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We'll All Be Singing Motown Blues in '09

With Carmakers Slashing Ad Spending, Media Owners Are 'Terrified'

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DETROIT (AdAge.com) -- Anyone who depends on automotive marketing for a living already knew they were in for a bumpy ride in 2009. Last week they started to get an idea of just how sickening it could be.

GM's recovery plan, turned over to Congress, calls for it to cut a massive $600 million out of its marketing over four years. Ford will trim up to 10% of its outlay next year, which could result in another $100 million moving out of the market based on its measured spending of $757 million in the first nine months of the year as tracked by TNS Media Intelligence.

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Chrysler is staying mum on its spending plans, but it's a good gamble that the automaker will have to slash a big chunk of the $579 million TNS tracked it spending in the first nine months of this year.

Another bad sign for the Big Three is that every buck they spend is being scrutinized as they bow and scrape for a bailout from Congress, which will make them even more nervous about any kind of spending that could be perceived as profligate. Car marketers and dealers might know the value of a flashy TV ad campaign, but the question is whether the public will understand that it's an investment.

It's not just Detroit automakers who are going to be cutting back: The biggest three Asian transplants -- Toyota, Honda and Nissan -- all saw new-vehicle sales fall more than 30% last month. That does not bode well for next year's spending, considering that Toyota and Nissan already hacked measured-media outlays through September.

The nation's six biggest carmakers "are all joined at the hip," said GM's Mike DiGiovanni, executive director-global market and industry analysis. The current economy has "the ability to take all of us down."

Day to day planning
Long-term media plans are history, and buys are being made month to month or even day to day. More "accountable" media such as interactive are likely to be stressed. Detroit automakers -- particularly GM and Chrysler -- aren't making any first-quarter magazine buys other than for key launch models such as Ford's Fusion, Mustang and Taurus, said magazine representatives. And because the print buys are being made on a last-minute basis, the beneficiaries will be weeklies and biweeklies that get them in print fast.

Kia expects to spend about the same in 2009 on advertising as it did in 2008, maybe even a pinch higher due to significant model launches, said Michael Sprague, VP-marketing at Kia Motors America. Kia spent $170 million in measured media in the first nine months of the year, $37 million more than in the same period a year ago, according to TNS Media Intelligence.

Kia's affiliate Hyundai Motor America will also keep its '09 budgets the same as this year, partly due to the favorable exchange rate of the U.S. dollar with South Korea's won, said an executive close to the matter -- but even that is at a reduced rate. Hyundai chopped $105 million off measured media spending in the first nine months of 2008 to $242 million vs. a year ago, according to TNS. A Hyundai spokesman declined to comment.

In the meantime, every marketing alliance and sponsorship is on the table for review at GM, and others are shaking the couch cushions for savings. Ford Motor Co. is committed to "American Idol" and "Extreme Home Makeover" for this season, a spokeswoman said, but those will be re-evaluated in the spring upfronts. Honda pulled a stunner last week when it parted with Formula One racing.

The upheaval has many media owners "terrified of getting screwed" out of payments, according to an executive at one media outlet. Some magazine representatives reported that automakers are taking longer to pay their media bills, in some cases 120 days, up from 60.

Little guys worried
That worries smaller media organizations who fear a domino effect in the event of a Detroit bankruptcy. "If a publisher has 30% of revenue coming from autos and, of that, 50% of your revenue has defaulted and it's a soft year already, that's enough to tip a company into going under," said Andrea Kerr Redniss, managing director-digital at Optimedia.

Autos that are spending are concentrating on areas that offer efficiency and accountability, including direct-response-based buys and search marketing. That's bad news for some emerging areas, such as in-game advertising, which has historically counted on autos to fund a third of its campaigns at times.

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Contributing: Abbey Klaassen, Rita Chang, Brian Steinberg, Nat Ives

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