'Clunkers' Jump-Starts Auto Advertising

Cash for Clunkers = cash for stations
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The federal government's so-called “Cash for Clunkers” program has dramatically fueled auto sales across America, and has kicked local TV advertising into gear as well. The initial round of the program, which replaced an estimated 250,000 gas-guzzling automobiles with fuel-efficient new rides, is being labeled a raging success by many. And few are more enthusiastic about Cash for Clunkers than local broadcasters.

“Man, does this ever speak to pent-up demand,” says Television Bureau of Advertising (TVB) President Chris Rohrs. “The blood pressure cuff put on the patient has given quite a reading—it's not a dead patient at all.”

The U.S. Department of Transportation's Car Allowance Rebate System (CARS), as Cash for Clunkers is formally titled, dispensed credits of $3,500 or $4,500, depending on fuel efficiency, toward new automobiles. The program had $1 billion to give out toward the new cars, and burned through the stash in about a month. A $2 billion extension of CARS won Senate approval late last week after the House approved it earlier.

As virtually no one foresaw just how vigorously consumers would respond to the incentives, some station executives say the dealers were in many cases slow to get their marketing plans in place. “I'm not sure the dealers fully understood it,” says WSBT South Bend President/General Manager John Mann.

'Uncle Sam wants your car'

Yet many others got their ad strategies in order in plenty of time. They flooded the airwaves from Atlanta to Las Vegas with campaigns urging viewers to schlep down to the dealer, luring them with catchphrases like “Obama-Rama” and “Uncle Sam Wants Your Car.”

Station managers describe the CARS-related advertising as somewhere between an uptick and a windfall for their outlets. “We haven't been able to quantify it yet,” News-Press & Gazette Broadcasting President John Kueneke said last week, “but we've certainly seen an increased use of television. It's all over the airwaves here in St. Louis.”

Winning it by being in it

Broadcast executives say the car dealers who've gotten the most traffic out of the CARS campaign have been those who've had a consistent television presence throughout these dark days—not those who scrambled to get their message out after Cash for Clunkers became a major fixture in the news cycle. “There's clear evidence that the dealers who've actively stayed on the air benefited the most when Cash for Clunkers kicked in,” Rohrs says. “That brand awareness [among viewers] translated to business when the program launched. I think the lesson is, in a really tough recession, don't go dormant.”

Significantly, industry watchers believe the program has sparked overall auto sales—not just those covered by the CARS program. “Dealers say they're getting a lift outside of Cash for Clunkers,” says Hearst VP of Sales Kathleen Keefe. “It's getting people into the dealers, and they're buying—clunkers or not.”

Heartened by the first favorable development in auto advertising in years, station executives are eager to see CARS extended. With the program a proven success, at least as far as car sales are concerned, and “Cash for Clunkers” having become part of the national lexicon, many believe the potential ad spend from car dealers will dramatically surpass what they coughed up during the first round. The $2 billion extension will cover roughly 500,000 new cars.

On its quarterly earnings call Aug. 5, Sinclair Broadcast Group executives said they were banking on Cash for Clunkers-related advertising to help offset lagging third-quarter earnings. “[Cash for Clunkers] sent our company over a million dollars,” VP/COO Steve Marks said. “We expect more” with the program's renewal.

Keefe believes the large number of sales that the dealers have been closing can have positive long-term results for stations. “The more sales grow, the more ad budgets grow,” she says. “There's a direct correlation.”

For his part, Rohrs expects a “surge” in advertising—and resultant car sales—from an extended Clunkers program. “Everyone will jump in for sure—how can you not?” he says. “It's a proven consumer success. You don't have this too often.”

If nothing else, broadcast folks are simply tickled to see Americans moving ahead on big-ticket items for the first time in what feels like eons. “Anything that gets people excited about buying things is good,” says Raycom COO Wayne Daugherty. “The consumer has to get that confidence again—that's the key.”

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michael.malone@reedbusiness.com

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