As the recession began to take hold during the summer of 2008 the advertising community was insulated by two quadrennial events, the Presidential election and The Summer Olympics. As the longest Post-War recession continues, into the summer of 2009, ad dollars are plummeting. Local TV, newspapers and radio are losing upwards of 20% of its ad revenue versus a year ago. While there are no blockbuster events like The Olympics or political campaigns to offset the sluggish economy, there are two initiatives taking place that are unique and could give the sluggish advertising industry a mild shot in the arm.

Historically, one of advertisings largest product categories has been automotive. The industry has undergone a massive overhaul with two of Detroit’s “Big Three” filing for bankruptcy protection and coming back leaner and (hopefully) more productive companies. Automotive has been by a wide margin the top product category with local TV stations and despite a reduction of nearly 50% in spending in first quarter 2009. To give a shot in the arm, the government has initiated over the summer The Car Allowance Rebate System, better known as “cash for clunkers” program in which consumers can trade in their gas guzzling old cars, receive $3,500 to $4,500 in cash to trade-in for a more fuel efficient car. 83% of all “clunkers” are either SUV’s and trucks while the new car gets on average nearly ten more miles to the gallon.

Many local car dealerships are advertising the “cash for clunkers” plan with excellent results, wiping out their entire inventory for some. In July 2009, Ford Motor, reported a sales increase of 2%, its first year to year increase since November 2007. That same month General Motors reported its first increase in ten months and Chrysler’s sales grew by 30% when July 2009 is compared to June 2008. The program has been so popular that the government has extended the program into September.

While the short term the program has been incredibly successful, its long term success is questionable. Will this program only provide a temporary spike in sales similar to 0% financing or employee pricing or will it jump start the ailing automobile category and thereby help the advertising industry. If it does jump start the auto industry how soon would carmakers and auto dealers increase their marketing budgets pumping dollars back into the advertising industry?

The debate over health care reform can also pump some much needed dollars into local TV, local radio and newspapers. Already the Campaign Media Analysis Group estimates that various advocacy groups have spent $52 million on the topic. At the onset most of the dollars were targeted in Washington, in an attempt to influence lawmakers. With Congress now in recess, the dollars will spent in various strategic markets and states across the country
With the health care reform bill being a lengthy 1,100 pages long, the law will be dissected by citizen journalists and bloggers and others. The debate will move from the traditional top down advocacy advertising that had been prevalent in years past to a new media, in which activists and voters are empowered and their opinions will be widely distributed and known. Hence, instead of dollars further spent on local TV, radio and newspapers, the recipients will be twitter, social networks and other platforms of the web 2.0.

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