Local TV Stations Say Auto Dealer Advertising Less Dismal than Expected

The closing of auto dealers following the bankruptcy filing of General Motors and Chrysler may not be affecting local television advertising as much as some had expected.

That’s because the dealers that advertised the most were the strongest dealers, and those were the ones that managed to hang onto their businesses, writes The New York Times.

The general manager of four Oklahoma and Texas TV stations said that auto ad sales were the worst at the end of 2008, and that ad revenue has improved since then. It was down only about 12% through May from the same period last year, and was down just 5% in June from the same month in 2008.

Dealer closures are expected to total 17% of the national dealer footprint, but as it is the smaller, underperforming dealers - those that advertise the least - that are closing, the situation is not as dire as it could be for local TV stations, which lost 33% of their auto ads in 2008.

Despite the silver lining, auto ads from local dealers fell nearly 40% in Q1 09, according to TNS Media Intelligence.

Local TV stations pulled 23% of their total advertising from auto ads in 2008; newspapers took 17% of total advertising from auto, while radio took 14%.

Sanford C. Bernstein analyst Michael Nathanson says demand for new automobiles will strengthen in 2010, which in turn will strengthen local ad markets and local TV stations in particular.

Auto ads slipped 17% in 2008, and fell an alarming 29% in the first quarter of 2009 - and Nathanson doesn’t expect the rest of 2009 to be much better. However, 2010 is likely to not be as bad, he says, foreseeing that the worst case scenario for auto advertising would be a decline of 9%.

General Motors says it will spend $50 million per month on advertising during the next few months, in an attempt to inform the public that the company continues to exist despite being in bankruptcy protection.

GM cut its spending by 15% last year, from $2.49 billion in 2007 to $2.11 billion, and going from the second biggest advertiser in the country (behind Procter & Gamble) to the third biggest (just after Verizon).