Car Makers Shifting Ad Money to Cable, Online

Apr 17, 2006  •  Post A Comment

By Laura Clark Geist

Automotive News

Car companies launched four dozen new or redesigned vehicles in the United States last year. U.S. automakers touted their employee pricing programs all summer. But despite those major initiatives, automotive marketers spent 1.8 percent less on advertising in traditional U.S. media-mainly broadcast and print-in 2005 than they did in 2004.

TNS Media Intelligence reported recently that automakers spent nearly $10.71 billion on U.S. advertising last year, compared with almost $10.91 billion the year before. Those figures do not include local advertising by auto dealers.

“It was a very busy year, and marketing budgets were up,” said Gene Cameron, executive director of Media Solutions, a unit of JD Power and Associates. “A lot of marketers went to nontraditional media for [vehicle] introductions.”

Power said automakers introduced 48 new or redesigned cars and trucks last year, compared with 43 in 2004 and a scheduled 64 this year.

General Motors, the largest U.S. automotive advertiser, spent $2.76 billion in 2005 to advertise its cars and trucks. That was 8.6 percent more than in 2004, TNS said. Several GM brands-Buick (43.7 percent), Pontiac (38.7 percent), Hummer (26.8 percent) and GMC (24.2 percent)-got especially large increases in their ad budgets.

Pontiac Marketing Director Mark-Hans Richer noted that the brand launched the Solstice roadster and Torrent SUV last year. In addition to advertising, Mr. Richer said, Pontiac placed several of its vehicles in popular TV shows.

“We do an innovative mix of media, from ‘Survivor’ to ‘The Apprentice’ to ‘Jimmy Kimmel Live,'” Mr. Richer said. “We got some huge returns on some very limited investments.”

Flat to Depressed

At the same time, last year’s ad spending by Ford Motor Co. was virtually flat at $1.54 billion. DaimlerChrysler AG, including the Chrysler group and Mercedes-Benz USA, cut its ad spending in 2005 by 13 percent to $1.58 billion.

Among other billion-dollar advertisers, Toyota Motor Sales USA, trimmed its ad spending last year by 3 percent, to nearly $1.07 billion. U.S. ad spending by Nissan North America dropped by 7.6 percent, to about $1.02 billion.

George Murphy, the Chrysler group’s senior VP of global marketing, said the company increasingly is promoting several vehicles in the same ad.

“As we get more and more nameplates, either you put them in a family or you don’t have enough money to sprinkle them around,” Mr. Murphy told Automotive News.

Last year automakers continued to shift money from traditional media advertising to customer events and other direct marketing. They also advertised more heavily in such alternative media as cellphones and video-on-demand. The TNS figures do not include such spending, a spokeswoman said.

Ford division said it allocated 30 percent of its 2005 marketing budget to so-called targeted media. Those include Internet advertising as well as direct and alternative marketing.

Web Ads Rise

Overall, automakers spent $273.4 million to advertise on U.S. Web sites last year-a 21.2 percent increase from 2004. But that amount still was less than car companies spent in 2005 on such things as national newspaper advertising ($314.3 million) and commercials on Spanish-language TV ($276.3 million).

Among smaller Japanese automakers there were steep cuts in U.S. advertising by Isuzu Motors America (down 72.9 percent), Mazda North America Operations (down 29.2 percent) and Mitsubishi Motors North America (down 28.3 percent).

By contrast, U.S. ad spending was up by 41 percent in 2005 at American Suzuki Motor Corp. and by 9.5 percent at American Honda Motor Co. Honda launched its first pickup, the Ridgeline, in March 2005. Suzuki launched its redesigned Grand Vitara last fall.

“We realized Ridgeline was going to be difficult because we didn’t have any truck credentials,” said Eric Conn, Honda’s assistant VP of auto advertising.

Broadcast network TV remained the most popular medium for U.S. auto advertising last year, with auto advertisers spending nearly $2.78 billion. But that represented a 1.2 percent drop from 2004. And auto ad spending on local spot TV fell by 13.2 percent last year, to $2.29 billion.

Meanwhile, car companies spent $1.2 billion last year to advertise on cable TV-a 19.2 percent increase from 2004.