The nation’s beleaguered automakers turned to TV last year and called fill ‘er up, revving up media advertising revenues and earnings.
In a new report, Michael Nathanson of Normura Securities estimated that automakers, historically the biggest ad spending category, increased outlays by 20% and were responsible for 32% of the overall growth of the ad market.
Nathanson says that 90% of the increases in auto company ad budgets went to TV stations, broadcast networks, cable TV and the Internet.
The spending increase correlates to an 11% increase in car sales in 2010. Spending per car increased 8% to $1,280 per car. With sales expected to increase 13% in 2011 and another 7% in 2012, Nathanson expects total auto advertising to grow 6.4% to $15.7 billion in 2011 and 7% to $16.8 billion in 2012.
When it comes to cashing in on Detroit’s spending, national TV and the Internet will be in the fast lane, with auto category spending growth in the high single and mid-double digit range.
Nathanson says that three stocks Nomura recommends-CBS, News Corp. and Disney-are beneficiaries of the increase in national auto spending, But he added those companies also are looking at slower local growth, both in the auto category and in political spending.