Magazine article Editor & Publisher

Strong, but Slipping: Closest to Buyers, Newspapers Remain a Vital Link in the Auto Industry's Marketing Food Chain

Magazine article Editor & Publisher

Strong, but Slipping: Closest to Buyers, Newspapers Remain a Vital Link in the Auto Industry's Marketing Food Chain

Article excerpt

Auto advertising in newspapers is alive and well, despite some troubling trends. Newspapers remain the first medium that auto dealers turn to to advertise cars and light trucks for sale--and sell they do, about $500 billion worth a year.

Newspapers get more than 52 [cts.] of every ad dollar spent by the nation's 22,000 car dealers, way ahead of the 17 [cts.] spent on TV and 16 [cts.] spent on radio, according to the National Automobile Dealers Association (NADA). Dealers spent $5.1 billion last year on advertising and promotion.

Dealers are the biggest of three categories of auto advertisers--the others being dealer associations and manufacturers--and in the top 50 markets dealers spent nearly twice as much as the other two categories combined last year, according to the Dallas-based ad tracking company Competitive Media Reporting (see data on pages 97-99). CMR says auto advertising--newspapers and TV only--is a $6.1 billion business in the 50 biggest U.S. markets.

But while newspapers dominate dealer advertising, their share has declined steadily, from 58% in 1992 to 52% last year, NADA figures say even as TV's piece has grown to 17%, from 14%, and direct mail has grown to over 8% of dealer ad spending.

In another sign of erosion, the Newspaper Association of America says classified revenues in the auto category declined from $4.6 billion in 1990 to $3.8 billion in 1995, though preliminary 1996 figures indicate a rebound to $4 billion.

At the top of the auto advertising food chain, factory and dealer association advertisers overwhelmingly favor TV--a fact of life that remains relatively steady

Comparing just TV and newspaper advertising in the top 50 markets, CMR data show factory advertising--a $2.1 billion proposition--favoring TV by about a 7-to-1 margin, and dealer association ads--worth $1.4 billion to both media--leaning to TV by a 2-to-1 margin.

The reasoning is that TV is better at building demand--excitement and brand identity--for manufacturers and dealer associations, while newspapers bring buyers into showrooms.

"We are very concerned about the outlook of auto advertising, but it is a very-high priority," said Nick Cannistraro, president of the Newspaper National Network (NNN), a newspaper ad sales group dedicated to select national ad categories, and former Newspaper Association of America (NAA) chief advertising specialist.

He said newspapers attract less than 5% of factory ad spending and less than 10% of dealer association spending across the nation.

While NNN has had "some level of success"--car manufacturers bought about one-third of the $60 million in ads booked last year--the amount is undetectable on the national ad radar screen, and newspapers still have "a long, long way to go" to make a dent in the lead TV and magazines have in factory auto advertising, Cannistraro said.

As an example, he cited a General Motors ad budget of $1.5 billion a few years ago, steering $650 million to magazines and less than $100 million to newspapers.

Besides NNN, newspapers are quietly making other moves designed to attract more auto advertising.

One of them, Cannistraro said, involves a slow trend of newspapers consolidating their rate cards to effectively lower the prices paid by factory advertisers.

By creating auto rate cards, newspapers charge factory advertisers retail rates instead of national rates, which can run 200% higher. But lowering rates for factory ads has had the unexpected effect of underpricing NNN's network rate in some instances, Cannistraro said, making some papers cheaper to buy directly.

Bob Scaife, director of auto advertising for the Newspaper Association of America, says newspapers took much of the auto business for granted over the years, but things have changed. For one thing, the ability of newspapers to communicate and to form partnerships with dealers has improved dramatically, he said. …

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