Motors

Overview

Motors clients invest heavily in media, spending almost £1 billion pounds in 2017. Traditionally heavy newspaper spenders, motors brands have cut print allocations substantially since 2013, with only small spending rises in digital newsbrands.

Benchmarketing’s analysis shows that low spending in newsbrands is harming the profit return from the campaign. This results in lower profit payback for the entire campaign and diminishing returns from over-investment in digital media.

To maximise PROI it is recommended that a minimum of 7.7% of the total media budget is allocated to print newspapers and 2.6% to digital newsbrands.

Analysis shows that TV-led multimedia campaigns using a wide variety of media are most successful at generating maximum profit return on investment.

Clients are losing out on £56.2 million potential profit through under-investing in newsbrands, particularly print.

7.7%
Print newsbrands' minimum recommended share of budget
2.6%
Digital newsbrands' minimum recommended share of budget

Adspend patterns

While TV and out of home have maintained share of motors category advertising expenditure in recent years, radio and print media have witnessed declines.

Online media now secure almost half of motors clients’ budgets, compared to under a third in 2013. Digital display alone accounts for 31.8% of total spend.

Motors category spend in print newspapers has exhibited the most marked decline, from over 13% of total media budgets in 2013 to just 4% in 2017.

Spend in digital newsbrands has increased during the same period and now accounts for 2.4% of expenditure.

The fall in print adspend is far steeper than the decline in circulation and this sharp fall is also at odds with the growth in the overall weekly newsbrand audience, which now stands at 41.3 million, according to latest PAMCo data.

Campaign PROI: print

Profit margins for motors campaigns are lower in percentage terms when compared with some other categories, but the actual profits delivered are very large: £500 million at least.

However, motors campaigns are considerably less profitable when the spend in print newsbrands dips below 5% of overall campaign spend.

Average print spend currently sits at 4% of overall media budgets, so it falls into the lowest third (tertile) of cases analysed. Multimedia motors campaigns in this tertile generate a PROI of just 0.55.

Considerably higher short to medium-term campaign profitability is discovered when print newsbrand spend is between 5.3% and 10% of the total campaign investment. When print newsbrands are included at this level, total campaign PROI is 1.00. This in turn will mean considerably higher long term profit. Benchmarketing’s estimate of the long-term effect is twice the short to medium-term PROI.

PROI is 1.0
when print newsbrands are at optimum level

Campaign PROI: digital

For the first time, the profitability of adding digital newsbrands to motors campaigns specifically can be quantified.

It is still early days, as the vast majority of campaigns allocate just a few percentage points of budget to newsbrand sites. However, there are clear findings that adding digital newsbrands at the current average level of 2.4% of overall budget has a positive impact on PROI for the total campaign. The profit return for campaigns in the middle third of digital newsbrand spending is 1.07, whereas investment below 1.6% of total campaign budget returns a campaign profit of 0.74.

PROI is 1.07
when digital newsbrands are at optimum level

The profit gap

The current average 4% investment in print newsbrands elicits a campaign profit of £39 million. If the average rose to the recommended 7.7% minimum share of media spend to optimise overall campaign profit levels, the additional profit released could be as much as £54 million.

Missing profit
£27.2m - £25m = £2.2m
Missing profit
£75m - £21m = £54m
Potential campaign profit
£25.4m x £1.07= £27.2m
Potential campaign profit
£75m x £1.00 = £75m
Recommended average
investment in online newsbrands

2.6% = £25.4m
Recommended average
investment in print newsbrands

2.4% = £23.4m
Campaign profit
£23.4m x £1.07 = £25m
Campaign profit
£39m x £0.55 = £21m
Current investment in online newsbrands
2.4% = £23.4m
Current investment in print newsbrands
4.0% = £39m
Current automotive category spend
= £977m
£56.2m
Total missing profit =

Where should the money come from?

To understand how budgets in the motors category can be effectively realigned, Benchmarketing looked at two separate pieces of further analysis in addition to PROI calculations – adstock and response curves.

Adstock is strong for most media channels in the motors category, with only digital search dropping below 50%. Benchmarketing believes this is due to the predominance of TV-led integrated campaigns.

Print achieves the highest adstocks, with both newspapers and magazines reaching 83% carry-over. Adstock of 80% or more is typically associated with a long-term branding message.

Response curve analysis demonstrates that digital display, while delivering strong profits and adstock, is less scaleable than TV, print newspapers and radio in the motors category. This suggests that the 29% of motors media expenditure currently invested in digital display is subject to diminishing returns.

The recommendation is therefore to adjust online budgets to allow for a greater proportion of digital newsbrands display (and potentially video) and to re-instate print newsbrands at the most effective and efficient spend level in the overall media budget.