FOCUS ON SPOT SALES

GENERAL MOTORS’ 2Q SPOT SPENDING OVERDUE

Broadcasters and their reps wait anxiously for troubled automaker to issue spot orders that will make or break second quarter for many.

What’s GM going to do?

TV broadcasters and their reps keep asking themselves that question—with growing anxiety. They can’t get a handle on the spot market in the second quarter until the big ad spender makes its play.

“Orders were due end of last week, then delayed this week,” says Television Bureau of Advertising President Chris Rohrs. “Our scouting reports call for a flat 2Q, but we won’t know that till we know that.”

“Oh, there is plenty of consternation among reps,” adds one Detroit-based agency exec with automotive ties. “Most vendors are just on pins and needles. The orders are not in and nobody knows what’s going to be spent. It’s been a goofy two weeks.”

The real fear is that the news from GM will not be good. The company is in deep financial trouble and last fall it moved all its media buying into one shop, Starcom MediaVest’s GM Planworks, and said that it was re-evaluating all of its ad spending.

At the time, Betsey Lazar, GM’s general director of advertising and media operations, said the automaker was seeking “new solutions to address GM media and marketing issues.”

BRAND CONNECTIONS

Those solutions could mean shifting significant amounts of broadcast spot either to the Internet or spot cable.

The last quarter for which TVB has hard data is the third quarter of 2005. It shows that GM spent $113 million in local broadcast spot, three percent less than the $117 million it spent in the quarter in 2004.

“GM is the number one spender in our markets,” says Michael Hugger, president, Katz Television Group’s Eagle TV, which represents major market stations. “They can make or break a station. Even a slight shift can move the revenue dial a point or two, which is why I’d love to see them support spot TV.”

“We’re hearing GM spot budgets could be flat to up a point or two,” says Hugger. “The difference is huge.”

According to agency insiders, with GM facing bankruptcy (it had an $8.5 billion net loss last year), putting less money into traditional media would be a huge mistake.

“Until GM’s new products catch up to competitors, they will have to stay in the local markets advertising products already in the dealerships,” one media buyer told me off the record.  “Local dealer associations will also have to stay active to move inventory on the ground.”

Jean Pool, EVP/COO, Universal McCann, and chief buyer for its LCI group, is more candid.

“GM’s got to deal with a bad economy and better competition,” Pool insists. “The biggest thing GM has to do is deal with its sales mess. They are not selling product. They’re close to being outsold by Toyota in the U.S. and the plain fact is dealer dollars are generated  by cars sold. If GM dealers don’t sell GM cars, their advertising funds shrink.”

Like others, Pool, whose agency once represented a good share of GM spending until the Starcom move, also insists that GM has to spend to gain. “GM can’t afford not to spend money,” she says. “In a bad market, you don’t stop spending or you’ll lose market share.”

The good news is that GM also puts factory dollars into the mix.” That’s definitely a plus,” Hugger says, “especially if dealers are not moving cars.”

TVB’s Rohrs is not waiting around. He’ll be in Detroit next week seeing various automotive people, including GM’s Betsy Lazar.

“I would hope Chris talks about the success broadcast spot has been,” says Hugger. “But I would also push the point that TV stations have a variety of ways to reach viewers: via the Internet, podcasting and high definition.”


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