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The American auto market has often been driven by emotional purchases: You see a car that you love, and you drive it off the lot the same day. Cars have long held an intimate place in the American imagination, aided by a media industry that loves auto—just think of iconic cars like the 1961 Ferrari 250 GT SWB California Spyder from Ferris Bueller’s Day Off, James Bond’s 1964 Aston Martin DB5, or the 1966 Ford Thunderbird from Thelma & Louise.
Consumers aren’t used to waiting to bring home their new wheels—but that’s exactly what many have had to do in recent years, thanks to a global semiconductor shortage that upended not just the supply chain, but also the auto retail model that’s existed for over 50 years in the US.
Fortunately, it seems that the worst of these supply chain issues is behind us, and vehicle inventory is forecast to reach pre-pandemic norms in 2024. While recent years have been marked by higher prices and interest rates, keeping many consumers out of the market, vehicle prices should decrease in 2024 as the supply chain recovers and the industry is forecast to see constrained growth, giving automotive brands an opportunity to capitalize on pent-up consumer demand.
For marketing and advertising leaders, the key to making the most of this opportunity will be to understand their target audiences’ behaviors, preferences, and perspectives, and to adjust their strategies accordingly.
While 66% of consumers are interested in purchasing a vehicle within the next three years, affordability is still top of mind as prices and interest rates remain high. That doesn’t mean consumers are unwilling to invest in new vehicles, though: In fact, the majority of in-market consumers intend to purchase a new vehicle, which represents a shift from previous years.
To earn consumer dollars, advertisers must understand what their specific audiences care about. Millennials, in particular, present a notable opportunity as not only the largest demographic group in the US, but one that’s demonstrating significant interest in purchasing vehicles in the near future.
As pent-up demand drives purchases in 2024, auto marketers should focus on nurturing brand loyalty, addressing consumer interest in electric vehicles, and making the most of digital advertising opportunities to reach audiences where they spend their time.
In a crowded marketplace where consumers have a wide array of options, dealers and brands must carefully consider how they can cut through the noise and foster brand loyalty.
Today’s consumers want to know what causes and core beliefs they’re supporting when they buy from a certain company. Gen Z and millennials, in particular, have indicated they want to support brands who do more than just sell goods and services—they want to build relationships with companies that are making a difference in the world, making brand values a worthy differentiator in creative messaging.
For some brands, leading with brand values could mean highlighting certain social causes, such as sustainability, as almost half of consumers who either currently own a vehicle or intend to buy one in the next three years favor brands that support social issues and are environmentally conscious.
Be wary, however, of coming across as inauthentic. Consumers today have sensitive radars for insincerity, and if you choose to focus on brand values in your marketing, it’s essential your messaging aligns with your actions behind the scenes.
Speaking of environmentally conscious consumers, demand for hybrid and electric vehicles (EVs) is on the rise: Revenue for EVs will rise 18% this year compared to 2023, and according to a GWI/Basis Technologies survey, close to half of consumers think EVs are the future of transportation. While gas-powered vehicles continue to reign supreme for now, the majority of in-market consumers are willing to consider fully electric or hybrid cars, and adoption is set to grow in the coming years as these models become more affordable.
The clamor around EVs comes against a backdrop of ballooning gas prices and growing consideration and sentiment around sustainability. And from an automaker’s perspective, laws in both California and New York requiring all new car and light truck sales to be EV or emissions-free by 2035, and a new federal regulation intended to guarantee that most new passenger cars and light trucks sold in the US are either all-electric or hybrids by 2032, are providing additional incentive. Throw in better, next-generation battery technology, and the future of auto really does look electric. As such, automakers and dealers are preparing for a future driven by EVs: Many of the industry’s major players have already started making EVs en masse, and they’re putting some serious dollars behind marketing those offerings.
Still, the road to a future powered by EVs isn’t obstacle-free, due in part to lack of charging infrastructure and shortages of the raw materials needed to build batteries. As a result, advertisers can expect the rise of EVs to develop at a more moderate pace. For example, this February, sales of hybrid vehicles rose 62% year-over-year, while YoY EV sales fell.
As interest around EVs evolves, marketers will need to focus on creating greater awareness around their electric vehicles, educating consumers about the benefits of electric mobility and emphasizing their brands’ commitment to sustainability. Both brands and dealers must also find ways to usher EVs into their marketing strategy without cannibalizing or alienating the still critical traditional gas-powered vehicle buyer.
In the current auto retail market, industry marketers will want to leverage digital opportunities to their fullest potential. Consumers are embracing an increasingly digital buying journey, with close to 30% of consumers open to purchasing their next car via an entirely digital process, and 23% preferring to order online but also wanting the benefit of physical touchpoints, such as a test drive. Consumers in the market to lease vehicles are even more open to an entirely online ordering process. Considering this, marketers need to ensure they have a robust presence online to meet audiences where they are.
Leveraging digital advertising is especially important for reaching younger audiences and first-time car buyers who spend much of their time online. This is a significant demographic for auto advertisers, as younger audiences are more likely to buy a car in the short-term future. Digital marketing also allows advertisers to serve targeted, personalized messages to groups of consumers that have the highest likelihood of converting.
Personalization is quickly becoming the norm across the digital ecosystem, with 56% of consumers expecting offers to always be personalized. To earn pent-up consumer dollars, auto marketers will need to understand their consumers on a granular level, reach them at specific moments, in specific places, and on specific devices, and create individualized customer experiences at scale. As such, a data-driven approach to digital marketing will be critical for building and reaching high-quality automotive audiences.
The key to creating a personalized, stress-free car buying experience is consumer data—and with third-party cookies on their way out, marketers will need to set up new systems for gathering information about their customers and meeting them in their moment.
For auto dealers and brands, first-party data offers an avenue for providing personalization at scale. Advanced customer data infrastructure, for example, can collect and unify first-party data from multiple sources—including CRM, website, and ads—to build a single, coherent, and complete view of each customer and their journey. Marketers can then use the collective data to create targeted and personalized marketing campaigns that enable one-to-one communication with consumers.
If first-party data is the wheels that enable marketers to connect with consumers, advertising automation tools are the engines that allow marketers to use that data effectively.
Personalization strategies are inherently nuanced and achieving them at scale requires a level of flexibility and efficiency that is nearly impossible to achieve manually. The fragmented and complex marketing media landscape means advertisers are often slowed down at several stages of the campaign, including planning, performance optimization, and measurement. Advertising automation reduces manual labor and streamlines the campaign life cycle, empowering auto marketers with the agility required to align and shift ad spending in a turbulent market, and ensuring ads are reaching high-value targets to drive measurable outcomes.
After a turbulent few years, automotive advertisers should be able to enjoy a return to some semblance of normalcy in 2024. Making the most of pent-up consumer demand in today’s market will require a deep understanding of today’s consumer base, along with a prioritization of strategies that meet that audience’s behaviors and preferences. Advertisers who take strides in this direction by promoting their brand values, preparing for an EV-focused future, and embracing personalized digital marketing will find themselves well-positioned to earn the business of consumers who are excited to finally purchase a new vehicle this year.
Massive changes are taking place in both the automotive and the marketing industries, and automotive marketers are caught right in the middle.
On the automotive side, both the unprecedented supply chain disruptions and semiconductor shortages that began during COVID-19 continue on to today, with many industry analysts predicting that inventory levels will never return to what they were pre-pandemic. In 2024, EIU forecasts that the sector will also be weighed down by slow consumer spending, high interest rates driven by stubborn inflation, and big bets on electric vehicles. On top of all that, in the longer-term, the resolution of the United Auto Workers (UAW) strike will likely result in UAW brands raising their prices to account for increasing employee salaries—and other auto brands may follow suit as part of a trickle-down effect.
And on the marketing side? Nothing major: just signal loss driven by the continued deprecation of third-party cookies, an uptick in digital advertising regulation and scrutiny, and massive technological advances that stand to redefine the landscape... you know, nothing much.
Amidst all these challenges, automotive marketers must prioritize strategies and tools that allow them to make the absolute most of their advertising dollars and their people. To that end, here are three trends that will be top of mind for future-forward auto marketers in 2024:
We all know that prioritizing the collection and extension of first-party data is a must as we move towards a privacy-friendly future. As marketers in the automotive industry move in that direction, leading brands and dealers will begin to consolidate their databases and execute a coordinated first-party data strategy to reduce the duplication of efforts and to make the most of all the data available to them.
Most automotive brands have had CDPs and data lakes in place for a long time. Now, those tools are being adopted within the dealership ecosystem, and with more sophisticated audience segmentation capabilities, dealers will be able to share more relevant audiences with brands and to deploy those segments on their own. Most dealerships have significantly more data than brands just by virtue of the nature of their business, so there’s a huge opportunity to share that with brands. This consolidation and coordination of data between brands and dealers will reduce duplication of tactics and strategies and allow both parties to make the most of all the first-party data available to them.
Automation is key for digital marketers who want to make the most of first-party data for personalization at scale. After all: If first-party data constitutes the wheels that enable marketers to connect with consumers, then automation is the engine that allows marketers to use that data effectively. (Sound familiar?)
But that isn’t the only use case for advertising automation. Automation can help automotive marketers build and deploy omnichannel campaigns more quickly, automatically optimizing pace and spend across all channels and moving budget from low performing channels to high performing channels—saving advertisers both time and money. For automotive marketers, the efficiency offered by these tools will be a game-changer for overcoming challenges like slow consumer spending, high interest rates, and signal loss. These technologies are developing quickly, and there’s a benefit to getting your foot in the door early so that you're primed for taking advantage of all the innovations coming down the line.
Artificial intelligence is another area that’s innovating quickly, and savvy automotive marketers will be keeping an eye on the space to ensure they’re tapping into all the ways AI can work for them. There are a host of ways marketers can leverage AI, such as using generative AI tools and DCO to produce marketing content and deploy targeted one-to-one email communications at scale. AI can also assist in personalizing and automating parts of customer communication via websites and call centers. Like automation, artificial intelligence tools can provide both time savings and cost-efficiencies, giving automotive marketers a competitive edge in a particularly competitive moment for the industry.
2024 is a year for automotive marketers to step on the gas. Marketing teams can get ahead by prioritizing the collection and extension of first-party data and coordinating that data with their brand/dealer counterparts; and embracing automation and AI tools that can reduce manual labor and save time as well as money. The road to automotive marketing success is clear—why wait?
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Hungry for more 2024 trends? Check out our 2024 Trends Report for everything digital marketers need to know for next year.
With supply chain issues delaying delivery of key parts and curbing new car manufacturing, the automotive industry slammed the metaphorical brakes on at the beginning of the pandemic. But its engines never ceased running, and now we find ourselves entering arguably the most dynamic and expansive period the vertical has ever seen, with electric mobility, new direct-to-consumer (D2C) brands, and evolving consumer behavior joining forces to make major impacts.
And so, despite near-term challenges (less affordability, rising interest rates, and tight supply), there are myriad reasons to be optimistic in 2023, all of which should trigger more advertising investment:
The question, then, is how will these industry trends shape advertising trends moving forward?
First and foremost, brands will need to make their electric cars the stars. Fifty-two percent of car buyers say they would prefer an EV for their next purchase, so advertisers will need to prioritize creating awareness for these products and educating consumers about the benefits of electric mobility as they communicate their EV story. Both brands and dealers will also need to find ways to usher in EVs without cannibalizing the traditional gas-powered vehicle buyer.
Second, robust retargeting strategies will be key. Consumer behavior is shifting rapidly in this space, with more choices leading to more cross-shopping between models and ultimately less brand loyalty. To take advantage of these movements and accelerate into a position of strength, advertisers should focus on implementing powerful, future-proof audience segmentation strategies that will empower them to target engaged consumers effectively.
And one final thought as you consider media planning for 2023: Traditional automotive in-market segments will look different than in years past—mainly due to inventory and cost factors that are extending buying cycles. The path to purchase will likely be much longer than at any time previously, and to find the right consumer, automotive brands and dealers would do well to build a first-party data stockpile that can drive better results.
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Want to learn about some of the macro trends affecting digital marketing more generally? Check out our 2023 Trends Report to stay ahead of the curve as you plan for the year ahead.