The US Auto Industry Is Bouncing Back — And Digitization Is the Key for Auto Brands

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The auto industry continues to feel the impacts of COVID-19, which caused US auto sales to reach a 30-year low. But a number of factors — including a relatively strong economic recovery and low interest rates — are causing a spike in auto demand.

As auto brands and dealerships struggle to keep up with this spike in the face of a chip shortage, there’s another factor that can’t be ignored: the auto buying process is becoming more digitized by the day.

Brands are turning to open web offerings like strategic ad placements and online video to make sure that they’re capitalizing on the massive opportunities that will arise from 2021 and beyond.

But we’ll get into product solutions and best practices later. First, let’s look at how the auto industry has changed and the opportunity for auto advertisers in the upcoming months.

How the Industry Got Here During COVID

Auto brands are presented with a huge opportunity to make up for lost time and dollars in 2020, but the question remains — can they keep up with demand?

Due to a relatively strong economic recovery, low interest rates, high savings, and government stimulus payments, auto dealers can’t keep cars on the lots.

Additionally, automakers are struggling to produce new models due to a computer chip shortage. This chip shortage, prompting vehicle production cuts, could potentially cause the auto industry upwards of $110 billion in sales.

Due to the delay in production, used cars prices are up roughly 45% over the last year. This demand is forcing some dealers to call and email former customers offering to buy back previously sold cars within the last couple of years.

Another obstacle for regional automotive dealers is ever-growing digital auto marketplaces like Vroom, Carvana, and Shift. As they enjoy the spotlight and satisfy demand, these digital auto marketplaces will likely push ad dollars from traditional to digital over time — increasing their presence of alternative car-buying models during a continuously unprecedented time.

For this reason (and others), local dealerships and large automakers should aim to diversify their advertising efforts. Instead of focusing solely on commercial and local advertisements, consider investing more in digital advertising. Channels like Taboola can help you keep up with digital auto marketplaces that are already so prominent in the digital space.

There’s Hope on the Horizon

What is the opportunity for auto advertisers right now? Despite these challenges that you’ve had to overcome over the past year and a half, there is a light at the end of the tunnel.

In mid-July, TSMC, a Taiwan based chipmaker, announced that consumers can expect the car chip shortage to begin easing in the next few months. This is because the company plans to increase auto chip output by about 60% YoY — but likely at the expense of clients in other industries who will likely be left waiting even longer for their backlogged orders.

We’re also seeing more positive trends:

  • Used car sales rebounded quickly in June, as Americans sought out alternatives to public transportation and vacationed within driving distance in order to avoid air travel. Taboola’s readership data shows that used cars continue to trend.

(Source: Taboola readership data, accessed September 21, 2021, 90-day lookback window)

  • Car shoppers who have delayed their purchases are expected to return to dealerships.
  • Leases that expired, and were subsequently extended, during Q2 will presumably bring in more customers later in the year and into 2021.
  • Electric vehicle (EV) sales are expected to take off, possibly tripling US registrations from 1.8% in 2020 to 9% in 2025 and 15% in 2030. This is catalyzed by President Biden’s calls for a clean-energy economy and his “Made in America” plan. Taboola’s readership data confirms these projections, showing that electric vehicles are trending.

(Source: Taboola readership data, accessed September 21, 2021, 90-day lookback window)

The Boom and Shift to Digitized Buying Models Local and regional dealerships are learning from digital auto marketplaces. We’re seeing more and more of these brands shift to incorporate more of a digitalized buying model, and in turn find major benefits from this operational adjustment. eMarketer estimates show that automotive digital ad spending will grow 21.4% in 2021 to $13.29 billion, slightly below its pre-pandemic peak.

What Consumers Are Saying:

~⅓*

of younger consumers today want to shop for their next car in-person at the dealership

48% **

of today’s consumers would like to handle price negotiations online, and another 42% say they want to handle financing online as well

(*Source: AutoDealer Today, The Current Setting for Automotive Digital Retail in 2021)

(**Source: Cars.com, Ride-Sharing Drops, Online Car Shopping Increases in Coronavirus’ Wake)

What Dealers Are Saying:

76%

of dealers agree that their staff’s personal touch, in combination with digital tools, will enhance relationship building

69%

of car dealers say tech and digitization will be more important after COVID-19

42%

of dealers say digitization will improve their financing transparency

(Source: Forbes, Dealers Are/Digitalization Is the Future of Car Buying)

How Auto Brands and Dealerships Can Harness Digital — and the Future

Digital is the future, and that’s also true for your advertising strategy. With so much car-buying activity taking place online (like research, negotiations, and financing), it’s of utmost importance for sellers to have a positive online presence and continue to build brand awareness.

But a basic advertising strategy won’t cut it. You need to make an impact with every ad dollar and every impression by making sure your ads are reaching engaged audience members in a trustworthy environment.

Taboola helps brands do just that. It uses the world’s largest dataset of readership data from top editorial sites around the world — informing your campaign strategy with the help of 1 trillion recommendations, 516 million daily active users, and 22 billion monthly pageviews.

With Taboola High Impact, brands are front-and-center with high-impact ad placements within premium content.

How Can Taboola Help?

Data and Targeting

Taboola’s wealth of data means more information at your fingertips to inform and optimize every campaign.

Brands can use Taboola’s comprehensive data and targeting capabilities to reach the right consumers at the right time.

For example, you can target potential customers using readership trends through contextual campaigns, as well as targeting based on demographic and vehicle make and model.

Taboola Segments let you leverage Taboola’s data marketplace of proprietary 1st party and 3rd party auto segments to drive key KPIs and overall brand awareness.

These segments include groups like SUV, minivan, vehicle type, and luxury and non-luxury.

We’re seeing that advertisers who utilize these data and targeting capabilities are able to achieve auto KPIs like:

  • Qualified site traffic
  • Qualified action on site
  • Foot traffic to dealerships
  • Overall brand awareness (for model launches)

Ad Campaign Creative Best Practices

Taboola Trends provides advertisers and partners with real-time trends to help build the most effective campaigns possible, showing what creative elements are working best for images, video, and headlines.

Here are some trends for the U.S. pulled on October 1st, 2021. For the most accurate representation of creative best practices for your campaign at the time of creation, we recommend visiting our website as we update our trends with new data weekly.

Image Trends

Images without text are performing better than images with text, so avoid overlaying text onto your ad images.

Audiences are responding more positively to photos versus illustrations, so consider adding photo to your campaigns.

Black and white images are trending over color images. Add a touch of nostalgia by going black and white.

Video Trends

When it comes to the season, winter videos achieve a 100% completion rate. This means that 100% of users who start watching a winter video will watch until the end.

Similarly to images, videos with illustration are performing better than those without. Consider adding animated videos to your campaigns.

Videos featuring women have a higher completion rate than videos featuring men.

Headline Trends

Taboola’s Title Analyzer is a great tool for developing ad headlines. Just plug in your ideas and see which ones are predicted to have a higher click-through rate (CTR).

We plugged in a few headlines related to electric cars and found that the top performer was “10 Electric Cars That Celebrities Are Sporting,” which suggests that users are interested in seeing lists, and they’re interested in what’s stylish in pop culture.

Try your own headlines as you build out your own campaigns.

Capture Auto Spend with Additional Advertising Channels

The past year has been tough for many auto companies, but there’s a lot of potential for brands that harness the shift to digital — and pick the right partners to help them lead the charge.

Auto brands and dealerships are using Taboola to capture auto spend as car sales begin to bounce back. Learn how you can, too.

Create Your Content Campaign Today!