Listen to this article
Televised car commercials usually provide a good excuse to pay a visit to the refrigerator. Ubiquitous during sporting broadcasts, the adverts tend to feature shots of vehicles zipping down scenic roads and jawdropping stunts followed by warnings that the footage was shot on a closed track. As for drama, the most Detroit can offer is breathless promises of great deals and cheap financing.
But now the adverts are disappearing. CBS reported a 6 per cent drop in second quarter television advertising sales and Disney has said that slow auto advertising sales were a prime contributor to “weakness” at the ESPN and ABC networks. The sector’s woes are also said to be weighing on NBC Universal’s efforts to sell more than $1bn in advertising inventory for the summer Olympics. Analysts at Sanford Bernstein predict that troubles at General Motors, Ford and Chrysler could reduce their traditional ad spending by as much as 16 per cent, or $3 billion, in 2008. The diversified media conglomerates can certainly survive on other revenue. But the car advertising pullback cuts particularly deeply for some of the media sector’s most vulnerable players. Automobile advertisers remain a bulwark of support for US local media. Auto ads account for 28 per cent of local TV station advertising, 18 per cent of local newspaper advertising and 15 per cent of local radio advertising, estimates Sanford Bernstein.
Detroit plans to roll out a host of fuel-efficient cars, which will almost certainly be accompanied by an advertising blitz. But this will take time and there is no guarantee that any new money will go to the traditional recipients. Compared with other consumer businesses, carmakers have been slow to migrate their advertising spending to the internet and other new media. Retooling the fleet could well trigger a rethinking of the ad campaign. Like the gas guzzlers they feature, the car commercial’s days may be numbered.
Lex is the FT’s agenda-setting column, giving an authoritative view on corporate and financial matters. It is also one of the few parts of FT.com available only to Premium subscribers. This article is provided for free as an example. A Premium subscription gives you unlimited access to all FT content, including all Lex articles and the FT mobile Newsreader.
If you have questions or comments, please email email@example.com or call:
US and Canada: +1 800 628 8088
Asia: +852 2905 5555
UK, Europe & Rest of the world: +44 (0)20 7775 6248