The UK is on course to become the first country in the world where spending on digital advertising outstrips all other traditional formats combined.

As consumers increasingly shop on smartphones and tablets, more than half of the nation’s advertising budget is expected to go on digital media this year, with a boom in paid-for results on search engines such as Google, according to sales and marketing researchers Strategy Analytics.

The total UK advertising market will hit £15.8 billion in 2015, up 5.5% from last year the researchers said, and just under £8bn of that will go on digital ads, whether on search engines, mobile apps, newspaper websites or video-on-demand services such as ITV Player or 4oD.

While the UK would be the first country to break the 50% threshold for digital advertising, globally around 30% of advertising spend goes on digital media, while in the US the figure is 28%.

The biggest casualty of the surge in online advertising has been traditional print media, with newspapers and magazines struggling to hold on to their market share. Print advertising revenues are predicted to fall by 0.2% to £2.5bn.

As Ian Barber from the Advertising Association, points out that online platforms have opened the market to smaller firms that would not consider advertising on national TV.

According to Ian, British people love their smartphones, and they love shopping online, which is why our digital advertising sector leads the world.

So are manufacturers and dealers keeping up with this rapid pace of change?

One innovative company which stands outs above its competitors is Lookers.  I recently heard the chief executive, Andy Bruce speak at a conference and I was deeply impressed and enthused by his thinking and approach – this a shining example of a large dealer group embracing change.

Lookers has recently focused its efforts on developing its culture, with programmes aimed at enhancing the experience of its staff, in the knowledge that this will have a positive impact on the customer experience. Lookers is determined to break the perception of the car industry as being old fashioned.

At the core of its business strategy is empowerment and encouragement, making people feel good about themselves.

Lookers is bringing even more focus and structure around the whole area of customer experience.

The key to the whole programme is encouraging staff satisfaction in the knowledge that happy staff equals happy customers which is the key to long term success. They have also introduced more measurement, including surveying everyone who doesn't buy from them.

So is it fair to say, that many industry players are adapting to changing consumer habits and behaviour? I think the answer is not enough.

The recent article on AM-online  https://www.am-online.com/news/2015/3/2/car-manufacturers-need-new-breed-of-leaders---survey/37967/ highlights a study by leadership consulting firm Korn Ferry, that claims that automotive manufacturers will need a new breed of leaders to succeed in a prolonged period of ‘slow growth and rapid change’. 

The study claims that it is imperative for the automotive sector to broaden the search for new skills will grow as new, disruptive companies enter the auto industry, from Google’s prototypes of autonomous cars to Tesla Motors’ challenging of orthodox thinking. 

It predicts that the companies that will succeed in the future will be those that have clearly aligned talent strategies that can respond to changing business needs.

The big challenge for the dealers and manufacturers is ensuring they have the skills set to evolve on and offline strategies in such a way, that it empowers both staff and customers.

We only have to look at high street retailers such as The John Lewis Partnership, which has been able to produce sharp and slick online processes to complement their bricks and mortar business.  This heritage brand has been able to keep up with the pace of technological change.  The firm’s revenue topped £9bn - £5.75bn for Waitrose and £3.27bn for John Lewis at the end of its 2013/14 financial year. Combined, it was the first time the firm achieved sales of over £10bn.

In a statement Charlie Mayfield, chairman of John Lewis Partnership, said that “omni-channel capability and innovation has been the key to success”.   Indeed, Waitrose saw total online services gross sales of £262m, with Waitrose.com grocery gross sales up 41.4%. 

Similarly, johnlewis.com gross sales grew 19.2%, up £184m, while its ‘click & collect’ service grew by 57%.

Mayfield has also said: “There are fundamental changes taking place in retail, especially in customer attitudes towards value, convenience and personalisation. For several years, we have been adapting our business to take advantage of these changes.

“We continued to invest in our online business, improving the shopping experience with a new look for the site, making it more tablet-friendly, and easier to register, navigate and search for products.”

We undoubtedly live in a world where smartphone and tablets are a one-stop shop that delivers immediacy and encourages fierce competition on prices and service.  It is becoming increasing tougher for brands to build and maintain loyalty in this environment. The speed and impact of innovation is unprecedented and brands cannot rely on their heritage for survival.  They need to innovate to survive.

So what will car retailing look like in 10 years?

Automotive analysts Frost & Sullivan estimates that about 4% of all new cars sold in future, equalling about 4.5 million units, could be sold completely on-line by 2020.  It is clear that new cars will be sold via a number of channels, leveraging the existing dealer network and new flagship stores, but also through online and mobile channels, with sales staff potentially travelling to customers to showcase the vehicles digitally.

Innovative connected car apps like WEJO are springing up which can reward consumers with big brand offers, as well as helping them manage their own driving. 

WEJO estimates that by 2020, there will be more than 55m app-enabled vehicles in the EMEA region, capable of tracking driver behaviour with no additional hardware needed.

We could also see dealership showrooms evolving into purely service and test drive centres, where the focus will be customer experience at the highest level, with no real selling and haggling involved.  It's pretty safe to say the connected car will play a major part for motor manufacturers and dealers in terms of retention and loyalty, which is the ever increasing goal in any brand strategy.

Author: Chris Green (pictured), sales and media director at Motoring.co.uk