For many years, luxury car brands have been using Lexus’s “Memorable December” slogan to boost sales during the holiday season.
But industry executives and analysts said that automakers and dealers are expected to reduce advertising spending this holiday season, thereby getting rid of the generous lease deals and discounts of the past season. One year of supply chain and production disruptions has left car dealerships at approximately one-third of normal inventory levels, and sellers have little reason to spend money on eye-catching holiday advertisements.
“We will not advertise holidays as we used to,” said Rory Harvey, vice president of Cadillac brand at General Motors. He said that the vehicle supply is only one-third of the normal level, “Why are you doing this?”
According to estimates by advertising measurement and analysis companies EDO and Pathmatics, in 2019, General Motors spent approximately $106 million on Cadillac’s TV advertising and $16.4 million on digital advertising for the brand.
Automakers are not alone. Disruptions in the global supply chain are causing inventory problems in multiple categories, including electronics, toys, and clothing. According to the Adobe Digital Economy Index, online shoppers saw more than 2 billion out-of-stock messages last month, more than three times the number in October 2019.
Pathmatics, which compiles data for Reuters, said that compared with the same period in 2019, automakers—usually a big deal in the fourth quarter—have reduced their spending on digital advertising by approximately $23 million between late July and the end of October. Or 10%. The data for 2019 does not include Instagram ads.
According to EDO estimates, compared with 2019, the industry’s spending on radio and television advertising during this period also decreased by 57 million US dollars, or 5%.
Kevin Krim, CEO of EDO, said: “Winter promotion is an institutionalized activity and it’s hard not to do it.” “But if they do a good job, if they don’t have a car, They may upset people. For automakers, this is a December to forget.”
Ford Motor Company has started a holiday event called “Get Holiday Ready” to promote its F-series pickup trucks and certain SUVs. Lexus is also continuing its annual “Remember December” advertising campaign, which popularized the idea of luxury cars as holiday gifts.
“For us, it is too important for the brand to make a major change. This is part of our DNA,” said Vinay Shahani, vice president of marketing for the brand in the United States. He said that Lexus’ spending will be “similar” to the past few years.
However, Shahani said, “Of course you can expect that these offers may not be as compelling as they were two years ago.”
Executive Vice President Marc Cannon said that AutoNation Inc, the largest auto retail chain in the United States, plans to spend less on advertising than the year before the 2019 pandemic. He said that discounts from automakers “will be easy.”
MoffettNathanson analyst Michael Nathanson (Michael Nathanson) said in a research report last week that media companies that sell advertising time for national TV commercials may be the first to bear the brunt.
He wrote that Nathanson stated that he expects total national television advertising spending in the fourth quarter to fall by 1% year-on-year, because automakers that continue to struggle with chip shortages may reduce their holiday ads.
He added that this also means that compared with 2019, the total amount of advertising has fallen by 7% in the pre-COVID era.
Keep focus
Looking ahead to the holidays, in addition to cars, some shoppers’ favorite brands may experience temporary power outages due to shortages of inventory and labor.
According to EDO’s estimates, compared with the same period in 2019, department stores including Macy’s and Nordstrom’s TV advertising expenditures between July 30 and October 30 decreased by 8%.
Compared with the level before the outbreak, the TV advertising expenditure of casual restaurants has been reduced by 56% because the number of waiters in dining restaurants has decreased.
However, advertising experts who talked with Reuters Social Network said that the supply chain disruption did not cause the data analysis company to reduce the forecast of total advertising spending this year, because the brand wants to keep the customer’s attention when the product is finally available.
Data from Pathmatics tracking Internet display advertising and digital advertising on platforms such as Facebook and Twitter shows that compared with the top 25 advertisers in the four key areas of packaged goods, retail, electronics, and games, spending in the past three months has increased. Something. The same period in 2020. For example, the e-commerce giant Amazon spent 304 million U.S. dollars in the three months of this year, compared with 176 million U.S. dollars in the same period in 2020. Target’s spending is US$89 million, compared to US$46 million in the same period in 2020.
Bret Sanford-Chung, managing director of KPMG Marketing Consulting, said that some advertisers simply transfer information to products they have in stock, while others just want to transfer their brands The name remains in front of consumers.
