Economic Slowdown and TV Writers’ Strike are Wild Cards for Auto Marketers

Economic Slowdown and TV Writers’ Strike are Wild Cards for Auto Marketers

By Michelle Krebs January 28, 2008

By Dale Buss

The decision-making process at Hyundai went naked in recent weeks as the company’s marketing staff openly mulled the possibility of withdrawing its planned Super Bowl advertisements -- and then quickly decided to keep the spots.

And although Hyundai’s action maintained the status quo for Fox’s mega-broadcast Feb. 3, the debate also illustrated how two wild cards -- the intensifying sales slowdown and the prolonged TV writers’ strike -- are becoming bigger challenges for automotive marketers these days.

Auto-marketing executives largely maintain they’ve still got a pretty good handle on both of these problems.

Most profess resignation about slower sales but display a stiff upper lip when it comes to talk of something worse. “I don’t see a national recession,” Phil Cowdell, CEO of Ford Media Services, told AutoObserver. “And the automotive Big Three really don’t have the option not to spend (on marketing now anyway), because they’re in a fight for survival.”

And though they rue the length of the TV writers’ strike and how it has taken many previously reliable advertising platforms off the table for now, most car marketers purport they’re working around the walkout just fine.

“TV production companies have been around a long time producing entertainment and content that attracts audiences -- that’s what they do,” said Mark Spencer, senior manager of Dodge advertising for Chrysler. “My expectation is that they’ll figure out and innovate and find other ways to attract audiences.”

Where There’s Smoke

Nevertheless, the sales downturn and the writers’ strike are roiling the landscape enough to cause auto marketers growing unrest. Consider:

-- Ford is depending on the continued popularity of "American Idol" to help it step lightly through the writers’ shredding of the first-quarter TV-network programming schedule. But the recent premiere of the king of the reality genre clocked four million fewer viewers than a year ago.

-- General Motors had a bad experience shifting Cadillac spots to fit around NBC’s abbreviated, makeshift telecast of the Golden Globe Awards on Jan. 13 and, along with other automakers, is increasingly wary of how the writers’ strike might affect upcoming premier programs, including the Grammy Awards and the Oscars.

-- GM also is doing a late revisiting of how it plans to use the one spot it has bought during the Super Bowl. Originally Chevrolet clearly was going to be the occupant. But “now we’re possibly considering other brands,” said GM spokeswoman Ryndee Carney; Chevy’s only definite posting is in pregame TV ads.

-- Hyundai spokesman Chris Hosford publicly cited “the ‘R’ word” – growing fears of recession -- as one major reason the company was considering a withdrawal from the Super Bowl. But the game’s status as one of the dwindling number of favorite TV-advertising vehicles during the first quarter helped affirm Hyundai’s decision to remain.

-- Given the high value of Super Bowl ad placements, Nissan is absolutely sticking with its plan to run TV ads on Fox for its new 2008 Murano crossover before, during and after the Super Bowl. But Nissan is taking a less-expensive route than buying a network ad, by pulling together simultaneous local spots in more than 20 metro markets around the country, said Ben Poore, the company’s recently appointed North American vice president of marketing communications.

The ads will mark the first time Nissan has participated in Super Bowl advertising since its infamous “pigeons” spot for the Maxima in 1997.

“It’ll maximize our coverage of our target venue where we can get a lot of eyes,” Poore said. “It’s very difficult to find anywhere else today where you can get those kinds of ratings points, except maybe "American Idol" and Hispanic television.”

Watching for a Recession Mentality

A couple of months ago most marketers predicted both the sales slowdown and the TV writers’ strike would be relatively momentary phenomena the industry would plow through in a matter of weeks or months.

In November and December, auto executives generally forecast a sub-16-million U.S. industrywide sales environment to open 2008, similar to how 2007 closed -- and then a return to a healthier sales pace in the second half of 2008.

But as January has unfolded with a shaky stock market, a continuation of the U.S. credit crunch and indicators of rising unemployment as well as inflation, independent analysts have been raising the probability of a true recession. And that, of course, could be a game-changer for the auto business.

Several factors seem to have created Hyundai’s waffling over its pair of in-game 30-second spots during the Super Bowl, including the reported possibility the company wasn’t happy with how its ad agency, Goodby Silverstein & Partners, was handling the creative end.

But growing recession talk was certainly one consideration. “We see a heightened awareness among the public” about the greater possibilities for recession, Hosford said. “That has at least some impact on their outlook.” Hyundai recently began re-evaluating its Super Bowl placement, he said, “to make sure this is still the kind of place to reach people we want to reach, with the kind of messages they’ll listen to in early February.”

GM’s Carney wouldn’t discuss whether the dimming sales outlook had anything to do with GM’s reconsideration of how to leverage its single in-game Super Bowl spot (down from three GM ads during the 2007 Super Bowl). But clearly the company is increasingly concerned about getting the right bang for the estimated $2.7 million Fox is charging for each 30-second spot. And in that regard, Carney said, “we’re considering possibly other brands” for the ad.

One strong possibility, she said, is GM might choose to advertise one or more of its new hybrid vehicles during the Super Bowl, including the Saturn Vue and the Chevrolet Malibu. “But the debate we’re having is we’re not sure we’ll have enough inventory (of the new hybrids) on February 3 to warrant running an ad for them during the Super Bowl,” Carney said. “We don’t want to frustrate consumers.”

Haven on the Field

Including the Super Bowl, professional sports are becoming a more and more important haven for automakers who rely on TV for building brands and product awareness but are seeing the three-month-old writers’ strike take more and more surefire broadcast-advertising platforms off the table, including popular serial dramas such as "24" (which has been given the season off) and "The Office" (which ran out of new programs late last year).

For that reason, Spencer said he’s not overly concerned even if the writers’ strike should eventually shake up the fall TV season. Dodge’s biggest play this year, of course, is the introduction of new versions of its Ram pickup trucks in the fall. “That segment is still 85 percent male, and there are some terrific sports properties we will use, including NFL and college football, and then basketball and hockey in October,” he said. “TV will still offer us a core set of media properties that will allow us to get our message out.”

Sports programming “draws an intense and interested group of people,” said Hyundai’s Hosford. Include NASCAR racing, said Ford’s Cowdell, and sports properties allow automakers to avoid facing “vulnerability in the total TV audience.”

“What are people going to spend their time doing if they’re not watching TV?” said Dodge’s Spencer. “Are we concerned that we won’t be able to reach that audience? No. Maybe they watch a few more hockey games. There are still a terrific number of sports properties out there.”

At the same time, all automakers are more intently considering cable and reality-TV ad slots as well as more sports. More new reality shows and other mid-season replacements, as well as reruns of popular dormant shows, also can help TV networks chug along for a while without turning off the auto industry. So far, anyway, car marketers seem committed to making whatever adjustments are necessary for maintaining television’s share of their overall marketing spending.

Shifting to other media could help, but only by so much. Every automaker already was planning to devote a bigger share of marketing resources in 2008 resources to digital advertising, for example, long before the writers’ strike. “But there’s basically full adoption (of the Internet) in terms of consumption and auto-shopping behavior,” Spencer said. “I don’t know that that is accelerated because of the TV strike.”

Or, Cowdell speculated, “Do we shift more money to radio? That would be quite a big step in expecting it to substitute for TV.”

The Clock Is Ticking

But further gloom for automakers’ TV-advertising spending may be gathering quickly in the coming few weeks.

For one thing, "American Idol" was supposed to be the ultimate ace in the hole for Ford. During the last few weeks of questions about the writers’ strike, Ford marketers always pointed to the show as a reliable winner that has burned brightly through six seasons of insane levels of popularity -- and prescient Ford sponsorship.

But the two-day premiere of Idol’s seventh season garnered 33.4 million viewers; that’s more by about nine million viewers than the combined broadcast competition, but still four million shy of last year’s unveiling and two million below the 2006 kickoff. Also, this year’s opener produced the smallest rating among teens since Idol’s initial season, the summer of 2002.

Cowdell professed little concern. “Everyone always says each year is going to be the last year it’s going to be TV’s biggest show,” said the head of Ford’s media placement and executive of Team Detroit, the Dearborn, Mich.-based joint venture of Ford’s leading marketing-communications agencies. But he believes Ford can still count on “hardcore viewers” who become devoted to the show once it reaches its serial-competition phase.

Generally, auto marketers also are increasingly worried about the potential for more car-wreck scenarios such as the one that ensued when the writers’ strike ruined the Golden Globes telecast. For now, at least, the networks can promise auto advertisers make-good slots on other current programming or for a later season, presumably after the strike is settled. GM’s Carney said the company is “continuing to monitor the situation and looking at where we need to make adjustments” to its TV-advertising plans for future mega-events.

Cowdell said the stakes are rising continuously as other big mega-broadcasts near, including the February 10 Grammy Awards and February 24 Oscars. “That is key timing that we’re getting into from an emotional and public-debate point of view,” he said.

Also in the spring, TV networks need to begin reviewing scripts for returning and new shows so they can go into production for the fall. If the strike continues that long, Cowdell said, the Writers’ Guild of America will enjoy its maximum leverage with the TV industry because the networks ask marketers in the spring to commit to fall advertising in the “upfront” period.

“Without those new scripts,” Cowdell said, “what will TV have to talk about in the upfront?”

Michelle Krebs:  is Editor-in-Chief of AutoObserver.com. Follow @AutoObserver on Twitter.