Regardless of which side of the US auto-maker issue you are on, one thing is certain...those guys sure can spend ad dollars can’t they. GM and Chrysler claim to be at the verge of extinction and while 2008 ad spending through July was down 10% from last year, they continue to pound the airwaves with ads. If you’ve watched any (non-TiVo) prime time in the last two months you've noticed the barrage of either local or national auto ads. This is great for us who rely on the trickle-down effect of these purchases into our edge of the industry, but is it simply the last car on the gravy train?
Through July 2008, American car manufacturers (GM, Ford, and Chrysler) all showed negative advertising growth over 2007, according to Nielsen Monitor-Plus. Ford and Chrysler each spent 22% less on advertising, while GM dropped its spending by 6%. That still equated to $1.2 Billion dollars for GM, nearly $1 Billion for Ford and $500 Million for ailing Chrysler...for six months.
Suppose people came to their senses and folded-up shop at Chrysler. There goes $1B per year in ad revenues off the table, along with creative and production spending associated with those ads. That’s the cold turkey scenario. The more likely scenario will be a less-of-the-same strategy rather than a cold hard look at ad effectiveness, particularly in a recessionary market.
Compare the Big Three with the relative success of foreign automakers. Honda added the most spending in dollars over 2007 (an extra $71.5 million, or 13%), while Daimler (48%) and Volkswagen (23%) showed the most growth percentage-wise. All adding to the white noise that is prime time advertising... state the mantra, ‘Cash back, Employee pricing, Red Tag marathon, Zero Percent Financing’ and repeat.
The addiction to local and national spot advertising these companies have, regardless of their profit margins, is a true testament to Madison Avenue entrenchment in their corridors. For these company failings, you can blame UAW wages, job bank practices, poor product R&D, and executive pay, but to some degree we must blame ourselves for enabling this addiction to the almighty television advertising product.
I’m not saying TV ads don’t work. Nielsen and the agency number crunchers will tell you they do and have forever when it comes to selling 17 million automobiles to Americans each year. But there has to be a saturation point past-which the viewer glazes over and hears nothing. Yes, there has been a trend to move the ad budgets to the web. But in order to make that work they have to drive eyeballs to their themed web sites and how do they do it...television advertising. Roll tape of the Dodge Ram Challenge...or just wait for the post-kick-off commercial break on Sunday and I’m sure you’ll get your target four ad impressions of this web wonder; right there on your television.
What does all this mean? Well, certainly the advertising world sees it coming and have already reacted to the coming storm (we've seen the layoff stats). My point is that even if you take a hard-line against placing our tax dollars into a failing US industry with no real game plan for recovery, you have to recognize the stimulus effect of doing so. At least with regard to our industry. Yes the system is flawed, the companies have been run into the ground, and their habitual use of television advertising has been a key contributor to the success of the DVR. But imagine what the void of $8 Billion dollars in annual production and ad revenues would feel like to professionals that call the media industry home.
In a season of thanksgiving sometimes I am reminded by stories from unanticipated places that its not all about me/us. This week in a local movie theater in Dallas an ordinary act had an extraordinary impact on one man. He's called 'Doc', a homeless man who was passing out flyers at a theater to earn some coin. While he was cashing-in some change at the ticket counter a man offered to pay his way into the movie. Accepting, he thanked the man who looked familiar then asked the teller "Was that Tony Romo?". Yes, it was.
So Doc ran across the street to ask his 'employer' if he could have the afternoon off, then ran back. The movie had already started. According to the Dallas Morning News 'Romo, who confirmed the story, waved Doc over to sit by him and his friend. Doc sheepishly mentioned that he hadn't showered in a few days. "Don't worry about that," Romo said. "I'm used to locker rooms." And so the $67 million quarterback and a man who doesn't have $6.70 to his name sat next to each other and shared laughs for 90 mintues or so.'
As we count our blessings this Thanksgiving let's not forget how far a simple act of kindness can go, particularly to a random stranger. Whether you are working or unemployed, we all have something to give and much to be thankful for.
BTW, the movie Romo and friends watched was Role Models. Interesting.