Type to search

Top Companies

December to Forget: Automakers and retailers cut TV ads amid supply chain problems

Share

DETROIT, Nov. 11 (Reuters) – Luxury vehicle brands have been promoting Christmas sales for years with slogans like “December to Remember” from Lexus.

But automakers and dealerships are well on their way to spending less on advertising this holiday season, industry executives and analysts said, leaving behind the generous leases and discounts of previous seasons. A year of disruptions in the supply chain and production left dealerships about a third of normal inventory, leaving sellers no reason to pay for splashy Christmas ads.

“We’re not going to be promoting the holiday season like we’ve done before,” said Rory Harvey, General Motors Co (GM.N) vice president of Cadillac. With the vehicle supply at a third of the normal level, he said, “Why should you?”

Register now for FREE unlimited access to Reuters.com

to register

In 2019, General Motors spent an estimated $ 106 million on TV ads for Cadillac and $ 16.4 million on digital ads for the brand, according to estimates from ad measurement and analytics firms EDO and Pathmatics.

Automakers are not alone. Global supply chain disruptions create inventory issues in several categories, including electronics, toys, and apparel. According to the Adobe Digital Economy Index, online shoppers saw more than 2 billion out of print messages in the past month, more than three times as many as in October 2019.

According to Pathmatics, which compiled data for Reuters, automakers – usually spending a lot in the fourth quarter – spent about $ 23 million, or 10% less, on digital advertising between late July and late October compared to the same period in 2019. 2019 data excludes Instagram advertising.

EDO estimates the industry also spent $ 57 million, or 5% less, on television commercials aired during this period, compared to 2019.

“Winter sales events are so institutionalized that it is difficult not to hold them,” said Kevin Krim, CEO of EDO. “But if they do their job really well, they could make people miserable when the cars aren’t there. For automakers, it’s a December to forget. “

Ford Motor Co (FN) has launched a Christmas campaign called “Get Holiday Ready” to promote its F-Series pickup trucks and certain SUVs. Lexus also continues its annual December to Remember advertising campaign promoting the idea of ​​a luxury vehicle as a Christmas present.

“For us to change it dramatically, it’s too important to the brand. It’s part of our DNA,” said Vinay Shahani, US vice president of marketing for the brand. Lexus’ spending will be “on par” in recent years, he said.

However, according to Shahani, “one could certainly expect that the offers are no longer as convincing” as they were two years ago.

Cars are for sale at a Lexus dealership in Greenwich, Connecticut, November 17, 2008. REUTERS / Mike Segar (UNITED STATES) / File Photo / File Photo

The largest US auto retail chain AutoNation Inc (AN.N) plans to spend less on advertising than in the year before the pandemic, said Executive Vice President Marc Cannon. Discount offers from automakers “are going to be low all round,” he said.

Media companies selling advertising time for national television commercials could feel the brunt of the disruption, Michael Nathanson, an analyst at MoffettNathanson, said in a research note last week.

Nathanson said he expected the total amount spent on national TV advertising to decrease 1% year over year in the fourth quarter as automakers, continuing to grapple with chip shortages, could run fewer holiday ads, wrote he.

That would also translate into an overall decrease in ads of 7% compared to 2019 in pre-COVID times, he added.

KEEP ATTENTION

With the holidays in view and beyond the parking lot, some of shoppers’ favorite brands can experience temporary marketing downtime due to inventory and labor shortages.

EDO estimates that department stores including Macy’s and Nordstrom’s spent 8% less on TV advertising from July 30 to October 30 than in the same period in 2019.

Casual dining restaurants have reduced TV ad spend by 56% compared to pre-COVID levels as restaurants struggle with fewer waiters.

The supply chain disruptions, however, haven’t resulted in data analytics firms slashing forecasts for total ad spend this year as brands want to keep customers’ attention until products are finally available, advertising experts who spoke to Reuters said.

Data from Pathmatics, which tracks internet display ads and digital ads on platforms like Facebook and Twitter, shows that the top 25 advertisers in four key sectors – packaged goods, retail, electronics, and games – compared their spend over the past three months doubled year-on-year for the same period in 2020. For example, e-commerce giant Amazon spent $ 304 million in the three months of this year, up from $ 176 million in the same period in 2020. Target gave $ 89 million Dollars versus $ 46 million over the same period in 2020.

Some advertisers have simply switched their messages to marketing products they have in stock while others just want to keep their brand names with consumers, said Bret Sanford-Chung, managing director of Marketing Consulting at KPMG.

Register now for FREE unlimited access to Reuters.com

to register

Reporting by Joe White in Detroit, Sheila Dang in Dallas, and Arriana McLymore in New York; Editing by Vanessa O’Connell and Aurora Ellis

Our Standards: The Thomson Reuters Trust Principles.

Tags:

You Might also Like

Leave a Comment

Your email address will not be published. Required fields are marked *