How Brexit Impacts the UK Auto Industry’s Digital Ad Spending

 

Investment in the UK’s industries has significantly impacted amid uncertainties over Brexit, particularly the automotive sector has been hit hard, which has affected its spending on digital ads. The reports estimate that the auto industry’s digital ad spend is growing but at a below-average rate. The industry’s 13.2% share of total digital ad spending is shifted down with 0.2 percentage points from the previous year.

According to the report, the UK automotive industry this year will invest £1.94 billion ($2.58 billion) on digital ads that make up 13.2% of all digital ad spending in the region. Conversely, digital ad spend will grow to £2.10 billion ($2.80 billion) next year, with 8.1%, but it is down from the 9.2% growth this year and a sheer drop even from the 15% growth in 2018.

Brexit risks cause the UK economic instability and potential recession; Advertisers reviewing budgets and delaying investments; Potential increase in the cost of goods and reduction in consumer spending. These risks potentially influence any advertiser’s outlook, attitude and decision-making when it comes to setting budgets and making further investments.

In its statement, the Society of Motor Manufacturers & Traders (SMMT) pointed out that a Brexit deal was imperative to help the embattled industry to bounce back, otherwise the government will face demands for the same type of tax breaks farmers need to stay afloat.

UK Automotive Industry Growth

The UK automotive manufacturers have experienced steady growth over the years, with recent increases in 2016 of nearly 25% above its pre-downturn highs. The UK is a major manufacturer in the automotive industry, compared to the world’s production. Being the 13th largest producer of automobiles by volume in the world and the 4th largest within Europe producing more than 1.8 million vehicles, of which 1.72 million were cars, according to Society of Motor Manufacturers and Traders 2017 report.

UK Auto Industry’s Digital Ad Spending 

When it comes to digital ad spending over the auto industry, the sector’s advertisers will spend pretty much capital across display and search. It is anticipated that the amount of £0.71 billion, nearly $0.94 billion, will spend on display and £0.69 billion ($0.92 billion) on search. A majority of ad spend, with 67.7% and amount of £1.31 billion ($1.75 billion) will go for mobile, as per the data from eMarketer report 2019.

This spending is expected to give relief from the backdrop of a massive drop in year-over-year car production. Between May 2018 and May 2019, there were 21% fewer cars produced, with a majority (52.6%) of exports going to the EU, which does not bode well for the UK auto sector.