Concerns around the transition to electric make advertising an essential part of car manufacturers’ growth strategies, writes dentsu’s John Hiney.  

The automotive sector will see a 3.6% increase in ad spend in 2024, according to the latest dentsu Global Ad Spend Forecasts. This growth should not come as a surprise, as there has never been a greater need for both the leading brands and the challenging brands in the automotive sector to aggressively advertise their vehicles to capture and secure a share of the electric vehicle (EV) market.

A perfect storm for advertising

The automotive industry is changing. Established manufacturers are switching to EVs to hit official mandates in multiple countries, while new original equipment manufacturers are reinventing the production process and launching their vehicles into multiple markets. At the same time, the supply chain problems of recent years have diminished – for now – and manufacturers now have a glut of vehicles they are trying to sell.

As such, it has never been more important for car makers to advertise.

Legacy companies need to shift metal but also explain how they fit into the world of EVs to explain their credentials in this new area and to reestablish themselves as the tech pioneers they were when they first started.

New manufacturers like BYD and Geely need to build their brands, create awareness, and drive consideration in addition to selling cars. Although new entrants can begin by positioning themselves as challengers and outsiders, they will eventually need to advertise to reach large, mainstream audiences to establish clear positioning and create brand preference. Even Tesla, whose founder was long sceptical of advertising, is now reportedly advertising on social media platforms including Facebook and Instagram.

Advertising is key to dispelling consumer confusion

Consumers are in an age of confusion. Many want to go electric to help reduce their carbon footprint but have very practical questions around issues unique to EVs and infrastructure like range, subscriptions, battery life, and residual values – all of which raise questions on the best moment to take the plunge.

Range is an issue that simply does not exist for diesel and gasoline-powered cars – it is easy to find a filling station and the fuel tank can be filled in a matter of minutes. With EVs it is crucial to know how far the car can go on a single charge, and how to manage the logistics of finding somewhere to charge midway through a long journey. Different vehicles might need different charging networks, and because charging can take some time, vehicles may need to be booked into time slots in advance.

The rise of in-vehicle subscriptions will accelerate the switch to EVs. The vehicle’s operating system may offer upgrades to the standard services around connectivity, navigation, vehicle tracking and even perks like heated seats and giving owners the ability to customize their phones with their favorite apps. Drivers must get used to paying subscriptions on top of the price of the car itself.

Battery life is a vital consideration for resale value. The battery can account for a large part of the cost of the vehicle – sometimes up to 50% – but, as with other equipment, the battery will only last so long before it needs to be replaced. This means many consumers are just finding out that EVs will have a much lower resale value after a few years compared to gasoline and diesel vehicles, and this is an important consideration when choosing a car to buy.

Deciding when to buy can also be difficult for buyers. They have noticed the recent price drops in EVs, caused by both over-production and sales rising more slowly than expected, and waver between jumping on the occasion and waiting a bit longer in the hope of an even better deal. Additionally, some consumers may delay their purchase and wait for the next generation of vehicles in the same way they would hold on to their smartphone a bit longer to get the latest flagship device.

All these concerns make advertising an essential part of car manufacturers’ growth strategies as they seek to reassure consumers, bust myths, and demonstrate why their brands are the best.

Automotive is not the only sector where advertising is growing in 2024. Download the new dentsu Global Ad Spend Forecasts to stay on top of what is happening in this very dynamic year.