That headline is not ours, it is the one Moody’s Investors Service used on its announcement of new analysis on auto ad spending. “Windfall” is a pretty strong word and it is the word that Moody’s used.
According to the credit ratings agency, ad revenue growth will benefit from the expected strong growth in US auto sales in 2012-2013. Moody’s noted that auto advertising accounts for 20-25% of total advertising in certain media sectors including broadcast TV.
“The market has forecast a boost in revenues from political campaign spending and London Summer Olympic marketing, but we think some may be overlooking the impact of a striking rebound in automotive advertising,” said Neil Begley, a Moody’s Senior Vice President and author of the report.
Moody’s expects auto sales to grow over 9% this year, driven by pent-up demand that follows recession-fueled declines. Automotive ad spending in the US totaled $13.9 billion in 2011, up 6.3% from 2010. In addition, Japanese automakers will likely spend more on advertising as they recover market share after the earthquake and tsunami that disrupted production last year.
The report forecasts record-high prices in the upfront and scatter markets in 2012 as automotive spending lifts rates across categories, in addition to swelling upfront revenues. Moody’s notes that scatter rates should shoot up in the second half of 2012 as demand peaks from political campaigns and automakers launch new models.
“Owners of broadcast networks and TV stations will benefit the most from this surge in advertising, and we expect that diversified media companies such as CBS Corp stand to see the most revenue gains,” added Begley.
RBR-TVBR observation: This report goes hand-in-hand with the projection by Kelley Blue Book of continued strong auto sales.