Automotive Industry Advertising Spending

Delivered February 23rd, 2018. Contributors: Sunali, Jesus R., Ganesh P., Sarah D. and

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Automotive Ad Spend - China

According to an industry report by Carat, China accounts for 14.9% of the spending on advertising globally. It is the world's second largest market with $84.4 billion advertising spending in 2017 at a growth of 5.5% compared to the previous year. 

Based on research, it was found that the advertising spending by the automotive industry in China represents approximately 22% of the overall spending and is estimated to be $18.57 billion in 2017.
automotive advertising spending in chinaDespite extensive searching, an exact figure for the advertising spending on the automotive industry for China was not available. However, it was found that China had a revenue of 45.9 billion Yuan (9.1+11+12.7+13.1) between Q1-Q4 from online automotive advertising in 2015. According to another source, the total online revenue from advertising for China was 209.7 billion yuan in 2015 (graph). 

Based on the above information, it can be calculated that automotive online advertising revenue of 45.9 billion yuan accounts for roughly 22% of total online advertising revenue in China. (45.9 billion yuan/209.7 billion yuan*100). We can assume that the spending on automotive advertising represents the same share of 22% as the revenue from automobile advertising. This is emphasized by the fact that the major proportion of advertising (57%) in China is done online. 

According to AdAge, the total advertising spending in China was expected to be $84.4 billion in 2017. Therefore, it can be estimated that the spending on automotive advertising for the year was $18.57 billion ($84.4 billion*.22).
other findingsIt was reported that SAIC Motor, China's largest domestic auto group, spent $1.6 billion on its advertising in 2016. This had been a 4% increase from the previous year. 

According to Neilson, the volume of advertising is rapidly increasing in China with its booming automotive industry. It further states that the advertising had not yielded satisfactory results, and that its monotonous nature had resulted in the declining of the return on investment (ROI). 
conclusionIn conclusion, the total spending by the automotive industry in China for 2017 was estimated to be $18.57 billion. 

A summary of the findings of the automotive advertising spending by each country, including China is compiled in the attached spreadsheet. 

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Automotive Ad Spend - Japan

The Japanese advertising expenditure spent on automotive and related products using the traditional media, promotional media, and the internet amounted to ¥322,703,297 or $2,766,020. We have entered our findings in the attached spreadsheet. Below, you will have a deep dive of our findings. 
FINDINGS
In 2017, the total advertising expenditures in Japan totaled ¥6,390,700,000 or $54,777,272 converted using the average 2017 conversion rate of 116.667 Japanese Yen to 1 US Dollar. Thus, (¥6,390,700,000/116.667) equals to $54,777,272. Furthermore, in 2017, the advertising expenditure of Japan has experienced a 1.6% increase compared to the total advertising expenditure amounting to ¥6,288,000,000 in 2016. The 1.6% growth rate is driven by the constant and upward growth in the Japanese economy. The increase in the advertising expenditure is the collective result of all positive factors affecting the Japanese economy such as the recovery of the global economy, the rise in corporate earnings, among others. 

The Japanese advertising expenditures relating to automobile and related products amounted to ¥146,830,000 in 2017 and ¥144,590,000 in 2016. However, the given figures only reflect the Japanese advertising expenditures using the traditional media which comprises newspapers, magazines, radio, and terrestrial televisions. It does not consider the promotional media which comprises outdoors, transits, free magazines, and free newspapers. Furthermore, it does not also consider the internet which is composed of advertising production and advertising placements. 
CALCULATION ASSUMPTIONS
We have searched through industry reports and trusted media sites to look for the definitive amount of Japanese advertising expenditures relating to automotive and related products across all media channels. However, after an extensive search, we were only able to find relevant data points from which an estimate of the number of Japanese advertising expenditures relating to automotive and related products can be calculated. Below, you will learn more about our calculations and assumptions. 

• In 2016, the traditional media account for 45.5% of the total Japanese advertising spend. We will assume this rate to be constant in 2017. 
• In 2017, the average conversion rate of Japenese Yen to US Dollar is at 116.667 to 1. 
• In 2017, the Japanese advertising expenditure using the traditional media in the automotive and related products is ¥146,830,000. 

Using the above assumptions, we have estimated the total Japanese advertising spend for the automotive and related products in 2017 across all media (traditional media, promotional media, and the internet) to be $2,766,020, calculated as follows:

• 2017 total advertising spend in automobile and related products: ¥146,830,000/45.5% = ¥322,703,297

• Total advertising spend converted to USD: ¥322,703,297/116.667 = $2,766,020
CONCLUSION
Following a bolstering Japanese economy, the total Japanese advertising expenditure across all industries has experienced a 1.6% increase from the ¥6,288,000,000 in 2016 to ¥6,390,700,000 in 2017. Looking at the total advertising expenditure spent for the automotive and related products, we have estimated that for the year 2017, the total advertising expenditure spent in this industry is at ¥322,703,297 or $2,766,020. The $2,766,020 figure considers all the advertising channels which the automotive and related products had used which include the traditional media, promotional media, and the internet. A summary of our findings is entered in the attached spreadsheet. 

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Automotive Ad Spend - Germany

Based on the research and available sources, the total advertisement spending by automotive industry in Germany in the year 2016 was approximately €1,754,302,000 (US$ 2,156,651,164). A channel breakdown of the total advertising spend shows television contributed approximately 44% of that total, followed by newspapers (approximately 19%), internet (approximately 15%), consumer magazines (approximately 11%), radio (approximately 10%), mobile (approximately 2%), and trade magazines (approximately 1%). The compiled information is present in the attached spreadsheet. 
METHODOLOGY The research on spending on advertising by automotive industry is based on the latest available information on the internet until the year 2016. The year 2017 data on spending on the advertisement by the automotive industry in Germany is not yet available. The total figure for the year 2016 derived (in the original source) by doubling the available figure for the first half of the year. Conversion of the amount in Euros to US dollars is as per latest exchange rate available on the internet.
CONCLUSIONBased on the discussion above, the information on the total advertising spend by the automotive industry in Germany in the year 2016 is approximately US$ 2,156,651,164. Further, advertisement on television contributed to the maximum of overall advertisement expense. 

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Automotive Ad Spend - UK

The automotive ad spend in the United Kingdom is estimated to be appoximately 2,346,570,130 billion USD, with $1,806,859,000 coming from digital. The results of my research findings are listed in row 5 of the attached spreadsheet.  My calculations of how I arrived at this conclusion are listed below.  I hope you find this beneficial.

CALCULATIONS
According to eMarketer, 1.47 billion Euros is spent on digital advertising in the UK in the automotive industry. I was able to convert this figure to  $1,806,859,000 USD using XE Currency Converter. 

According to GroupM’s “Interaction 2017” report, digital advertising is expected to account for 77 cents of each new ad dollar in 2017.

If digital ad spend accounts for 77 cents per each dollar spent, we can conclude that $1,806,859,000 USD  is equal to 77% of the total spending.  

I then calculated the following $1,806,859,000 USD/ .77= 2,346,570,130 billion USD in order to find the total automotive spending in the UK.

CONCLUSION

The complete details of my research findings are listed in the attached spreadsheet. I was able to triangulate that ad spend in the United Kingdom for automotive is approximately $2,346,570,130 billion USD.