Slumping automakers spend less on ads
TEXT OF STORY
Kai Ryssdal: There are two ways to look at the American automobile industry today. One is that some parts of it actually outperformed the stock market last year. Ford says its 2008 sales were down 21 percent January through December. That’s less bad than the Dow and all the rest of them. On the other hand, for December, Chrysler’s sales were cut by more than half so stocks were looking pretty good.
No matter how you slice it though, Detroit is likely to spend less on advertising in 2009. And that’s going to cause its own problems because carmakers are traditionally the ad industry’s biggest customers. But now they can’t afford it, even as the need to boost sales is greater than ever, as Ashley Milne-Tyte reports.
Ashley Milne-Tyte: During last year’s Superbowl GM aired this ad for the Cadillac Escalade SUV — “Big, bold, beautiful. Forget drive it; if it had a bathroom, I’d live in it.” This year they’re cutting back. For the first time in as long as a GM spokesman could remember, the company won’t air any commercials during the game.
Rebecca Lindland is an auto analyst with IHS Global Insight. She says GM and Chrysler need to keep a particularly close eye on their marketing budgets because they’re being bailed out.
Rebecca Lindland: Every dollar that they spend, especially something as visible as advertising, is going to be scrutinized because suddenly this is taxpayers’ money.
She says the drop in auto ads will be another blow for struggling newspapers and magazines, not to mention TV and radio.
Lindland: This is not just a national issue, this is even down to the local level, because a lot of local networks are supported by local dealerships.
And dealerships can barely afford to advertise these days. Peter DeLorenzo publishes Autoextremist.com. He says it would be a mistake for carmakers to cut back too much.
Peter DeLorenzo: I would advise these car companies to retain as much of their advertising and marketing presence as possible because they are going to need all of the image enhancement that they can get their hands on.
He says the major carmakers have good, fuel-efficient vehicles already and more coming out in 2009 — and they have to get that message out to stay in business.
In New York I’m Ashley Milne-Tyte for Marketplace.
Stories You Might Like
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.
