Monday, June 2, 2008
What Early Ad Spend Says for the Rest of the Year
Grim Outlook as All but GM, Toyota Are Down in Expenditures
By Jean Halliday
Published: June 02, 2008
DETROIT (AdAge.com) -- Amid the U.S. industry's worst new-vehicle sales year in a decade, all but the top two automakers, General Motors Corp. and Toyota Motor Sales USA, hit the brakes on measured media spending in the first quarter -- and it doesn't look like they'll be letting up soon.
Both automakers beefed up TV spending through March: GM to $309 million from $297 million a year ago and Toyota to $141 million from $119.8 million. They also increased online-ad outlays: GM to $48 million from $30 million a year ago and Toyota to $22 million from $15 million, according to TNS Media Intelligence.
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Experts disagree whether the industry's early-year expenditures will bring a cloud to the upfront for the segment.
"There's a lot of pressure on traditional media" at the car companies, said Ian Beavis, the former Kia VP-marketing who joined Carat in April in the new position of exec VP-exec global client director. Mr. Beavis, whose 30 years of experience is mostly in auto marketing, predicted the auto category in the upfront will be down this year from 2007, due to the "tremendous financial pressures" sparked by the expected decline of 1 million total U.S. new vehicle sales this year.
According to Mr. Beavis, the carmakers are paying more attention to their marketing return on investment, especially at companies that are trying to rebound in their home markets, including GM, Chrysler and Ford.
Dave Allen, principal of Richards Group, Dallas, predicted spending will fall by year's end. "The car companies are fighting for share, especially Detroit, which has to give up share for profits," said Mr. Allen, who headed Hyundai's national creative account at the agency until early last year. He also projected more online spending, with magazines and broadcast TV networks taking the hit.
Waiting for new models
Spending often depends on the cadence of new-product launches, and several automakers may hold their ad dollars until crucial models arrive, for example, Ford's redone F-150 full-size pickup and Chrysler's newest-generation Dodge Ram pickup, both coming this fall. Hyundai will launch the new Genesis sedan in late June with an effort one of its prominent dealers valued at a record $80 million, including heavy TV backing.
The companies with key vehicle introductions will spend big to insure successful launches, and competitors historically have beefed up ad support for their older models to maintain share.
In the online arena, Nissan spent only $3.5 million on ads through March vs. $12.8 million a year ago; Chrysler spent $12.8 million in the first quarter -- $4 million less than a year ago; and American Honda's spending was flat, according to TNS, though the figures do not take into account things such as websites and e-mail promotions.
But digital is becoming vastly more important. Some 71% of Americans shop online before buying a car, said Stephen Berkov, who joined auto site Edmunds.com as executive director-client strategy earlier this year after eight years in Audi marketing.
Automakers figure it's a waste of ad dollars in the current economic climate to try to convince Americans who aren't predisposed to buy a new vehicle, said Todd Turner, president of consultant CarConcepts.
He predicted an uptick in advertising in the third and four quarters -- if the economy starts to improve by the third quarter. But, he said, if the economy doesn't begin to rebound a bit by then, "we'll continue to see delays in marketing expenditures."