For the longest time, what was good for General Motors was good for America.
These days, what's bad for GM--which is about everything--is bad for America, and especially bad for the thousands of media outlets that depend on its ad dollars.
It's about to get a lot worse.
Yesterday the giant carmaker announced yet another major downsizing in which it will chop its salaried workforce by 20 percent. Along with those cuts, the carmaker plans to chop ad spending.
How deep will those cuts be? GM hasn't said yet, but they're presumed to be in line with its other cost-saving measures.
A cut in GM’s ad budget will have big implications as the nation’s fourth-largest advertiser. In the first quarter alone, GM spent a $535 million, according to TNS Media Intelligence.
The new round of cuts will hardly come as a surprise.
Detroit has been chopping ad spending for some time as the domestic automakers struggled to maintain sales against stiffer competition from imports and more recently soaring gas prices and an ailing U.S. economy.
In 2007, GM spent $2.1 billion on advertising, down 9 percent from 2006, which in turn was well down from 2005, according to TNS.
TNS says in first quarter 2008, GM ad spend was actually up 12.6 percent versus first quarter 2007, to $535.3 million, in connection to model re-launches of the Chevy Malibu and Cadillac CTS.
The bulk of it, $335.5 million, went to television, with $78.5 million on magazines and about $48 million apiece on newspapers and the web.
Last year total auto ad spending was down 10.8 percent, to $12.3 billion, compared to the year before, according Nielsen Monitor-Plus.
Auto ad spending on traditional media was particularly hard hit last year.
Spending on network TV was down 11.6 percent to $2.5 billion, year on year, while spot TV spending was down 17.5 percent to $5.0 billion and national newspaper spending dropped 31.0 percent, to $110.8 million.
By contrast, internet spending was up 57.9 percent, to $441.6 million.
Some of GM's cutbacks reflect its shift in production away from trucks and SUVs toward small and medium cars.
G.M. has said that it believes light vehicle sales in the U.S. industrywide will hit about 14 million both this year and next. That is the lowest figure in well over a decade.
So far this year, GM sales are down 16 percent.
In all, GM hopes to trim its total spending by $10 billion, amid rumors of possible bankruptcy.
Back in March, forecasters were revising downward their projections for auto ad spending, reflecting the worsening economy.
As one analyst told Media Life: “A lot of this is due to consumer confidence. The consumer is unsure and confused and doesn’t have a good outlook. So much of what’s happening is outside their control.”
|
GM ad spending for the 2006, 2007 and first quarter
1/1/2006-3/31/2008 |
|
MEDIA |
2006 DOLS (000) |
2007 DOLS (000) |
QTR 1 2008 DOLS (000) |
|
Television |
1,327,858.0 |
1,176,809.7 |
335,484.8 |
|
Magazine |
401,707.9 |
373,646.9 |
78,522.7 |
|
Newspaper |
219,619.9 |
149,790.3 |
48,896.1 |
|
Radio |
100,196.9 |
104,449.1 |
14,589.5 |
|
Internet |
118,202.5 |
212,111.5 |
48,539.1 |
|
Outdoor |
40,841.4 |
45,564.3 |
9,252.7 |
|
GRAND TOTAL |
2,208,426.6 |
2,062,371.8 |
535,284.8 |
Internet figures are for internet display advertising only.
Source TNS Media Intelligence |