A blend of traditional and new media can punch up auto sales
By Wayne Friedman -- Broadcasting & Cable, 4/16/2006 8:00:00 PM
The automotive-advertising business needs to make a pit stop.
Automotive advertising on TV stations is down a scary 10% from 2004 to 2005—and more bad news is on the way. Major auto strikes are looming, threatening to hurt media revenues more. And that's not all: Internet and cable businesses are increasingly serious competitors.
What is an ad-sales executive to do—especially when auto advertising is 25% or more of the station's total revenue, the most of any ad category?
The answer comes from the Internet. The future of auto marketing, say experts, is a blend of traditional and new media.
“It's pretty powerful combination, broadcast and the Internet,” says Paul Accinno, president/CEO of WorldDealer Inc., a company that creates automotive Web sites for stations. “Multi-platform convergence is a must for stations.” He will head a special automobile session at the TVB conference.
Station web sites are key
A WorldDealer site lets consumers browse, shop and buy—all with the brand association of a TV station. WorldDealer has done deals in San Francisco, Pittsburgh, Wheeling, W.Va./Steubenville, Ohio, and Johnstown/Altoona, Pa.
Katz Television Group President Jim Beloyianis urges stations to move into this area quickly—especially given even more bad news for 2006.
So far, national spot automotive spending for domestic manufacturers is down 6%, while spending on imports is up 7%—a 1% overall gain.
“Typically, it should be up 7% or 8%,” he says.
The major problems are with two of the biggest domestic car companies. Both General Motors and Ford Motor Co. experienced a 20% drop in local TV expenditures last year. A possible GM strike would further hurt ad revenues.
Last year's results were poor overall. Local TV took in some $3.8 billion in auto spending in 2005, according to the TVB, down 9% from 2004. Even though a softening was expected—because 2005 was a non-Olympic, non-political-ad–spending year—analysts are still concerned. In comparison, the previous non-Olympic, non-political year, 2003, saw revenue decline just 1.8% from the prior year. More recently, constant stories about the precarious condition of Detroit automakers, including a massive buyout of the contracts of 113,000 workers that could cost GM $2 billion, have dominated business-page headlines.
Some stations have bucked this overall down trend. Scripps Television Group's automotive business climbed 3% from 2004 to 2005, according to Bob Sliva, VP of advertising sales for the station group. Much of this increase, he says, came from persuading dealers to move some of their newspaper budgets to local television.
“We can customize messages to fit their local strategy,” he says. Linking a dealer Web site with that of the station—as well as having dealers buy a traditional TV schedule—is the answer, he adds: “We can give them additional exposures.”
Although domestic manufacturers are having trouble, he says, much can be gained from growing foreign suppliers, which like Kia Motors are still building out their dealership network.
Grabbing more auto dollars also depends on ease of execution for dealers, says WorldDealer's Accinno. Car dealers have a misconception about the obstacles in doing their own TV advertising. But stations can help dealers overcome it.
Stations regularly get car-video footage. They can help a dealer produce commercials—something stations did a lot more in years past. A number of radio station and local cable operators still attract business this way.
Cox TV stations have been making gains with dealers. Director of Advertising Sales Leslie Kennedy says that, because of its efforts in grabbing dealer money, “we tend to be faring a little bit better than the market as whole.”
Co-op money tightens
Typically, 70% of stations' auto-advertising revenue comes from the manufacturers themselves, 20% from regional dealer associations (which get co-op money from the manufacturers), the remaining 10% from local dealers.
In recent years, Kennedy notes, domestic manufacturers have depended increasingly on dealer-association money for growth.
But the money from that source is declining. A report from the National Automotive Dealer Association (NADA) says that, over the past 10 years, TV advertising from dealer associations has dropped 10%, while radio climbed 15% and direct mail increased 7%. A few years ago, 90% of dealer association dollars went into local TV; now 65% does, according to Kennedy estimates.
There is some good news for TV stations. The revenue split is heading in the right direction. Whereas 60%-70% of media dollars used to go to newspapers, says Kennedy, TV gets 50% today.
Even so, Katz's Beloyianis warns that there is much work to be done. Given the size of the auto business, stations should need to act quickly.
“The auto business is 35%-40% of all of national spot revenue,” he says. “With an ad category that size, when it gets the sniffles, the whole industry can suffer a major cold.”
No related content found.
No Top Articles
Digital Rapids provides market-leading software and hardware solutions, technology and expertise for transforming live and on-demand video to reach wider audiences on the latest viewing platforms more efficiently, more effectively and more profitably. Empowering applications from..more