Why the Auto Industry is Cutting Down on TV Ad Spend, and Why it Matters
The auto industry is cutting TV advertising budgets due to declining car sales driven by rising interest rates, economic uncertainty, tariffs, and industry shifts like electric vehicles and ride-sharing, leading major manufacturers like Ford and Jaguar to implement significant cost reductions, which in turn has caused a consistent year-over-year decline in automotive TV ad spend over the past several quarters.
The auto industry is experiencing a decline, with car manufacturers facing budget cuts that have impacted TV advertising spend. According to Jim Edwards for Business Insider, while the US economy has been performing well and retail demand remains strong, the same cannot be said for automobiles. As car manufacturers reduce their budgets, TV advertising in the industry has also decreased.
CNBC reports that car sales are expected to drop in 2019 due to rising interest rates, which lead to higher monthly car payments for consumers. Additional factors such as recent stock market turmoil and uncertainty about the health of the U.S. economy may also contribute to consumer caution. In the EuroZone, economic growth forecasts have been trimmed, with weakness in the auto industry cited as a major contributing factor.
The Economist attributes falling car sales to the tariff war, rapid industry changes (including the rise of electric cars and ride-sharing apps), and a decrease in consumer interest. Regardless of the specific reasons, global car sales are likely to fall, prompting major manufacturers to cut costs. For example, Ford is working to cut $14 billion in annual costs, while Jaguar aims to reduce costs by $3.2 billion per year.
It is not surprising that TV advertising, known for its high costs, is among the areas being cut. Data from MediaRadar’s television industry tracking and the Annual TV Trend Report show significant changes in auto ad spend on television.
How Lowered Auto Ad Spend is Affecting Television — For Now
The auto industry has traditionally been a major buyer of national TV ad space. However, in the past year, automakers have consistently reduced their TV advertising budgets. MediaRadar data shows that every quarter except Q2 2017 has seen a negative year-over-year change in automotive ad spend on TV. Spending by auto companies on national TV has declined year-over-year in eight of the last nine quarters, with the largest drop—a 21 percent decline—occurring in the first quarter of the current year compared to Q1 2018.
The reduction in TV ad spend is especially evident in Super Bowl advertising. While the auto industry was the top spending category for 2018 Super Bowl ads, a nearly $50 million decrease in 2019 dropped its ranking to fourth place.
A Huge Silver Lining for TV: Decreasing Auto Ad Spend Really Isn’t Personal
For TV ad sellers, the dramatic decrease in automotive TV ad spend is not due to a shift to other advertising mediums. MediaRadar research indicates that car companies are not reallocating their ad budgets from TV to newer formats like YouTube or Snapchat. Instead, the overall economic trends in the auto industry are leading to reduced ad investment across all channels.
In 2017, TV accounted for 85 percent of ad spend in the auto industry. In 2018, TV ad spend represented 84 percent of total advertising efforts. Although car makers are spending less on TV advertising, the medium still maintains its dominant share of auto ad budgets.
TV ad sellers may need to wait out the current drop in ad spend, as the auto industry is known for its cyclical nature. Despite the cutbacks, the auto industry remains one of the largest buyers of TV ads. From Q2 2018 to Q1 2019, the auto sector was the fifth largest category for national TV advertising, collectively spending over $6 billion.
A rebound in TV ad spend from the auto industry will depend on the sector's ability to boost revenue and appeal to a new generation of car buyers.
Related
Q4 2023 12 for ‘24 - Alcohol
In 2023, the alcohol advertising sector saw a 3% year-over-year decline in spending to $1.4 billion from 1,600 companies, with beer advertisers dominating over half the spend at $740 million, while twelve top alcohol brands—including Bud Light and Crown Royal—significantly increased their ad investments by 114% collectively through November, leveraging major events like Super Bowl LVII and football programming to boost TV and digital advertising.
Q4 2023 12 for ‘24 - Beauty
In 2023, the beauty sector saw a 3% year-over-year decline in ad spend totaling over $5.2 billion across 5,200 companies and 11,600 brands, with TV still dominating at 34% of spend despite a 10% drop, while online video and native ads surged by 35% and 41% respectively, driven by increased investments in deodorant (up 72%), skincare, and hair care, alongside notable spending spikes from companies like P&G, and a mixed performance with declines in oral hygiene and bath & shower advertising, as MediaRadar highlights 12 key beauty advertisers poised for growth in 2024.
Q4 2023 12 for ‘24 - Fitness & Weight Loss
In 2023, the fitness and weight loss industry saw a 14% year-over-year decline in ad spend to over $917 million through November, driven largely by a 99% drop from Aviron Interactive and a 4% reduction in brands, with TV dominating media spend, Q1 showing a 20% increase, and top sectors like weight loss services, fitness equipment, and prescription weight loss accounting for 90% of the $826 million spent, while twelve leading brands collectively increased their advertising by 83% to $640 million.
Thank You for Subscribing
The subscription confirmation message welcomes readers to receive data-driven marketing and advertising technology news, featuring in-depth reports on Streaming TV advertising, pharmaceutical industry trends, 2025 media investment strategies, the resurgence of legacy advertising channels, and future brand media spending plans.
Alcohol Advertisers Say No to Another Round of Ads
In 2022, despite the alcoholic drinks market's projected growth to $283.8 billion and average American consumption of four drinks weekly, overall alcohol advertising spending dropped 17% year-over-year to $1.7 billion with nearly half of 2021 advertisers not returning, while vodka brands—led by Bacardi's Grey Goose, Diageo, and Pernod-Ricard's Absolut—were the only category to increase ad investments, collectively spending $104 million and driving significant growth in vodka advertising.
Facebook vs Snapchat: How do Their Advertisers Compare?
Snapchat is increasingly popular among Gen Z users due to its innovative, interactive ad formats and growing daily active users, attracting new advertisers and driving a 24% year-over-year increase in ad spend, while Facebook, despite its overall revenue growth, struggles to engage younger audiences and sees many Snapchat advertisers as new entrants rather than overlapping with its own user base.