Big Automakers' Ad Spending Fell 13% in Fourth Quarter

Only Four Bucked Trend, Upped Outlays: Toyota, Hyundai, Kia, VW

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DETROIT (AdAge.com) -- General Motors Corp. revealed last week that it would chop $800 million from its marketing budget this year, but that could be the tip of the iceberg if troubling trends from the fourth quarter hold up among other automakers in 2009.

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Measured media spending for 15 major automakers plunged $328 million in the last quarter of 2008, according to TNS Media Intelligence, and that excludes internet, outdoor and national-spot-radio spending, which were not available at press time. In total, 11 of the 15 automakers cut their U.S. measured media spending. It dropped 13.5% in the last three months of 2008 to $2.1 billion from the same period in 2007.

The biggest fourth-quarter drop came from Tata Motors, which acquired Jaguar and Land Rover from Ford Motor Co. last June. Tata backed the two brands with $8.5 million in measured media in the final period, a 76% falloff from the fourth quarter of 2007. Chrysler was next, with a 43% slide in the last three months of 2008 to $179 million from $317.8 million in the same period in 2007.

The four who bucked the trend and spent more in the final quarter of 2008 were Toyota Motor Sales USA, Hyundai Motor America and affiliate Kia Motors America, and Volkswagen of America.

"This is survival for virtually everyone" in the car business, said Charlie Hughes, founder of consultancy BrandRules. Carmakers have cut advertising because they "know they can't move the market."

'Retail mania'
As a result, Ian Beavis, exec VP of IAG Research's automotive unit, predicted 2009 would be a year of "retail mania." Mr. Beavis forecasted "12 months of sales events" by automakers, which will increasingly target the reduced number of Americans in the market for new vehicles. That will translate to less mass media, such as TV and magazines, and more web-based efforts, he said.

Mr. Beavis also predicted more automaker spending in spot TV -- but not from regional dealer ad groups, which are working with shrinking ad budgets, due to lower sales volumes. He said several car companies are already buying certain cable TV areas that are "pockets of prosperity." Carmakers that advertise on TV get more lift with effective messaging, he said.

Lincoln Merrihew, senior VP of TNS's automotive arm, said there will still be "pops of energy" in the form of mass-media buys from carmakers when they have launches in the first half of 2009. He said TV networks "don't become irrelevant" due to car companies' interest in extending their TV buys to the networks' websites and noted Toyota's big backing to launch its Venza model. Ford is also setting a big push behind its redone 2010-model Fusion sedan and new hybrid version (ads break March 3 during "American Idol").

But a return to free-spending ways for automakers isn't in the cards anytime soon. Mr. Merrihew said auto marketers can't create the same kind of demand as in the past because Americans aren't in the mood to buy and the companies no longer have the money to do so.

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