Sadly, we’ve seen the iceberg off in the distance. If we’re not careful, we’re going to hit it.
Radio’s relationship with car dealers continues to be complex, concerning, and worthy of broadcasters’ collective attention. It’s something we tackled head-on at DASH this past October. And you can count on even more coverage and discussion at DASH 2.0 later this year right here in Detroit.
On the one hand, the five-year trend from the RAB continues to show that automotive revenue remains the #1 category for radio ad revenue:
That’s probably not a surprise, but new data from the National Automobile Dealers Association finds that franchised new car dealerships increased their spending in 2013 to $7.6 billion – an increase of more than 6% over the previous year. But sadly, radio advertising’s piece of this automotive revenue pie fell nearly 9%. In 2013, it comprised 14.5% of the auto spending share, down from 15.9%.
Where’s the money going? To the Internet of course, now sucking about a third of all those car dollars.
Given these metrics, the need for radio to effectively engage dealerships, and forge relationships that pure-plays and search companies simply cannot match has never been greater. Radio broadcasting has the potential to provide great value to car dealerships. But as we know from our dealer DASH panel last year, and other interviews we’ve done with these auto executives, the approach has to change.
While it is essential that radio executives make every effort to interface with OEMs and influential Tier 1 companies, Ground Zero for broadcasters in markets big and small is local car dealerships and dealership groups.
And whether you’re in New York City or Nome, the importance of these relationships, partnerships, and the ability to work together has never been more important.
And whether you’re in a major market or your stations are in towns that will never see a Nielsen diary, this issue is of paramount importance. It is essential that radio executives show up for DASH this year to demonstrate to auto dealers that the industry is concerned, engaged, and motivated to redefine this storied relationship.
The days of putting up the tent, parking the van, and doing a remote are coming to an end.
It’s time to listen, learn, innovate, and act.
Jacobs Media has consistently walked the walk in the digital space, providing insights and guidance through its well-read national Techsurveys.
In 2008, jacapps was launched - a mobile apps company that has designed and built more than 1,300 apps for both the Apple and Android platforms. In 2013, the DASH Conference was created - a mashup of radio and automotive, designed to foster better understanding of the "connected car" and its impact.
Along with providing the creative and intellectual direction for the company, Fred consults many of Jacobs Media's commercial and public radio clients, in addition to media brands looking to thrive in the rapidly changing tech environment.
Fred was inducted into the Radio Hall of Fame in 2018.
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Wow – another fabulous post with much to ponder and a lot of truth. There is probably no sector where the sophistication disparity between manufacturer and dealer is greater than the car business. Some of the research and resulting products coming out of Detroit and elsewhere are almost inspiring. I think the strong car sales despite a lackluster economy reflect that – the new cars are just well built, nicely styled and fun to drive so people are willing to stretch to buy them.
Despite all of that – on the local level, car dealers and the actual buying experience have changed surprisingly little. Margins are thinner because buyers can learn things online they never could before and that helps them negotiate – but the basic shuffle is frighteningly similar to what it was in the 80s. And car dealer advertising has changed even less than car dealer selling.
This presents an opportunity for radio. Imagine what could happen for the first car dealer in a market to apply Jerry Lee’s kind of system and metrics to their advertising – or the first to develop a campaign around GenY/Millennials. What if a dealer did both?
Car dealers are gravitating toward the Internet for the same reason as others do – they like the accountability and ability to track ROI. Radio needs to step up in this area – they should be looking for ways to provide more and better accountability from Nielsen – non subscribers are diverging from what marketers are demanding more of, not less. This is a classic case where some investment in the right product would generate more EBITDA than another round of cost cuts.
Car dealers have always been and still are tough to reach on a lot of levels, but they’re radio’s biggest vertical so they warrant a lot of attention. Helping them use radio to bridge the gap between their marketing and what their brands do could be a textbook win win.
Bob, thanks, and you make great points that deserve attention. This may be another sector where radio sales is taking these dollars – and these relationships – for granted. The stats in the post speak for themselves. But the stories that Paul and I have heard from car dealers over the last suggest that attention and refocusing by radio is essential. And the missing piece – which we will address in an upcoming post – is about engaging with dealers on the “connected car.” For broadcasters in markets big and small, this is a major opportunity but of course, a challenge, too.
Great post, Fred.
As I read, the imagery that came to mind, for some strange reason, was that of a person in a long-term relationship who has had their eye turned by a younger, dare I say it, ‘sexy’ upstart. As the person’s long-term partner we are suddenly jolted into a reality that the relationship we have (or though we had) is under threat. Somewhere along the way we just became complacent and took our relationship for granted. It’s time to freshen things up!
So you’re right Fred – the days of putting up the tent, parking the van, and doing a remote are over. I cringe at the naivety of it. We need to deliver the kind of granularity in targeting and delivering qualified prospects that digital is able to do so easily. The challenge is to segment our audience and deliver content (including advertising) in a context-sensitive way that has relevance and value to the listener. I truly believe this is the only way we are going to be able to take on any competition, regardless of how ‘sexy’ it is, and claw back our share of the market.
David, thanks for the great comment. The notion of taking things for granted is a running theme in radio. We want to believe that Millennials have radios in their dorms and apartments. We assume that most people wake up to our morning shows on clock radios. And we have always owned the car dashboard.
Just like our long-term relationships with local auto dealers, nothing is the way it used to be. We have to re-examine our value proposition and what we can provide that no one else can.
Truly, this auto dealer sales data is a clarion call to rethink everything.
Thanks again.