Tips & Advice

How Much Money Should Automotive Aftermarket Brands Spend On Marketing?

Ryan Feyer

One of the primary variables that determines the success of a brand in the automotive aftermarket is marketing budget. How much the brand is willing to invest in marketing oftentimes is what separates the winning players from the mediocre players.

Recently, I published an article on how much businesses should be spending on marketing, as a percentage of their overall revenue. Depending on the industry, marketing budgets range from 2-19% of revenue. 

But, where do automotive aftermarket manufacturers fit within the list of industries listed? What percentage of revenue should aftermarket brands dedicate to marketing? Is it 2.4% like most manufacturing industries? Is it 8.5% like transportation? Or is it something else?

Traditional manufacturers are typically B2B businesses that produce goods for other brands. Think of all the tier 1 and tier 2 suppliers who manufacture products and subassemblies to the big OEM brands. You don’t buy a Tenneco exhaust, a Magna interior, or an American Axle product. You buy a Chevrolet or Ford product. Traditional manufacturers like these have long sales cycles, few customers (sometimes only one customer), and extremely high-volume, long-term orders. They rely heavily on a sales force (or sales engineers) to generate and manage sales contracts. Marketing spend here is usually pretty trim. That’s what is reflected in a 2.4% marketing budget.

However, while automotive aftermarket brands are oftentimes manufacturers, in that they manufacture or assemble goods, they are actually much more like consumer brands. They have hundreds, thousands, or even millions of small customers (consumers) who purchase products with their brand name on them. Because of that, I would argue automotive aftermarket brands should treat themselves more like a consumer packaged goods (CPG) brand than a manufacturing brand.

The average marketing budget for CPG businesses is 9.1%. CPG brands must have broad appeal. They sell to a large percentage of the population as well as distribution partners who store, distribute, retail, resell, and, in some cases, install the products. Because of this, it takes CPG brands significant effort and budget to reach and convince their target consumers to buy. Sound familiar to my automotive aftermarket friends?

Proof of concept: WeatherTech

Almost everyone in the automotive aftermarket has heard of WeatherTech. In fact, it’s probably one of the few brands in our industry that our “non-industry” friends actually recognize.

WeatherTech was founded in 1989 by David MacNeil, who started the business in his garage, purchasing floor liners from a manufacturer in England selling them in America. As I’m sure you’re aware, today WeatherTech products are made in the USA with 95% of their products being manufactured in one of their Chicago-based facilities.

WeatherTech is often credited with creating the “laser-fit floor liner” that is custom fit for your particular vehicle, ensuring every square inch of your floor is protected from dirty feet and spilled soda. That’s what I believed when I was exposed to the WeatherTech brand for the first time, long before I began working in the aftermarket. I happened to drive past one of their billboards during a commute on I-94 on the south side of Chicago.

However, many credit Husky Liners with pioneering the first custom fit floor liners, back in 1988. Many would argue that Husky Liners even has a superior product when put head-to-head against WeatherTech. But the truth is, people don’t buy the best products. And they don’t buy the products released first. People buy the products they understand the fastest. And that’s exactly what WeatherTech did.

Chris Markell, Managing Director of WeatherTech’s advertising agency, Pinnacle Advertising, said this of David MacNeil: “His genius is in building a better mousetrap and using a specific formula to build the business and then reinvest revenues in the advertising strategy.”

In 2009, WeatherTech began advertising on television in Chicago, which proved to be fruitful. They’ve been on the air every single week since then. However, now they’re not just in Chicago, they’re national.

In 2014, WeatherTech bought their first commercial to be displayed during the Super Bowl at an estimated $4 million for a 30-second spot. I remember seeing this ad and how proud the entire aftermarket was that someone in our industry was represented in a Super Bowl ad.

How much exactly is WeatherTech spending on marketing? Forbes estimated WeatherTech’s revenue in 2013 to be around $400MM. In the same period, Kantar Media pegged their measured media spend to be around $74MM. That’s 18.5% of revenue spent on advertising (and doesn’t include the other marketing expenditures like head count, agency fees, and production). It has likely increased since 2013 due to their continued Super Bowl ad buys.

WeatherTech’s key to success, among other things, was to set aside a significant portion of revenue to invest in advertising, which brought them additional revenue, so they could invest even more in advertising, which brought in even more revenue, etc. You get the picture.

Fund your marketing

The truth is, most businesses budget marketing like they budget their profit. Revenue minus expenses equals profit. Profit gets whatever is left over, which in many cases is little-to-nothing. In the same way, many businesses give marketing whatever budget is left over after funding engineering, manufacturing, administration, payroll, rent, and so on. But the key to sustained business growth, is to make sure you’re funding your marketing with an adequate budget to actually move the business forward. If funding your marketing is an afterthought, your business will grow likewise. 

Let me float down from the clouds of idealism and enter the real world for a moment. 

I understand that dedicating 9.1% of your revenue to marketing may seem extreme and seemingly impossible to attain. Your business may not even operate at a profit-margin that high. Where would you find that kind of money? 

And honestly, it would be quite foolish to go from a 0% marketing budget to a 9% marketing budget overnight. You could very likely sink your business. 

But, could you start with a 1% allocation increase? If today you allocate 0% of revenue to marketing, could you start working towards 1%? I’m sure you could find that money somewhere. If you’re at a 2% marketing budget today, could you start working towards 3%? Small steps like this build momentum and start driving incremental results. Many times, with the businesses I’ve worked with, once they start increasing their marketing allocation, they begin seeing results, so it becomes even easier to keep making increases.

If you’re looking to grow your brand in the automotive aftermarket, lead with marketing and provide it with the fuel it needs to accelerate your business forward.

Last updated March 4, 2021.