As the auto industry shifts priorities, digital media buying slips into the driver’s seat

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Headline after headline, auto industry supply chain issues (Not enough computer chips! Expensive raw materials! Used cars are more valuable than new cars!) Have dominated commercial pages for at least a year now. It turns out that these impacts on the industry, combined with a more selective consumer who expects to get things on their terms, are impacting where automakers and dealerships spend their media dollars.

On top of all this, the auto industry had to contend with Tesla, an independent auto brand that didn’t spend a dime on advertising but sold nearly 450,000 fully electric cars in 2020. While Tesla has its own set of challenges, automakers and their agencies are keeping a close and envious eye on how the newcomer has marketed himself.

“Tesla was a game-changer. Their resellerless model has really affected consumer expectations, ”said Scott Schwartz, Managing Director, Business Manager at Omnicom’s PHD. “They don’t advertise. What they do well is they encourage fandom – they create experiences, moments and that fandom. And it grows [the entire auto] industry to find out how to tap into some of that magic. It’s going to be hard to recreate what they did, but we can take a look at their playbook. ”Among other accounts, PHD manages Volkswagen’s media.

This magic, it seems, is increasingly sought after on digital channels, to the detriment of some traditional media. “Manufacturers are working on creating brands with long lifecycles, which tend to require [ad] spending, with more of a digital bias, ”said Brian Wieser, global president of Business Intelligence at GroupM. With used cars in some cases generating more value than new cars, dealers are looking to reach potential buyers online, which Wieser says can come at the expense of local broadcasters.

“At certain times and channels, the consumer wants to be inspired or educated or assured. We’re moving beyond the channel mix to focus more on the consumer journey, and right now that journey is more digital, streaming and influencer driven than ever before, ”said Kimberley Gardiner, vice – senior president of marketing for Volkswagen of America. “Given the supply issues and all of the production challenges in the automotive space right now, channels that allow maximum flexibility with respect to both theft and creation certainly have an advantage.”

The digital shift in all its forms – research, CTV, website – seems indisputable to Gordon Borrell, founder and CEO of media analysts Borrell Associates. Borrell’s own research shows that in 2019, of the $ 8.4 billion spent in the local and regional automotive sector, 65% was spent on digital. In 2021, Borrell predicts that of the $ 7.1 billion that should be spent by cars locally / regionally, 73% will be spent on digital.

Yes, you read that right, local auto dollars are expected to drop over time, and all sources contacted for this story pointed to the consolidation that is occurring among auto dealers, the result of more car buyers. choosing to forgo the dealership experience in favor of pre-ordering cars tailored to their needs, even if that means waiting a few months to get the car.

Phil Case, president and chief customer officer of marketing services agency Max Connect, said he was seeing slightly reduced budgets with some of his auto customers, as well as cases of manufacturers choosing not to ship new cars. to dealers, beyond what is necessary for the showroom. Still, dealerships aren’t going away anytime soon. “We’re a decade or two away from that – 90 percent of cars are still bought from dealers,” Case said.

There’s also a lot of unspent consumer demand that holds promise for the auto industry, Case added. “There is $ 12 trillion in consumer purchasing power, and these [carmakers] who adopt modified consumption habits will benefit from this pent-up demand, ”he said.

Ultimately, changing consumer expectations will drive the most changes, said Amy Lanzi, Executive Vice President, North America Practice Leader at Publicis Commerce. “The auto industry is ripe for disruption when it comes to the shopping experience. Brands like Carvana and Tesla have made the process as easy as buying your favorite product from Walmart or Amazon, ”she said. “At some point in the near future, the experience has to be matching a car to a person like the algorithms in the markets today that predict what’s best for you.”

Color by numbers

Borrell Associates, who analyzes media and marketing primarily with an eye on the local, just released their local agency survey on September 9. Conducted between April and June 2021 with 701 respondents, the main results are as follows:

– Social media was the top-notch media service for clients in 2020, to 77%; the highest traditional media were radio, ranked fourth at 69 percent.

—In social media work, Facebook remains the most widely used social platform in 90 percent, with 58 percent of respondents saying it is very or extremely effective. Twitter usage increased from 45% in the previous survey to 39%, while TikTok fell from 7% to 17% in the same time frame.

—Finally, most of the agencies that buy television also buy advanced television features such as CTV and digital video; 71 percent of these advanced TV budgets came from other media, mainly traditional TV.

Take off and landing

  • Unilever announced last week that it was keeping the lion’s share of its $ 3.3 billion media business with WPP / GroupM’s Spirit sharing, which will handle all media in the United States, as well as major markets in Europe, Southeast Asia and China. Omnicom’s OMG will take care of Canada, German-speaking Europe, the Middle East, Africa and some Asian markets. IPG obtains Russia and two other Eastern European markets, Latin America and Greece. And finally, Havas Media Group will take care of France, Spain and Japan.
  • Clare Chapman has joined Dentsu as CEO of Carats United Kingdom, leaving Essence of GroupM, where she was until recently Executive Vice President and Head of Media for the EMEA region.
  • Digital agency SYZYGIA landed fitness product developer TRX as a client, and will be responsible for expanding customer acquisition through e-commerce and direct-to-consumer work in the US and UK

Direct quote

“What I found on the agency side… I wanted more transparency in the ecosystem. I had clients who were frustrated with its opacity – I was frustrated on their behalf… and I felt there was an opportunity for a player to be there who could really open the kimono and A. put the ones on. clients comfortable in terms of how their money was being spent, but also B. share this data with clients and agencies so that they could really understand what was going on in terms of how the algorithms worked, how the auctions worked, where they were winning and losing, so they could optimize what they were doing.

– Kasha Cacy, global CEO of the Engine agency group, talks to BeetTV.

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