The General Motors focus on four auto brands, rather than eight, will reduce auto advertising by $1.3 billion, says senior analyst Michael Nathanson at Bernstein Research. The analyst issued a 33-page report analyzing the auto advertising category yesterday and finds that auto advertising declined by $1.1 billion or 29% in the first quarter of 2009 with TV stations bearing the bulk of that decline at 41%.
The picture doesn't look any better for full year 2009. Bernstein estimates that auto advertising in 2009 will decline by 22%. 2010 however is expected to show increases and that has the analyst revising projections upwards for major media station groups for next year. Nathanson suggests that car advertising will be up in 2010 by 12% assuming car sales increase by 22%.
His report includes TNS Media Intelligence figures that claim auto industry advertising dropped by $2.7 billion in 2008. Auto advertising on TV stations dropped by $903 million in 2008, according to the report.
Bernstein is revising upwards its 2010 estimates for CBS, News Corp., and Disney as a result of the likely improvement in the local TV ad market. Nathanson writes that stations will be "big beneficiary of increased auto spending amid a pick-up in local ad dollars in 2010. The potential step-up in local ad spend, couple with improved local political advertising dollars, drives an increase in our TV station forecasts."
The report notes a handful of interesting points; Nathanson's analysis of auto spending between 2004 and 2008 shows auto advertising has been declining for the past four years at an annual rate of -8% for a total of $5.8 billion and auto advertisers shifted money away from local newspapers to national TV. Broadcast networks picked up 3.6 share points while cable picked up 2.3 points over the four year period.
UBS also released its view of the likely impact of dealership closures on the local and national media market concluding a limited affect on major media companies. UBS media analyst Michael Morris wrote in a note yesterday, "GM and Chrysler closures will focus on smaller dealerships, which we consider more likely to spend on newspapers or smaller-market TV stations not large market TV." UBS said advertising spend per dealership in 2008 declined by 10% from the 2007 figure which was $378,345.