GM's Bankruptcy is Bad News for Media

Detroit's continuing problems, along with government involvement, is going to continue to hurt the media business.

The auto companies are huge advertisers. GM spent $2 billion last year alone, according to TMS Media Intelligence (as cited by the Wall St. Journal).

But it won't reach that level this year.

GM sold Hummer to an obscure China truck manufacturer, and may close or sell other brands, and is shutting down dealerships -- all that will have an impact on national and local media.

Same is true for Chrsyler, which will scale back its ad buy this year.

According to the Wall St. Journal, "GM's Bankruptcy Adds to Pressure on Prices in TV-Ad Bazaar," which put the most interesting aspect of the story -- at least for media junkies -- at the end of the article, the cutbacks in ad buys will result in national networks having to "cut staff and budgets for new and existing TV series. Local stations, which rely heavily on auto ads, have slashed spending on syndicated series, cut staff and, in some cases, filed for bankruptcy.

"Local media, TV stations and newspapers will likely continue to take the brunt of GM's cuts, say people familiar with the matter. But national media will also be hit. Ad executives close to the company say more dollars will be put into digital ads to move unsold inventory, and fewer into big-ticket TV spots for big branding efforts."

This is something we've been telling clients since news of the dealership closings hit.

What this article does not say, but what we've told clients, is that even when the recovery occurs, you can't expect ad spending to return to pre-recession levels. This is the new normal; get used to it. Marketers will spend less on advertising, and try new ways to reach a more fragmented audience.