As Go Auto Ads, So Goes Spot TV

Mar 10, 2003  •  Post A Comment

The prospect of war and economic uncertainties made for gloomy forecasts and cloudy crystal balls when senior agency, advertising and network executives gathered in Manhattan last week for a state of the advertising categories forum that focused on the critical automotive, pharmaceutical, financial services and entertainment ad segments.
The forum, organized by Primedia and sponsored by the Hallmark Channel, drew an attentive audience of approximately 200, who heard moderator James Cramer of CNBC call the country a “changed place” with a public dismayed by “chicanery” in executive suites and with executives themselves subject to “McCarthy-like” pressures to avoid putting positive spins on their corporate stories for fear of raising unrealistic expectations and drawing lawsuits, as well as the unwanted attentions of regulators and prosecutors. Highlights from the forum follow:
Automotive advertising is to spot television as breathing is to humans, said John Watkins, president, ABC National Television Sales. “Twenty-five percent of our business overall.” The next biggest spot categories-retail, telcos, quick-service restaurants and movies-are no more than 10 percent each, Mr. Watkins noted.
For 2003, spot’s largest category will be flat to up 1 to 2 percent, he predicted. One cause for a modicum of optimism: the “22 to 24” new car models in the pipeline, Mr. Watkins said.
Auto sales in the first two months of the year were “not good,” said Marc Goldstein, president and CEO, MindShare, who nonetheless placed his faith in the “resiliency” of the auto business. “The manufacturers will find a way” through difficult times, he said. “Long term [they] will make it through. I think that short term we will be in a challenged marketplace.”
Overall, the auto industry will sell between 16.3 million and 16.5 million units this year, according to Paul Taylor, chief economist, National Automobile Dealers Association, compared to the record year of 2000 when 17.3 million units were sold and last year when 16.8 million moved off the lots. As far as the prospect of a war affecting the industry, “We don’t think Iraq makes more than about 200,000 units difference,” Mr. Taylor said.
Panelist Maryann Keller, a principal in Maryann Keller and Associates, took a more pessimistic view of the auto industry’s prospects, predicting it will sell just 16 million units this year, “If they’re lucky.”
In the first two months of the year, SUV sales, which are crucial to Detroit’s profitability, are “off by more than the market,” partly because of rising fuel costs, Ms. Keller noted
Direct-to-consumer pharmaceutical advertising is a relatively new and, in some Washington quarters, a controversial category. The category’s political environment is “not great,” said Charlie Rutman, president, Carat USA, and government-mandated constraints are possible. Nonetheless, DTC advertising works, he said, citing the fact that the top-50-selling drugs all were DTC-advertised.
Reality shows are a concern for pharmaceutical advertisers, Mr. Rutman said, questioning whether reality is an “appropriate environment” for a “serious category” about health.
New hypertension drugs are good candidates for future heavy direct-to-consumer advertising, according to Paul Silverman, director DTC, media manager, Pharmacia, who contrasted them to oncology drugs, which need little or no television advertising. “If we have a cure for cancer,” said Mr. Silverman, then “I don’t really have to spend a lot of time reminding you to take this pill.”
Movies have doubled their ad spending on television in the past five-year period, according to Dave Thomas, co-managing director, national business unit, Nielsen Media Research. Last year, movies accounted for over 8 percent of the total TV ad spend. But Hollywood movie advertising is much more important in some demos, Mr. Thomas said. For example, during last Independence Day weekend, movies represented “over a third” of 18 to 34 demo rating points for all of the broadcast networks’ inventory. “You’re talking about premium inventory, highly rated properties,” Mr. Thomas said.
The evolution of DVDs from rentals to a sell-through business has effectively created a second “opening” for Hollywood’s films, said Jon Mandel, co-CEO and chief negotiating officer, MediaCom, and the result has been yet more Hollywood ad money poured into television. A DVD “used to be a tag-on to the movie advertising,” he said. “Now you can make more money on the DVD than you can on … the original theatrical. That potentially changes the windows. It also changes the amount of money that you would spend behind an introduction of a DVD.”
The financial services category has been particularly buffeted by both economic uncertainty and the distrust of consumers dismayed by corporate scandals. The public’s view of financial services is “complete and total cynicism,” CNBC’s Mr. Cramer said.
In the present tough economy, “messages [to the consumer] about growth [prospects] may not ring true,” said Edward Faruolo, VP marketing, Cigna Corp., but spots about maintaining income, “sustenance” in tough times and riding the wave all may resonate.
Taking a longer view, Larry Goodman, president, CNN sales and marketing, noted that spending in the financial category over the past five years is up 56 percent across all media. “Financial services spending in the past five years, even with the ’01 and ’02 setbacks, has still outpaced total ad spending by about two to one,” he said.
There also has been a “shift to television” from print advertising in the financial services category, Mr. Goodman said.
In the event of war, “In the acute phase you kind of take a step back” from advertising, Pharmacia’s Mr. Silverman said. “Then everybody’s going to make their decision about when they should go back in when the acute phase ends. … Certainly, I don’t think anybody wants to be sponsoring body bags.”