The National Automobile Dealers Association says new car sales will boost ad spending next year and by 2012 sales are forecast at 15 million vehicles. That’s welcome news to stations, which have watched auto ad revenue fall from $20 billion in 2004 to about $10 billion.
Although automotive advertising spending is just half of what it was five years ago, auto industry experts say TV stations can expect advertising dollars from dealers to increase along with the sale of new vehicles in 2010 and beyond.
At the Television Bureau of Advertising’s annual forecast conference, held Thursday in New York, the National Automobile Dealers Association shared its prediction that light vehicle sales would grow from between 10.1 million and 10.4 million this year to 12 million next year. The upswing will continue in 2012, when dealers are expecting to sell 15 million new vehicles. That kind of activity could result in more than $7 billion in total ad spending, the NADA said.
That would be welcome at TV stations, which have seen automotive advertising dollars drop to about $10 billion a year from $20 billion in 2004, according to Jon Swallen, TNS Media Intelligence’s SVP, research.
Speaking at the conference, Swallen said the decline in auto ad spending has affected all media — particularly national and spot TV and newspapers.
However, stations were hit particularly hard as local car dealers have retreated from the media, Swallen said.
Ad spending by local dealers this year has decreased 40 percent from a year ago, he said. Whether more dealerships — particularly those selling GM and Chrysler – will close is another question looming, he said.
Stations in large markets have felt the impact most dramatically, according to Swallen. That’s because those broadcasters lost advertising from two segments of the auto industry — dealers and manufacturers, he said.
Though activity spurred by the Cash for Clunkers program generated a mild increase in advertising this summer, long-term improvement will largely be based on the introduction of new or redesigned cars, the number of new vehicle sales and how much car dealers and manufactures will spend for each of those vehicles sold, Swallen said.