Auto makers see declining returns from TV ads, decrease spending


Automobile manufacturers are re-evaluating their contracts with TV advertising as economic constraints become more severe. The industry’s TV spending declined by 23% in June compared to the same month last year, and it shifted away from local advertising, according to iSpot.TV.

Low phase in TV ads for auto makers

Automobile manufacturers spent lavishly on TV advertising last month, spending $161.3 million on national campaigns and sporting events. As manufacturers focused on national sales, local impressions fell by 3 percentage points to 20.7% from last June.

In the first half of the year, manufacturers observed declining returns from TV advertisements and are now seeking for alternative locations to reinvest their money, particularly considering the current economic uncertainty. The decline in TV viewing in June is not the only sign that automakers are reducing expenditure. According to Samba TV, linear ad impressions declined as early as February, when spending decreased by 16% from January. Impression levels remained low through May, failing to surpass 7 billion, a low not previously recorded in any month of 2021.

Alternatives for TV ads

Ford stated the previous month that it is thinking about cutting back completely on its advertising for electric vehicles, a market in which automakers have made significant investments and that it will concentrate on the customer experience.

Automakers are investing more in loyalty programmes and customer experience than in linear TV, as economic concerns continue and affect consumers and businesses. A segment of the economy that is already tense and on the edge of a recession will probably become even more tense if automakers cut back on their advertising spending. In 2022, according to our predictions, the US auto industry will spend $17.01 billion on advertising, ranking sixth in overall spending.

Hope ahead for Auto makers

Many industries, especially those in the auto and tech sectors, are experiencing a fall in spending after the Fed boosted interest rates by 0.75 percent last month; another increase of similar magnitude may take place later this month. Despite several months of strong expenditure, there has been a downturn in recent months as prices continue to rise and recession fears intensify.

Automakers’ ad spending fell precipitously in June because of economic uncertainty and a sparse TV event schedule, but there is still time for ad spending to rebound because of many big athletic events in the second half of the year positive job reports.

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