With General Motors and Chrysler both undergoing a restructure and facing financial difficulties, it raises the question of their status as marketers for the upcoming 2009-10 broadcast season. TNS reports that for calendar year 2008 General Motors was the third leading spender on network television (behind Procter & Gamble and AT&T) at $630 million. Chrysler ranked only 43rd on the list at $144 million. Chrysler’s impact will be felt more with local television in which it was the top spender at $330 million in 2008. Simply put, automotive accounts account for about 6% of all network ad dollars and 3% of all cable dollars. In addition, automotive is by far away the top category in spending ad dollars with local TV. For 2008, carmakers spent nearly three billion dollars, roughly double the amount of what telecom had spent; the second largest category.

Under General Motors new structure, they will jettison three brands; Saturn, Hummer and Saab, while maintaining GMC, Chevrolet, Buick and Cadillac. In 2008 these brands account for 21% of General Motors ad spending. Also, they are pulling the plug on Pontiac, marking the end of 83 years for the car model. Pontiacs has been an integral part in America’s pop culture such as songs, TV shows and movies. You can also expect a drop in the number of GM and Chrysler cars appearing on movies and TV shows as the studios and networks continue to look at product placement as another revenue stream.

Part of the void in advertising inventory created by General Motors and Chrysler will be filled by imported carmakers that see opportunity. Hyundai has already capitalized on that by replacing General Motors in this year’s Super Bowl and Academy Awards, the two most expensive shows on television. Hyundai will use the occasion to re-position their cars from inexpensive entry level models to quality built sedans.

The financially precarious situation for General Motors and Chrysler coincides with the network annual upfront marketplace. However, the upfront continues to be a very lucrative business for the networks despite losing eyeballs to cable, the multiple screens available to consumers, viewers being able control their ad exposures with DVR’s and even last year’s writers strike. For the 2008-09 upfront the networks raked in $9 billion in ad dollars, a figure had that corresponded with previous years. There is the prospect that the networks may demand ad dollars from the financially troubled carmakers up front instead of the usual verbal agreement.

Another area that could be hard hit is sports marketing. Besides automotive, Anheuser-Busch InBev, the nation’s largest brewery, is planning to cut back on its advertising budget. Financial companies are another category hit hard by the economy. Prominent sports marketers are also expected to curtail their sports marketing dollars. Expect telecom, imported autos, other beer companies and other product categories to pick up some of the void.

While the automotive industry is in a tailspin, it will be only temporary. Despite their troubles, General Motors and Chrysler will still be selling cars, still making cars and still buying advertising time. It is possible that only eight million cars could be sold in 2009. Industry analysts JD Power and Associates estimates that 20 million cars will be sold by 2014 with new consumers, new, enhanced cars and confident consumers returning. A revamped Chrysler expects to turn a profit even sooner by 2012.

badgate Uncategorized Advertising, Local TV