Carmakers, dealers likely to cut TV ads amid supply chain crisis – National

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For years, luxury vehicle brands have been promoting holiday season sales with slogans like Lexus’ December to Remember.

But carmakers and dealerships are well on their way to spending less on advertising this holiday season, industry executives and analysts said, leaving behind the generous lease deals and discounts of past seasons. A year of supply chain and production disruptions has left auto dealerships with about a third of normal inventory levels, giving sellers little reason to fork out holiday ads.

“We’re not going to promote the holiday season like we have been,” said Rory Harvey, vice president of Cadillac brand of General Motors Co. With vehicles supplying one-third of normal levels, he said, “why would you?”

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In 2019, General Motors spent about $ 106 million on TV commercials for Cadillac and $ 16.4 million on digital advertising for the brand, according to estimates by ad analytics and measurement companies EDO and Pathmatics.

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Car manufacturers are not alone. Disruptions in the global supply chain are causing inventory problems in multiple categories including electronics, toys and clothing. Online shoppers saw more than 2 billion out-of-stock messages last month, more than three times the October 2019 amount, according to the Adobe Digital Economy Index.

According to Pathmatics, which compiled the data for Reuters, automakers – usually big spenders during 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. The 2019 data excludes Instagram ads.


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The industry also spent $ 57 million or 5% less on TV commercials that aired during that time period compared to 2019, according to EDO estimates.

“Winter sales events are such an institutionalized event that it’s hard not to organize them,” said Kevin Krim, CEO of EDO. “But if they do their job really well, they could make people miserable if the cars aren’t there. It’s a December for car manufacturers to forget. “

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Ford Motor Co has started a Christmas campaign called “Get Holiday Ready” to promote its F-Series pickup and some SUVs. Lexus is also running its annual “December to Remember” advertising campaign, which popularized the idea of ​​a luxury vehicle as a holiday gift.

“For us to radically change it is too important for the brand. It’s part of our DNA, ”said US Vice President of Brand Marketing Vinay Shahani. Lexus spending will be “in the horizon” of the past few years, he said.










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However, Shahani said, “certainly one would expect the offers to be not as compelling” as they were two years ago.

At the largest auto retail chain in the United States, AutoNation Inc, the plan is to spend less on advertising than the pre-pandemic year of 2019, executive vice president Marc Cannon said. Car manufacturers’ discount offers “will be read everywhere,” he said.

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Media companies that sell ad time for national TV commercials could suffer from the brunt of the disruptions, MoffettNathanson analyst Michael Nathanson said in a research note last week.

Nathanson said he expects the total amount spent on national TV ads to decrease 1% year-on-year in the fourth quarter as automakers, who continue to struggle with chip shortages, may run fewer commercials. he wrote.

That would also represent a total 7% drop in announcements since 2019, in pre-COVID times, he added.

Maintain attention

Ahead of the holidays, and beyond parking, some of the shopper’s favorite brands may have temporary marketing disruptions due to inventory and labor shortages.

Department stores, including Macy’s and Nordstrom’s, spent 8% less on TV commercials from July 30 to October 11. 30 compared to the same period in 2019, according to EDO estimates.

Casual restaurants have reduced commercial TV spending by 56% from pre-COVID levels, as dining restaurants struggled with fewer waiters.

To know more:

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However, supply chain disruptions have not caused data analytics companies to cut their projections for total ad spend this year because brands want to keep customer focus for when products are finally available, the companies said. advertising experts who spoke to Reuters.

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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 industries – packaged goods, retail, electronics and games – have doubled their spent in the past three months compared to the same period in 2020. For example, e-commerce giant Amazon spent $ 304 million in the three months of this year versus $ 176 million in the same period in 2020. Target spent $ 89. million versus $ 46 million in the same period of 2020.

Some advertisers have simply shifted their messages to market the products they have in stock, while others simply want to keep their brands in front of consumers, said Bret Sanford-Chung, managing director of marketing consulting at KPMG.

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