According to TV station execs, the auto dealerships being closed by Chrysler and GM were in most cases too small to do much TV advertising. What’s more, they say, the consolidation of dealerships should eventually lead to more spending on TV — at the local and dealer group levels.
Last January, the Chrysler dealers in San Antonio, Texas, consolidated, merging six dealerships into three — and then promptly upped their TV ad spending.
“We’ve all been hammering the airwaves pretty heavy,” says April Ancira of Ancira Chrysler Jeep Dodge in San Antonio.
Despite the economy, she says, the dealers expect to keep up the pace. “What we ended up cutting was mailers and less newspaper and even less radio but never TV,” she says. “We feel our ad dollars are best spent on TV news.”
That’s just the kind of talk TV stations like to hear and they are hoping to hear more of it as bankrupt automakers General Motors and Chrysler mandate the closing of hundreds of weaker dealerships to bolster the sales of the survivors.
Chrysler has notified nearly 800 dealers that they have reached the end of the road and GM is targeting more than 1,300.
TV broadcasters believe the surviving dealers in the forced consolidation will be better able to advertise on television, one of the pricier marketing options.
“The more cars a dealer sells, the more money it has to spend on advertising,” says Kathleen Keefe, vice president, sales, for Hearst-Argyle Television. “In the long run, I only see positives [from the dealer closings]. There are no negatives.”
For the most part, the dealers that are getting axed are too small to afford television, Keefe says.
“Our expectation is that the volume that these smaller dealers were doing will spread back out to the remaining dealerships in the marketplace, which will actually make the existing dealerships stronger,” she says.
Gray Television COO Robert Prather concurs. “There will be stronger dealers and bigger dealers that will be more likely to advertise on TV,” he says.
“You’ll see a spurt in spending” from the Chrysler and GM dealers who need to get rid of their inventory, says Prather.
Jeff Rosser, senior vice president, Raycom Media, also sees no long-term fallout.
“It’s sad to see auto dealerships closing down,” he says. “But we’re pretty certain the remaining dealers, as the economy improves, are going to be investing in advertising.”
At Cox Television the loss of Chrysler and GM dealers is being viewed as an opportunity.
“They have marketing problems right now and we think we’ll be able to solve them,” says Jane Williams, vice president of sales for Cox Television.
She says only one of Cox Television’s 15 markets lost an advertiser with the closing of Hartzheim Dodge in San Francisco.
“We’re optimistic,” Williams says. “We know television works — television is what built the brand. Americans are going to buy cars. They love cars. Whoever they buy them from is going to advertise.”
Even broadcasters operating in smaller markets than Cox and Hearst-Argyle are unconcerned by the closings.
“We did lose some local car dealer advertising, but they were not really the big advertisers,” says Steve Pruett, CEO of Communications Corp. of America, a small-market group based in Lafayette, La.
“The dealers who have been strong advertisers and successful users of television generally have fared better in this slowed-down scenario,” says Pruett. However, those remaining dealers are more demanding, he adds.
“They are more selective, a little tougher to deal with. They’re watching their returns very, very carefully and they want results exhibited to them. We’re meeting those terms.”
Sean Banks, sales manager at CBS affiliate WOWK Charleston-Huntington, W.Va. (DMA 65), one of four stations owned by West Virginia Media Holdings in the state, says the local dealers who went out of business weren’t active advertiser in the WVM markets.
Banks says he is more concerned about what the regional dealer advertising associations will do. “The dealer groups aren’t spending the money,” he says.
“They haven’t ordered any cars so there isn’t the allotment per car to spend in advertising to promote the brand,” he says.
It’s a legitimate concern.
The heads of Chrysler dealer groups confirm that their spending has temporarily stopped, but they add that it should resume in a month or two.
“We’ve been forced to cut back our ad budget,” says Rahn Pischke, vice president of the Wisconsin Outstate Chrysler Jeep Advertising Association, which covers La Crosse-Eau Claire, Greenbay and Madison.
“We get revenue every time they ship a car. They’re not shipping cars. So we have no revenue coming in,” adds Pischke.
Pischke, who runs Pischke Motors of La Crosse, Wis., says the association will start advertising soon after Chrysler starts shipping cars. “Our hope is we start seeing shipments in July and we can start planning for advertising dollars again in August.”
Mark Herbert, president of the Louisiana Chrysler-Jeep Advertising Association, which covers all of Louisiana and most of Mississippi, says his group is on the same schedule.
“We are watching our dollars very closely, but I think we’ll be back on air in July and August,” he says.
Herbert, who owns Herbert’s Town & Country Dodge Chrysler Jeep in Shreveport, La., also says the reduction of Chrysler dealers will not have much impact on his dealer group, noting that most of the dealers who received notices were not part of it.
That the dealers who are losing their franchises are also the ones that never advertised on TV is no coincidence, says Gray’s Prather.
The closings are “an advertisement for television,” he says. “It probably proves they if they had been advertising on TV, maybe they wouldn’t be getting closed right now.”