We’ve been hearing from some sellers in the national spot radio arena that dollars are starting to be held back again a bit—this after the automotive category has enjoyed nearly a year of great investment in media. While Volkswagen has just signed off on a campaign, “Some automakers have been moving week/week Q2 dollars into Q3. “That means a drop off in 3rd quarter dollars,” Focus360 Hispanic Radio Network (HRN) President Dave Logan told RBR-TVBR. “This has been going on for a month.”
While some have blamed this on the Japan earthquake and supplier problems, it’s starting to seem more like the economy/unemployment is the driver.
However, as to the supplier issues affecting advertising (remember, Toyota is not doing its Toyotathon this year due to supply issues and other automakers are cutting incentive-based creative), some underscore that radio should almost benefit from the problem with it’s ability to change copy and media plans quickly:
“As for the Japanese auto industry, things will get bumpy in the short run regarding inventory because of parts shortages, inability to meet rental car demands, inability to meet normal consumer demand, etc.,” Pat McNew, former PHD EVP/Local Media Network (LMN) Director of Operations, tells us. “To me this should play to radio’s strengths: easy to get on and off the air, relatively inexpensive creative costs, great reach and frequency.”
“It’s all about Japan,” said a national spot seller. “When the tragedy hit, the lots were overloaded. Some thought this might be a way to clear the lots and not have to cut prices and spend money on advertising. But when reality set in they quickly realized they were in deep trouble. The radio industry doesn’t know which way to turn, hiring people who don’t know the difference between a vehicle and a can of soup. Media for the automotive industry is planned in Detroit, LA, Miami, Chicago and to some degree NYC. Forget where it is bought. If these markets are not covered by pros who know what they are talking about its over, they won’t make their budgets and the internet will walk off with their dollars.”
RBR-TVBR observation: Whether or not we are on the verge of sustained lower auto sales or not is complicated. The supply chain issues affect automakers worldwide, so supply and demand figures are a bit altered. If demand goes up against a limited supply, it does present a problem at the lots. So in reaction, cutting incentives is one thing, but cutting advertising is another. Advertise the vehicles that you have plenty of supply of now and in the near future. As McNew said, radio is a great way to change and add new campaigns on the fly to make that new strategy work.