For Auto Industry, 2009 Holds Even Tighter Ad Budgets

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Promising better return on investment, GM will slash $600 million from U.S. advertising and promotions in the next four years to just $2.6 billion from $3.2 billion in 2008. It has not publicized its plans to accomplish this, though the automaker has cut out a number of high-profile events such as the Super Bowl.

The industry over-invested in TV last year, especially for seasonal sales events, but the economic turmoil is bringing the industry back to reality with more focus on strategic marketing and media planning to improve targeting

VW will dramatically beef up online efforts this year with ads, videos and content, as well as efforts on social-networking sites, to reach in-market shoppers and those considering a purchase in the next six to nine months. The marketer plans to do more brand-building online

Carmakers aren't the only ones trimming ad spending. Their regional-dealer ad groups, which generate a chunk of their budgets from every new- vehicle sale, are also cutting back due in part to smaller volumes, noted veteran auto marketer and agency exec Ian Beavis, now exec VP-exec client director of Aegis Group's Carat. Mr. Beavis said the biggest drop in industry ad spending will be from individual auto dealers because "their margins are getting squeezed" and they are cutting expenses any way they can just to survive.

In 2007, new-car dealers spent more than $7.8 billion in U.S. advertising, according to trade group National Automobile Dealers Association. Regional-dealer ad groups spent $2.5 billion in U.S. measured media in the first quarter of 2008, more than the $1.98 billion spent by the automakers in measured media during the period, according to TNS Media Intelligence.