The automotive industry was hit by a Mack truck the second half of 2008 with all-time high gas prices, a shrinking economy and growing consumer fear of making a large purchase.  Advertising spend reflects how the automotive industry reacted to the crisis, highlighting channels that are the most vital to intercepting new vehicle prospects.

The first half of 2008 showed growth in advertising spend over 2007 for TV (+2%) and Internet (+55%) while outdoor, magazine, radio and paper decreased (20%, 18%, 14%, and 4%, respectively).  The second half of 2008 yielded a lower advertising spend over 2007 across all channels.  Radio and paper took the biggest hits with decreases of 42 percent and 40 percent, while Internet exhibited a similar level of spend vs. 2007 with only a 0.5 percent decrease.  Overall automotive advertising spend decreased 8.2 percent from 2007 to 2008, with the Internet being the only channel to witness growth.

Automotive Estimated Ad Spend: 2007 – 2008

Trended on a monthly basis, automotive Internet advertising was outpacing 2007 until October 2008 when the brakes were applied and it dipped below 2007 levels for the first time.  Automotive Internet spending in 2007 represented 4.6 percent of total Internet spend rising to 5.9 percent in 2008.  Acura, Hyundai and Subaru contributed the largest increase in Internet spend from 2007 to 2008 while Mercury, Volvo and Jeep had the largest decrease.  Thus far, Internet spend for 2009 is once again gaining momentum and is forecast to be on par with Q1 07 while still slightly below Q1 08.

Auto Internet Ad Spend As % Of Total Internet Spend

The Internet is proving to be a critical strategic channel for automakers and we anticipate the trend to continue.  Although TV continues to represent roughly three-quarters of total advertising spend, the Internet could likely become the second largest advertising channel by 2010.  The key to successful Internet spend in 2009 will be identifying where your target audience goes online and interjecting yourself at the right moment in the vehicle purchase funnel.

Despite a continued softening of the economy, several media showed healthy growth in advertising for the first half.  Advertising on Cable TV (+8.1%), Syndication TV (+7.2%), and National Sunday Supplements (+7.2%) saw the largest growth, according to Nielsen.  Spot Radio fared worst among the 19 media categories analyzed by Nielsen (-10.1%). 

Although overall Internet ad spending, when including paid search and online video advertising, was up by 11% during the first half of this year, image-based Internet advertising declined by 6% during the first half of 2008, compared to the same period in 2007.

Among specific product categories, Credit Card Services (+18.95%) and Direct Response Products (+20.48%) showed the strongest ad spending gains, while the Automotive (-.01%), Pharmaceutical (-4.76%), and Motion Picture (-4.64%) categories recorded the largest advertising declines.

The decrease in image-based Internet advertising was driven by a 27% drop in online ad spending by financial services companies, which decreased their spending from $1.5 billion in the first half of 2007 to $1.1 billion during the first two quarters of this year. 

Other industries — entertainment (+47%), automotive (+45%), and consumer goods (+32%) — showed strong increases in image-based online advertising during the first half of 2008.

View the full press release.

View Nielsen Online’s report on first half 2008 online ad spending.

Read coverage of Nielsen’s findings in Wired, Investment News, the Financial Times, Crain’s New York Business, TV Week, Broadcasting & Cable, MediaPost, The Hollywood Reporter, Adweek, and Mediaweek.