Automakers drop mad cash on advertising in 2005, but less than in '04
Automakers spent $10.46 billion on advertising in 2005, a short step down from 2004 by .85 percent. Significant changes came in the shift from network television (down 15 percent) and magazine ads (down 4.5 percent) to internet advertising (up 16.9 percent, woo-hoo!) and cable spots (up 14.6 percent). Despite a drop in Ford Motor Company's advertising of 21.2 percent to $984.6 million, the company still led the automakers in ad spending in 2005, with General Motors not far behind with $876.6 million (down from 2004's $908.1 million). Bringing up the rear is Audi, which spent $101.4 million, an increase after 2004's $79.9 million.
[Source: Advertising Age via Automotive News]
Reader Comments (Page 1 of 1)
Scott 11:49AM (7/20/2006)
When will Ford and GM realize you cant sell crappy cars crap by spending insane money on advertising. Maybe they should spend less on ads and more on the actual cars.
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Fabulo 12:40PM (7/20/2006)
Well, I know millions and billions a big numbers, but according one of those documents found here:
http://www.gm.com/company/investor_information/sales_prod/hist_sales.html
GM sold a total of 4,517,730 vehicles in 2005. so 876M/4.5M ~= $194 per car.
Granted, lots of those probably sold as fleet, and those would sell without advertising (I have no idea though what's the proportion of fleet sales) And yeah, I probalby see more ads for the Asscalades and HHR than the Cobalt or the Saturn ION.
Still, $194 per car is not that insane of an amount.
What is insane is that with those sales number they *still* can't turn a profit...
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Aki 1:15PM (7/20/2006)
Hence debunking the notion that Toyota only succeeds because of its wonderful PR, marketing and advertising. And instead of spending that money on ads around cars nobody wants to buy, they should spend money on developing cars that people want. Building Hertz/Avis-fodder and putting a slick ad campaign around it does nothing.
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Lithous 3:42PM (7/20/2006)
"GM sold a total of 4,517,730 vehicles in 2005. so 876M/4.5M ~= $194 per car."
Are those numbers for the U.S. or world? Because the numbers change of course.
"Hence debunking the notion that Toyota only succeeds because of its wonderful PR, marketing and advertising."
Poor logic. Didn't the Redskins and Orioles have some of the highest total salaries yet didn't win it all? More money doesn't mean automatic success. If Toyota contracts to an ad agency and people jumping in the air and music with "Oh What a Feeling" is playing then it could cost $50 to make that commercial but American's are so into instant gratification that it worked.
"And instead of spending that money on ads around cars nobody wants to buy,"
Yeah, selling more cars than anybody equates to cars "nobody" wants. No wonder Americans fail tests all the time. It is too hard for them to make sense of simple ideas. Take away legacy costs and those cars that "nobody" wants being sold at their current price and things are much different, now aren't they? I guess Warren Buffet and others are wrong when they talk about legacy costs of the GM and Ford. Yeah, they have nothing to do with profits.
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DirkDundenburg 3:52PM (7/20/2006)
What are legacy costs? Is that what's killing GM and Ford?
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Lithous 4:28PM (7/20/2006)
" What are legacy costs? Is that what's killing GM and Ford?"
Go look up the health care costs and retirement costs accrued by GM and Ford. Think about the cost of having 600K *direct* employees in the U.S. alone as GM did in 1979 and having UAW driven contracts (i.e. not easy to get out of) to supply these people with pension and healthcare for a number of years. This was at a time when they were profitable and it looked like a good idea even if they didn't have a union bashing them (and striking on them) to get it out of them.
The costs per year are in the multi-billions. Toyota's only union over here in the U.S. (easier to get rid of costs for employees when needed) is the joint venture with GM (NUMMI) and even then IIRC it is like diet soda where the union did it a long time ago thinking if they were nice Toyota would do more business with them.
I say something where it is $1800 per vehicle they pay in these legacy costs. Multiply that by 4.4 million vehicles they sold in the U.S. alone last year and the amount is in the multi-billions of dollars.
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