The first automotive research study fielded exclusively for Southern California radio uncovers some important new findings about the value of AM/FM radio for today’s competitive auto industry. “The Automotive Path to Purchase Study,” conducted by Nielsen for the Southern California Broadcasters Association (SCBA), is being used to convince automotive clients and agencies to make broadcast radio a larger part of media plans.
The study reveals new information about auto customers in the region, how they make their buying decisions, what media provides the most reach and a comparison of how different local media match up with local vehicle buyers.
It suggests that 80% of auto ad buys should be in traditional media, such as radio and TV, and that radio has the greatest weekly reach of auto buyers in the market, delivering 1.8 million people who plan on making a new vehicle purchase in the next 12 months, representing $52 billion in planned new auto purchases. Radio also reaches an additional 1.5 million people who plan to purchase a used vehicle in the same time frame.
Results of the study were presented to dealers, dealer associations and other auto industry members in a pair of events in Los Angeles on June 7 and in San Diego on June 8. The SCBA has hired a Detroit-based PR firm to help deliver the study’s findings to the major automakers.
“We want to make sure the dealers understand the unique strength of radio to bring customers into the showroom,” SCBA president Thom Callahan told Inside Radio.
With the auto industry facing a fair amount of turmoil following four months of sales declines that abated in May, and some automakers calling for a flat to down year, the study is well timed. Both dealers and their associations have pulled back on auto spending in Southern California since 2017 began, according to Callahan, yet radio spending by manufacturers has gone up. During what he calls a “disruptive time” for the auto industry, Callahan says the study’s message isn’t to spend more on advertising but to reallocate budgets to deliver a bigger bang for the buck.
Dan Kearney, chair of the SCBA board of directors and senior VP/market manager for CBS Radio-L.A., called the study a “giant leap forward” in showing radio’s value to the auto industry.
The genesis of the research dates back to Nov. 2016 when Callahan said the trade group’s annual review of key ad categories found several “thunderstorms heading toward the auto industry,” just as it was about to wrap up a banner year of sales. Those included unsold cars remaining on dealer lots for more than 70 days, considered a red flag in the industry, and an unusual amount of rebates and incentives being offered. “We saw the cool down coming,” Callahan says of what would be four consecutive monthly setbacks for U.S. sales starting in January. Nielsen began interviewing more than 2,200 auto buyers in L.A and 715 in San Diego in late February through March 13.
The study shows that even the heaviest TV campaigns miss the auto customers they seek. Looking at the top five national campaigns—some 2,870 commercials that aired in the Los Angeles market in January 2017—23% of adults 25-54 and 40% of adults 18-34 were not reached.
The numbers also show that radio’s “Cost Per Analysis” is four times as efficient as TV. Television came in at a $21 million cost per awareness point, while radio is $5.4 million. In addition, a radio-only schedule delivers 1.5 times more auto buying ears than a TV-only does eyes. To illustrate: $335,000 spent only on AM/FM radio delivers 62% of adults 25-54 in the Los Angeles DMA vs. 39% for TV.
Making a case for automakers to reallocate budgets, the study suggests adding radio to a TV buy improves the reach of an auto campaign. Spending the same money and putting 20% on radio and 80% on TV, an auto campaign would reach 58% of adults 25-54. If 20% of a TV budget was allocated to radio it would equal 42% more vehicle purchases and greater brand impact.
Said Brad Kelly, managing director for Nielsen Audio, “This groundbreaking study provides concrete evidence of broadcast radio’s ability to reach and motivate millions of auto buyers in Los Angeles and San Diego.” View the complete study here: www.scba.com.