Toyota Motor Sales U.S.A. Inc. is the latest automaker to warn that it will not pay big increases in TV advertising rates this fall.
Broadcasters are hearing widespread discontent from automakers, their biggest-spending advertising customers.
Jim Lentz, Toyota Division vice president of marketing, says the company's ad budget has kept pace with media inflation.
But, he says, "It's difficult to say where it will be next year because we're hearing big numbers for the upfront."
Lentz says it is doubtful that Toyota could keep pace with the projected double-digit increases he's hearing for commercials in the new TV season.
Toyota's statement comes months before the "upfronts," when marketers make advance commitments to the next TV season. And it comes just a week after Nissan North America Inc. called sharp increases in TV pricing "ridiculous."
While to some degree the automakers' statements are a form of posturing, an early negotiating ploy, the automotive industry has relied heavily on profit-draining buyer incentives and can't afford to fork over higher media rates. Because of the intensity of their rivals, automakers also can't raise prices on their vehicles, said an executive at an agency that handles a major automotive account.
Automakers' opinions have been influenced by broadcast TV audience declines, the rise in cable TV viewership and the difficulty that networks have reaching young males, says the executive.
"Advertisers have to deal with that law of diminishing returns," he says.
The executive predicted that more money will be shifted to other media, including cable TV.
Steve Wilhite, head of marketing at both Nissan and Infiniti, is shopping for a media auditor to monitor its nearly $1 billion budget.
Ian Beavis, head of marketing at Mitsubishi Motors North America Inc., already has said the company will spend less on network TV in 2004 and more on cable and spot TV. TV networks "don't deliver enough at the right price," he says.
Toyota also sounded an alarm a year ago when Lentz's predecessor, Steve Sturm, warned media outlets that "Greed is not good."
Several executives told Advertising Age last month at the Detroit auto show that they plan to increase ad spending in 2004, mostly to handle a slew of model launches. Among them: General Motors, the Chrysler group, Mazda and Suzuki.
How they will spend the money is the question.
"More than ever," says the head of one automaker's media agency, marketers are "looking for alternatives" to broadcast TV.