Lamar Doesn't See Auto Bailout Money Helping Dealer Ads
Will any of the $17.4 billion bailout of the Detroit auto industry show up in the coffers of advertising agencies? It depends on who you ask.
Ad Age recently reported that some cable networks are seeing an uptick in car advertising, and IAG Research shows the same. Plus:
General Motors Corp.'s Chevrolet division has several new spots from Interpublic Group of Cos.' Campbell-Ewald, featuring Howie Long pushing the Silverado pickup and Traverse crossover, that are getting heavy play on CBS during the NCAA basketball tournament and elsewhere.But if you listened in on Lamar Advertising's Q4 analyst call, you'd have heard the downside to that: With demand for new cars falling off and the major companies in dire need of restructuring and consolidation, many dealerships have stopped advertising or reduced their outlays.
Goldman Sachs' Mark Wienkes brought up the issue with Kevin Reilly, Lamar's CEO:
Mark Wienkes - Goldman Sachs: Do you think that the, should the Obama administration, should they infuse the auto sector with a bunch of capital, does that filter down to the dealers, does that help them at all? And then if it filters to them, does that help you at all?Lamar CEO Kevin Reilly: Well no, because I mean the roadmap is pretty clear that there are going to be fewer dealers domestic US over the next couple of years. Which hopefully, that will be a good thing for the auto industry.
You will have to put it back on the consumer and the access to credit, which would kick-start things for our auto dealers. And baring a German plan, where they come out and say we will buy every automobile over seven years old, or over 10 years old for X amount of dollars, which would stimulate a lot of activity baring that.We really don't see that. But having said that, we had this dramatic drop off in December and January, but we have some auto dealers who have resigned to their new reality that they're going to be selling fewer cars, that they may have to live off of their repair department.
So, that's what they're doing. They are advertising their parts and labor, and their repairs and maybe some of their used car offerings and they're tiptoeing back into the market with us. And we are the lowest cost per thousand out there.
So, clearly, electronic media and newspaper are going to take the biggest brunt of their issues. I think what we have to do is not hope for hail Mary from the Federal Government, but think about trying to offer up that inventory to other customers, if our auto dealers don't want it.
- See BNET's previous coverage of the auto bailout's effect on advertising:
- More layoffs at BBDO Detroit
- Clients Are Delaying Payments to Agencies
- Omnicom, Publicis Worst Hit in Auto Brand Axings