GM to shift ad cash to local markets

Where does the money come from?
General Motors is paying for its "Keep America Rolling" incentive program by using funds that the divisions would have used on ads.


The incentive program offers financing as low as 0 percent on all models sold in the United States.


Each GM division will commit much of its ad budget to this corporate program rather than promoting its divisional retail messages, said CJ Fraleigh, GM's executive director of corporate advertising and marketing. GM will not use money marked for product launches for the incentive program, which runs through Oct. 21.


-- Laura Clark Geist

If General Motors' ad spending is any indication, automotive marketers will hold the line on expenditures for the rest of the year.

Although GM plans to spend more of its budget in local markets and less on national media, its overall fourth quarter budget has not changed since the Sept. 11 terrorist attacks. Much of GM's media dollars already are committed with various media outlets for the rest of the year.

"We are flat to down very slightly in our total spending for the first half and will be for the year in total," said CJ Fraleigh, GM's executive director of corporate marketing and advertising.

Fraleigh said the lack of advertising spending will not hurt GM's market share compared with its import competitors, many of whom are increasing ad spending.

"We are not cutting back on the great products like the new sport-utilities or the launch advertising that goes with them," said Fraleigh, the former PepsiCo marketing whiz who joined GM in January.

Spending down 7 percent

Competitive Media Reporting, an independent media consultant, reported that automakers spent $4 billion in the first half of 2001, down 7 percent from the $4.3 billion they spent in the first six months of 2000.

Advertising executives at Ford Motor Co. and the Chrysler group would not discuss their fourth-quarter spending plans last week.

Competitive Media Reporting shows GM's measured media expenditures dropped 28 percent, going from $1.3 billion in the first half of 2000 to $975 million in 2001. The report indicates GM made cuts in every major media category. But Fraleigh disputes Competitve Media Reporting's findings on GM and says the

real numbers will show a substantial shift from national to local media. That trend will continue for the rest of 2001, Fraleigh said.

"We have shifted our spending pretty measurably away from network TV and print and into local media, which is spot television and newspaper advertising," he said, adding that the national to local shift began this year. "There's a real need to support our local dealers and their efforts to advertise what we need to advertise on a local basis."

Domestics down, imports up

According to Competitive Media Reporting, domestic brands, which represented 57 percent of all automotive advertising expenditures the first half of the year, registered an 18 percent decrease in ad spending compared with the year-ago period. Domestic brand spending went from $2.53 billion in the first half of 2000 to $2.08 billion in the 2001 period.

Ford, which has spent heavily to restore luster to its Explorer nameplate, spent $609 million on advertising in the first half of 2001, up 2.2 percent from $596 million in the year-ago period. The company was the only one of the Big 3 to increase spending.

"We haven't capped (advertising) off at a certain number," said Ford global marketing chief Jan Klug. "It's what we need to do to be responsive to the customer."

Import brands, including those owned by the domestic automakers, spent $1.93 billion on advertising during the first half, compared with $1.85 billion, a slight 4.3 percent increase.

Tom Healey, a marketing analyst for J.D. Power and Associates, said much of the rise in import spending can be attributed to key product launches.

"Some of this (import increase) has to be taken with a grain of salt because you had a lot of key product launches such as Isuzu (which showed a 207 percent increase in ad spending for the first half of 2001), which had the Axiom launch," Healey said.

But don't look for importers to retreat. Steve Sturm, vice president of marketing for Toyota Motor Sales U.S.A. Inc., said last week that Toyota will spend more on car advertising in the second half of 2001 as it launches its new Camry and support core car products with its new "Get the feeling" campaign.

Said Sturm: "We'll spend what is necessary to meet our business plan."

You can reach Laura Clark Geist at autonews@crain.com

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