands that are still actively advertising include BMW, Mercedes-Benz, Lexus and other luxury lines.

Luxury automakers have shifted their creative to have a more human-first voice and to feature how shoppers can still make purchases while at home. 

As the economy reopens, we will continue to examine how the car industry performs and what that means for key players in media. 

For more updates like this, stay tuned. Subscribe to our blog for more updates on coronavirus and its mark on the economy.