When An Increase In Ad Spend Numbers Really Isn’t




You know how we feel about research here at Marketing Pilgrim. If you don’t have your ‘grain of salt’ hat on when you read most surveys and reports you could be led down a path that isn’t what you thought it might be.

The latest version of this is a report from Nielsen (as reported by MediaPost in an article titled “More Confidence, More Advertising) about increased ad spending trends. Here is the chart that was of most interest to me. Needless to say, when I saw it I had a few questions.

First, take a look at the sectors that have increased their ad spend the most. Automotive and things connected to automotive. Where is that ‘confidence’ coming from? Well, read some of the details behind the numbers and you may be able to guess.

Overall, there was a 3% increase in the top 10 product categories, with the largest growth by far seen in automotive and auto insurance. The automotive advertising was driven largely by increased spending by General Motors, which was up 73% over 1H09. Ford and Toyota also grew their ad spending by 15% and 22% respectively. An increase of 82% for UAW Health Care Trust contributed to the first half growth in the auto insurance category. All other categories, except department stores (+5%) and restaurants (+2%) showed declines in the first six months of the year.

Ok so here I go with my take on this. General Motors advertising up 73%. All that says is that your tax dollars are hard at work. With the government owning the majority of the company you might expect that there is a critical need to get some revenue since now if GM tanks we are all shareholders to a degree. Is the ad spend increase due to the market and the current success of GM? Hardly. That increase is a bailout increase not a result of confidence. It’s about PR and appearing to be strong. I don’t think it’s because of their stellar performance and confidence in the market.

Look at the other automakers. Ford (no stimulus) up 15% which is likely because they are just keeping pace. Toyota? A Toyota ad spend increase has little or nothing to do with consumer confidence. In fact, it’s quite the opposite because it has everything to do with corporate incompetence! They have been such a reputation and PR train wreck this entire year they have to advertise just to reassure people that they are not really as stupid as they appear! It’s like reporting that gas companies increased ad dollars is due to success and BP led the charge with huge increase in ad spend. Would that spend be due to consumer confidence or saving their behinds?

Look, I am not trying to pee on everyones’ Corn Flakes by saying that there is no real ad spend increase. I am just pointing out the truth of these matters rather than trying to BS my way into believing something that appears to be pretty weak at best.

We all want things to turn around. But to put money into an advertising environment that is unhealthy just because we are told it’s getting better when it’s really not, is not good for anyone. If companies throw more money down the drain advertising to a public that can’t buy anything due to the economy that will only serve to slow a recovery.

Personally, I just like the truth and it often lies well beneath the numbers that get paraded around on the surface. No one likes to be misled and trying to manufacture a reality that is not based on facts and reality is bad practice. Oh and by the way, sometimes the truth is harsh but until we learn to deal in it vs. a business fantasyland we will continue to take beatings like we are taking now.

Sermon over. Resume your day :-).

  • http://www.videomarketingcentre.com Mathew White

    As marketers, aren’t we most needed when the times are bad? Isn’t it forward thinking to build brand awareness so that when the economy turns around as it always does, your company is in the mind of people?

    Is it good for the economy for marketing to lie low at this time? Or should the industry participate in getting people moving and thinking about a recovery rather than being fearful?

    Should marketers who were there in the good times and earning so much when clients had untarnished reputation, abandon their clients instead of helping them repair their relationship with the consumers?

  • Lori

    This is a great post. Completely accentuate and I love the context for the numbers! But most of all I just liked the “pee on your corn flakes”

    Sarcasm with good info too. Bring it!