Back to normal (or not)

Many local television stations are having a record year in terms of revenue and making money. The usual suspects are a very competitive election year and the Olympics, but the return of local media’s biggest advertising category — automotive — has everybody smiling.

Ad spending by automotive companies is up, according to Kantar Media, prompting Jon Swallen, chief research officer at Kantar, to make a rather remarkable statement:

“So it’s like things are kind of back to normal.”

Well, maybe. A report by CNN reveals 3rd quarter auto ad spending to be softening, so the jury’s still out:

Overall U.S. auto sales have been strong this year, rising 14.8% through June, the best first half of a year since 2008, even as the broader U.S. economic growth has remained sluggish.

July sales rose 8.9% from a year ago, according to sales tracker Autodata.

That’s the weakest sales rate of the year and a bit short of the forecasts of a 10.1% gain in sales. Still, it was the best July for the industry since 2007. Last year’s July sales pace was 12.7 million.

Ben BolesI spoke with auto marketer Ben Boles, who is in charge of moving the revenue needle for Alabama’s largest automotive group, Jerry Damson Auto, an AR&D client. Many things have changed since we last spoke, including his pronouncement that Internet advertising “just doesn’t work.”

Why have you gone back to mostly traditional advertising?

We worry about our total outreach. Everything is evaluated based on costs. We want to spend the least amount on advertising possible to remain Alabama’s dominant auto dealer. We built a digital infrastructure with our own servers four years ago, and they are not as expensive to maintain as they were to develop. Now that those costs are behind us, we are moving forward with mass media to work on our keyword branding. Nothing is as powerful as traditional media. There is plenty of flash associated with the other – but at the end of the day, we feel like TV, Radio and Newspaper represent nice efficiencies towards our outreach effort.

What’s the biggest challenge for an auto advertiser today? How about for any advertiser today?

There are too many choices. EVERYBODY … I mean EVERYBODY is selling advertising. And it’s all pretty good! But we are constantly tweaking our best practices. Constantly looking at what we need to sell versus what customers want. Somewhere in the middle is the perfect formula. No one vendor has it. We rely on a basket of about twenty vendors for our outreach, and it’s served us well.

What do you mean “the Internet doesn’t work?”

Generally speaking, businesses are sold “Internet advertising” by companies ranging from the Yellow Pages all the way to vendors who print ads on the backs of store receipts. Niche advertising like this, we have found, generally benefits the media company more than us by a factor of about 25. Internet advertising is very very difficult. The Internet itself does wonders to enable commerce. But that reason alone is not enough to justify a major spend in a local market on some website that we do not own.

Why are people buying cars this year when the economy is so bad?

Cars have expiration dates. For four years, consumers have been opposed to buying cars; instead they have made necessary repairs. We are at a sweet spot in the buy cycle, interest rates are favorable to those with good credit, and the products continue to get better. The typical Honda purchase can reduce folks’ fuel consumption 20%. In an age of $3.50 gas, that’s real savings.

What’s going happen after the election?

I haven’t the faintest idea, and anyone who says they know is smoking crack.

So “back to normal” needs qualification, for the advertising world seems to be changing every day. The economy isn’t getting any better, and, according to Paul Farrell of Marketwatch, “The Real Crash is dead ahead as 2008 is forgotten.”

Déjà vu: here we are four years later. Again mired in another presidential election, right back where we were in the summer of 2008. In denial, trapped in lies and mean-spirited theatrics, ignoring warnings, blinded, obsessed about the smell of election victories no matter the cost, even if it triggers a recession.

Yes, déjà vu all over again. Four short years. We forget. We’re back repeating the same buildup scenario to another meltdown.

I’m not sure I’d go that far, but we need to be careful thinking that anything is “normal” when it comes to such a crucial economic segment as advertising. What does 2013 portend? Sorry, I’m not smoking anybody’s crack.

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