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Are Automakers Finally Starting to Realize TV Commercials Are a Waste of Money?

You can probably look back on your childhood and remember a few automotive commercials you saw repeatedly on television. Most of them impacted you, in some way. From the gimmicky tricks, they did, to the catchy tunes that invaded your mind to the celebrities that told you to buy that car, they were memorable.

Advertising on television has always meant big business for automakers, like Chevy, and they spent $18-billion, in 2018, to get their products out to the consumers. But times have changed and advertising needs are shifting to the internet. Those big television budgets are slowly declining and other mediums are rising. Marketingcharts.com recently discussed Zenith Media’s report on automotive television advertising. So what does the future hold for television commercials and cars?

Brief background of television advertising for automakers

Years ago, a TV was something everybody had in their homes, and what they spent their evenings watching. Using commercials, automakers could put their brand out there to potential consumers by interrupting their shows with 30-second or so clips of their products. When those very same consumers decided they needed a new vehicle, those commercials would come to mind. Suddenly, Ford was the truck they needed to get because they saw enough ads to connect the truck to Ford.

But, nowadays, televisions aren’t being used in the same way. Most people have turned away from traditional television networks and turned toward online streaming media apps. Commercial ads aren’t reaching the vast audience that they once did when television was still a big thing. Now, the ads that are being played can often be skipped after a few seconds, or done away with altogether for the right price.

Why are they still spending big budgets on television advertising?

Automotive advertising, according to Zenith Media, is slow to adapt to the ever-changing technology we see happening year after year. Typically, automakers spend over 50% of the advertising budget on television ads because it’s still the best way to convey emotions, which is what drives people to buy a product.

However, a shift in advertising is forming even though they’re still spending a huge portion of their budgets on the television medium. Since 2012, ad spend on TV commercials have dwindled down by 12%. Automakers realized that they have no choice but to change if they want their advertising to be effective.

Prices for advertising on TV is going up, but the problem is, they’re not reaching as many people as they once did. Therefore, the money spent on these ads is becoming wasteful.

Why is the money allocated to TV advertising going down?

One of the major reasons why ad budgets for television advertising are declining is because automakers are realizing they need to be where their consumers are, which is online. They know they need more than just brand websites and social media accounts.

Most potential buyers, who are looking to buy a car, are doing all of their vehicle research and automotive decisions online. But they’re not completing those sales over the internet. They’re going to the dealerships armed with their findings and looking to get a good deal.

Another reason is that the needs of the consumers are changing as well. Nowadays, SUVs are the number one choice when searching for a family vehicle. Electric cars and trucks are becoming popular as well, appealing to those green-minded people wanting transportation that doesn’t harm the environment. Advertising has to change to get their brands out to the people who need what they have and that means shifting advertising dollars to the internet.

In 2018, automotive advertising budgets for online media was at 22.9%. Zenith Media predicts that this number will rise to 25.6% by the end of 2020 as automakers begin to shift more and more to internet advertising mediums where their consumers are really spending their time.