GM Bankruptcy Punches Newspapers, But How Much Will It Hurt?

(MoneyWatch)  Was perusing The Wall Street Journal's chart of General Motors ad spending by medium from yesterday (the content is free), and the one statistic that really stood out is that, in the first quarter of 2009, GM actually increased spending in newspapers by 150.4 percent to $112 million, a bright spot that is completely out of sync with the Newspaper Association of America's first quarter numbers, which showed that overall ad spending in print newspapers was down by 29.7 percent and that automotive ad spending was down for both print and online by a total of 43.4 percent.

So, does the expected cut in ad spending now that GM has gone bankrupt mean much to the newspaper business? Surprisingly, probably not. I talked to Jon Swallen, senior vp/research of TNS Media Intelligence (which provided the figures to the WSJ), and it looks like the huge percentage increase in ad spend was an anomaly; another reason the ad spending increase appears to be high is because recent GM ad spending in newspapers has been so low. It's unclear what the ad spend increase tracks back to, but Swallen speculated that it may have been because of a specific campaign that just happened to run in the first quarter -- in other words just one of those every-so-often bumps that media companies have long grown accustomed to, but shouldn't become reliant upon. All in all, the total newspaper industry increase from GM amounts to just shy of $70 million, which is a drop in the bucket compared to the $6.6 billion spent in newspaper advertising in the first quarter. (Note: the WSJ numbers do not include dealer spending.)

Actually, a deeper trouble spot for newspapers in regards to GM may be the usual: the encroachment of online media into the print media business. Years ago, a GM bankruptcy would've actually resulted in a temporary increase in newspaper and magazine spending; print would've been the perfect medium for GM to place long-copy ads explaining how it plans to get itself out of this bankruptcy mess.

But it looks as though GM's post-bankruptcy ad campaign, which began on Monday, is relying heavily on the Internet, using video and social networking, to get its message across. Newspapers aren't entirely out of the advertising picture -- they are being used to publish an open letter from GM CEO Fritz Henderson, starting today -- but, as is almost always the case these days, advertisers aren't so sure newspaper delivers.