Auto strike bad for ad industry
September 24, 2007 – 10:45 am
For those following the news, GM workers went on strike this morning. [via]
I won’t go into a deep discussion about the good / bad of unions, but I personally don’t think the UAW is relevant in today’s business world, but thats for another day. Theres economist and plenty of people on both side of the fence.
General Motors workers in both the St. Louis and Kansas City areas are on the picket line today, now that a deadline has passed for a contract with the United Auto Workers.
The UAW says it has launched a nationwide strike of GM plants, including those in Wentzville, near St. Louis, and in Kansas City, Kan.
The UAW had extended its contract for nine days after it expired on September 14th, but the negotiations became bogged down yesterday, apparently over the union’s quest to protect jobs by getting the company to guarantee that new vehicles would be built in U.S. factories.
The union hasn’t called a nationwide strike during contract negotiations since 1976, when Ford Motor Company plants were shut down.
How does this impact the ad industry? I’ll give you a point of reference: Automotive advertising has grown into a nearly $31 billion category.
Among mass-market automobile brands, media spending in 2003 ranged from $181 per vehicle at Ford to $1,612 per vehicle — nearly nine times as much — at Mitsubishi.
Take a look at the advertising budgets for the major auto brands below. And its in millions, by the way.
Some brands, such as BMW, have been able to consistently underspend the industry without eroding market share.
On the other hand, GM is going to have to slow down their advertising in the short term, since there is no use driving (no pun intended) traffic to the lots if there aren’t any cars to be bought. I’m sure there is enough of a pipeline to keep things moving for a while, but I’m sure that if it goes on for too long, it will start to have an impact at the dealers.
