More of Detroit's Ad Dollars Should Go to Radio, Less to TV

BigResearch Analyzes Spending by GM, Ford, Chrysler

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A correction has been made in this story. See below for details.

DETROIT ( -- Detroit's Big Three automakers need to rethink where they spend their ad dollars and allocate more to consumer-centric media, such as radio, with better return on investment, according to recommendations based on research released this week.

General Motors Corp., Ford Motor Co. and Chrysler spend too much on TV, which isn't as effective or efficient as other media, an analysis by Ohio-based BigResearch concluded.

BigResearch coupled the results of its semiannual online survey of 17,231 consumers in June with just-developed software from Prosper Technologies to develop the analysis and recommendations, said Gary Drenik, managing director, BigResearch.

Automotive Ad Spend vs. Prosper Media Allocation Model/ Calendar 2007
  General Motors Spend Share* Ford Spend Share* Chrysler Spend Share* Prosper Allocation Model**
Magazines 12.4% 11.9% 10.5% 15.6%
Newspaper 5.0% 5.2% 6.9% 6.2%
Outdoor 1.5% 0.7% 0.5% 14.6%
TV 39.1% 38.9% 43.2% 17.3%
Radio 3.5% 2.3% 1.9% 21.5%
Internet 7.0% 6.5% 3.0% 8.5%
Other 31.5% 34.5% 34.0% 16.3%
Source: Ad Age Domestic Ad Spending by Category (2007)/Measured media from TNS Media Intelligence's Stradegy, Prosper Media Allocation Model
* % of Total U.S. Advertising Spend in 2007
** Media influence weighted by consumption and media cost for people planning to buy/lease a car/truck in the next 6 months

Gaps in budget
The consultant found wide gaps between how Detroit has divvied up ad budgets vs. what consumers say works best when it comes to making a decision to purchase a car.

Based on the three automakers' U.S. measured media in 2007, BigResearch recommends that they allocate the highest split of their annual budgets to radio, or 21.5%, from the low-single digit percentages each of the Detroit three spent in the medium last year.

Asked Mr. Drenik, "If radio reaches 90% of the people in a week, why does it only get seven percent of ad dollars" from the Motor City?

BigResearch also found automakers were greatly underutilizing outdoor ads, with the Big Three spending less than 1.5% of their budgets on billboards. The analysis recommends spending 21.5% of its allocation on out-of-home.

Magazines also important
The automakers should increase their use of magazines too, as General Motors, Ford and Chrysler were all committing less than the recommended 15.6% of their spending to glossies.

Internet and newspaper spending by all three was found to be just about right, with each of the automakers off just slightly from the recommended allocation. The exception is Chrysler's internet share, which was found to be 3%. BigResearch recommends that 8.5% go toward the web.

BigResearch is an authorized marketing representative of Prosper Technologies.

Considering the providers' online expertise, it's somewhat surprising there's not a bigger call for broader internet ad expenditures.

Chris Rohrs, president of the Television Bureau of Advertising, wasn't wowed by BigResearch's analysis. He noted the ad spending patterns of the transplanted automakers also heavily favor TV and place very little weight on radio. He cited TNS data showing that car companies outside the Detroit three spent less than 2% of their ad dollars in radio and well above 50% of their measured media dollars on TV, including 31.4% on local-market spot TV through the first nine months of 2008.

'Real head-scratcher'
He called the data on radio "a real head-scratcher" in terms of the top influencer on car buying, as it reflects the three automakers' "own evaluations of the impact that radio has on car-purchase decisions."

TV has always been the lead component of ad spending in automotive because of its reach, visual capability and effectiveness at all stages of the purchase funnel from awareness to purchase, Mr. Rohrs said.

"At first look it would appear to us that the Prosper Technologies model would represent a disaster for the Detroit 3, just what they don't need right now," he said.

In October, the Television Bureau of Advertising did a study that found General Motors Corp. was spending its media budget inefficiently. The local TV trade group, after analyzing the automaker's spending for the first half, concluded that GM was too heavily invested in media aimed at reaching in-market new-vehicle shoppers, at the expense of brand building on TV.

Move to digital
At that time, Mr. Rohrs told Advertising Age his group had been talking to GM's Mark LaNeve for "well over a year" about its big move to online advertising. The auto giant's very public pronouncements on its move to digital led the TVB to analyze GM's media strategy and spending in the first half of 2008 vs. the nation's six other major automakers. The TVB then sent its analysis to all 600 of its member stations.

Looks like the new "car czar" won't be lacking opinions on how Detroit should spend its ad budget.

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CORRECTION: An earlier version of this story incorrectly stated that Prosper Technologies was acquired earlier this year by Mzinga. Prosper, based in Columbus, Ohio, is the software development arm of Prosper Business Development Corp., which is the also the parent of BigResearch, another source of the research cited in the report.

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