Automakers to rev up ad spending in 2011

Automakers stepped on the gas when it came to advertising during the US industry's comeback last year and the spending will only accelerate in 2011 as sales rise and companies tout their newest vehicles.

With US auto sales up more than 11% to about 11.6 million cars and light trucks last year, and optimism running high that sales could grow another 12% in 2011, consumers can expect more car ads, especially on TV and the Internet, trying to lure them to dealer showrooms, top auto and media executives said.

"Over the holidays, every TV commercial break had an ad for a car," said Brad Adgate, senior vice president of research at ad buyer Horizon Media. "They were ubiquitous. In some cases, you had more than one car commercial in a pod. I was staggered by it."

Automotive industry spending on advertising in the United States through the first nine months of 2010 rose almost 24% to USD 9.15 billion driven by increases throughout the sector, including General Motors Co, Chrysler and Toyota Motor Corp, according to Kantar Media.

When the full-year data is released, the growth rate will be higher than the 24% figure, said Matt VanDyke, Ford Motor Co's director of US marketing communications.

"There's still a lot of spending that's driven by the big fall prime-time TV properties," he said. "Sports and a lot of them did take place in the fourth quarter."

While last year's growth compares with an anemic 2009, which VanDyke said was the weakest in at least 15 years, he and others see the rebound continuing in 2011 with ad spending up in the double-digits on a percentage basis.

"I would guess that you're going to see it in line with the sales increase," AutoNation Inc President Michael Maroone told Reuters at the Detroit auto show.

Bottomline, with sales rising, ad budgets are too.

"You'll see everybody in the industry increasing their spend simply because the market is growing," said Bob Carter, the Toyota brand chief for the United States, told Reuters at Detroit auto show.

The industry's renewed confidence was reflected by GM's announcement at the show that it would be a major advertiser during the 2012 Summer Olympics in London. GM also returns to the Super Bowl next month with five ads after a two-year break from the National Football League's heavily watched championship game.

"They know that they have to reach the consumer, they know that they have to do it in big numbers and right now the best way to do it is on... network television," said Jo Ann Ross, president of network sales at CBS.

"They're putting their money where their mouth is," she added.

The ducks are flying

The growth is even more pronounced on the regional level as local broadcast TV advertising through the first nine months of last year surged 74% to almost USD 701 million, according to trade association TVB.

"There's an old adage, 'when the ducks are flying that's when you shoot,'" said Chuck Eddy, owner of a Chrysler-Dodge-Jeep dealer outside Youngstown, Ohio. "The consumers are out there, the public is starting to be receptive to the showroom floors in a pretty significant way."

Eddy's ad spending jumped 30% last year, and while the growth rate will be lower in 2011, the amount spent will top 2009. "I'm doing more advertising than I ever have."

Auto executives agree the growth is largely on TV and digital, including the Internet.

Also boosting the need for advertising is the rising number of new and redesigned vehicles, executives said. The number of new and significantly refreshed models in 2011 requiring ads to alert car buyers to their presence will be 49, up 63% from last year according to IHS Automotive.

"With the investment made in the product, once you have it you've got to get your story out there," Ford's VanDyke said. "There's kind of that minimum threshold where you need to certainly be big enough to be heard."

Another factor in the expected increases this year is the need for GM and Chrysler to show consumers they are new companies after their government-led bankruptcy reorganizations in 2009 and GM's return as a publicly traded company in November, executives said.

In addition, Toyota, coming off the hit to its reputation by its numerous recalls last year, still needs to run brand ads, executives said.