Auto Ads Decline In Step With Industry Woes For a long time, the three biggest buyers of TV commercial time were fast food, pharmaceuticals and cars. So for the advertising industry, the ripple effect of Detroit's trouble is more like a tidal wave. Since automakers' fortunes have declined, they've cut their ad purchases sharply.
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Auto Ads Decline In Step With Industry Woes

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Auto Ads Decline In Step With Industry Woes

Auto Ads Decline In Step With Industry Woes

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MICHELE NORRIS, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Michele Norris.

ROBERT SIEGEL, host:

And I'm Robert Siegel. The collapse of the U.S. auto industry has created a ripple effect in the wider economy. For TV magazines and newspapers, that ripple has become a tidal wave. Car companies have traditionally been a huge and reliable source of ad revenue for the media, saturating airwaves and filling up pages with glossy ads.

Well, now they're slashing ad budgets as they scramble to cut costs. NPR's Elizabeth Blair has this first in a series of reports on advertising in the economic downturn.

ELIZABETH BLAIR: You've seen the commercials 100 times, the shiny sedan winding its way around a gorgeous landscape, selling the sizzle, but not the steak.

Mr. WARREN BERGER (Journalist; Author, "Advertising Today"): They're like mini Hollywood movies, you know, in which the car is the star.

BLAIR: Journalist and author Warren Berger has been writing about advertising for 20 years. He says, name the brand, they're all guilty. Car companies flooded TV screens with these look-alike ads.

(Soundbite of TV commercial)

Unidentified Man #1: The same innovation in a new smaller design.

BLAIR: And TV networks make a lot of money from them. On the high end, a hit like "American Idol" typically charges more than a half million dollars for a 30 second spot. So when the auto industry pulls back, TV takes a blow.

Mr. BERGER: The television industry in particular, has been really hit hard. You know, if you're used to getting $3 billion a year in advertising then suddenly, you know, it gets cut, that's a huge deal.

BLAIR: The auto manufacturers are slashing their ad budgets because they're in deep trouble. Kim McGill is director of advertising for the General Motors brand Saturn. She says their sales are down and so is her ad budget.

Ms. KIM MCGILL (Director, Advertising, General Motors): Certainly the dollars have been reduced based on the volume, you know, proportionate to the volume.

BLAIR Roughly by how much of the dollar's been reduced?

Ms. MCGILL: Well, if the market is down 50 percent, you can relate that our advertising spend is down 50 percent.

BLAIR: GM announced that Saturn was likely one of the brands it would either discontinue or sell.

Ms. MCGILL: It's a difficult time to be in the car business, for sure.

BLAIR: There are still more than 350 Saturn dealerships around the country. So Saturn tried to get a positive message out there with an ad campaign featuring individual dealers.

Mr. TODD INGERSOLL (Dealer, Saturn): In this economy everyone is questioning everything. Not a day goes by if someone doesn't ask me, what's going on with Saturn? Well, let me tell you what's going on with Saturn. We're still here.

BLAIR: The campaign was created by Deutsch LA where Eric Hirshberg is the creative director. He says it used to be that the message of a new car ad was about why his brand was better than his competitors. But now that's not enough.

Mr. ERIC HIRSHBERG (Creative Director, Deutsch LA): People are buying about half as many cars today as they were just a short time ago. So now advertisers are in the position of not just having to convince people, hey, when you buy a new car, buy ours, but buy a new car, period.

BLAIR: At the local level, dealerships have never been too shy about promoting themselves like there's a party right there in the parking lot with balloons and flags. At Marlow Motors in Front Royal, Virginia, they've got a big bright red pickup truck with the doors thrown open and the radio blaring.

Mr. JOHN MARLOW (Owner and President; Marlow Motors): It's just to create excitement. That's all I do.

BLAIR: John Marlow has been selling cars for more than 40 years. He says sales are down about 15 percent. So he's looking for the biggest bang for his buck when it comes to advertising. And that means moving the dollars they used to spend on newspapers and TV to other media. Right now they're planning a promotion for next month.

Mr. MARLOW: We know we'll use radio. We know we are using the Internet more, and we're seeing the results. The results of the Internet are more measurable than newspapers. Some of these things are very, very cost effective as opposed to a half-page, quarter-page ad in the paper that you're not sure that we get anything for this or not.

BLAIR: Moving ad dollars from traditional print media to Web sites has been a swift and significant trend that has also hurt magazines. According to Nielsen, auto advertising in national magazines is down 24 percent from 2007 to 2008. Ellen Oppenheim of Magazine Publishers of America…

Ms. ELLEN OPPENHEIM (Magazine Publishers of America): What we've seen is if you look back two years ago to 2006 compared to the end of 2008, magazine share of the market has remained about the same. It's just that the automotive advertisers are pulling a lot of money out of advertising and it's affecting magazines along with all media.

BLAIR: There's at least one car company that is actually spending more on advertising. As I interviewed people for this story, over and over again they mentioned Hyundai. The company is believed to be the first to directly address people's fears about buying a new car during the recession.

(Soundbite of TV commercial)

Unidentified Man #2: Right now, buy any new Hyundai and if in the next year you lose your income, we'll let you return it.

BLAIR: And sales for Hyundai are up slightly. Now other auto companies are making similar offers in their advertising. They're just spending a lot less to do it.

Elizabeth Blair, NPR News.

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