In addition to reimagining the digital retailing experience, we encourage automakers and dealers to reimagine advertising strategies. With auto plant closures severely impacting new-vehicle inventory, some dealers have pulled back on ad spend; others simply view advertising through a lens of diminished returns.
According to a recent IAB study, ad buyers expect 2020 ad spend to decline approximately 20 percent from the previous year. Additionally, according to the National Automobile Dealers Association, ad spend in July was down more than 21 percent compared with the year earlier.
We understand the hesitation to return to spending near pre-pandemic levels, particularly as sales begin to rebound despite fewer ad buys. But let's not forget there is significant pent-up demand. According to The Harris Poll, COVID-19 Wave 24, 20 percent of U.S. adults are planning to purchase a vehicle when things return to normal. It's not a matter of cutting ad spend but rather focusing on being more efficient.
Previously, some in the industry often relied on the "spray and pray" approach, but there's too much wasted ad spend. Making matters worse, it's difficult to identify where the waste is coming from. Instead, let's rely on data to identify those who are in-market and most likely to purchase a vehicle. Review sales performance for core makes and models; determine the markets where these perform best and the types of shoppers who prefer these vehicles. Implement the same approach with the competition; identify conquest opportunities and grow market share.
According to Experian, loyalty rates for makes have steadily increased since 2011, finishing 2019 at more than 63 percent. That still leaves just less than 37 percent of new-vehicle buyers returning to market who will consider switching brands. It's no longer just about building awareness; the use of data and a more targeted approach allow us to reach the most likely buyers at every stage of the path to purchase.
The industry finds itself at a crossroads: The market has weathered the storm, but how do we continue to succeed? We need to be diligent about seeking insight to make informed decisions. Data can guide us on an otherwise dimly lit road.