SAGE Advice: There 'Auto' Be A Change for Newspaper Ads

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By: Leo J. Shapiro, Erik Shapiro, and Steve Yahn Peak auto, it turns out, precedes peak oil. As a result, newspaper ad sellers will need to know how to plan for and harness a resulting bundle of trends in the automotive field.

Since the U.S. consumer demand for automobile driving is highly elastic with respect to fuel prices, people are driving less. People who are using their cars less will tend to keep them longer. Our July Leo J. Shapiro and Associates national poll of consumer opinion finds that respondents who bought a car in the last year are likely to hold onto it for eight years, compared with seven years in 2006.

Back in the eighties, new cars were held for an average of only four years.

The declining desire to drive and the increasing propensity to hang onto an older car combined with general economic worries promises to result in a perfect storm decline in auto sales.

According to a July 31 article in The New York Times, both G.M. and Ford will report double-digit declines in July auto sales. Even hybrid slinger Toyota just posted declines in U.S. sales as well. With declining auto sales ? and multiple vendors scrambling for their slice of a shrinking market pie ?- newspaper ad sellers could enjoy a short-term increase in demand for new car sales ads.

Buyers of a new car who say that they plan to keep for their car for eight years want more assurances of lasting value than, for example, the new car buyer of the 1980s, who only thought to keep it for four years or so. A 100,000 mile warranty in automotive marketing and advertising will be as standard as seat belts, and competitive auto marketers will need to raise the stakes to maintain or increase market share.

Also in the short term used car advertising revenue for newspapers is likely to decline along with the declining supply of used cars,

But in the long term, cars as we now know them ? and along with them traditional car ad sales revenue ? will disappear . C.F.O. Frederick A. Henderson of General Motors used a prescient metaphor to describe how he kept G.M. from going under, ?Given that we?re breaking even, we?ve been pedaling pretty fast to get here. But we need to pedal even faster.?

Henderson isn?t the only one who is pedaling. Bicycle sales are spiking sharply, as are motor scooter and motorcycle sales. Think of these growing categories of transportation products as new places on sales appointment routes for newspaper ad sellers.

Also as we pass peak auto, walking paths are growing like vines through urban neighborhoods and public transportation usage is rising sharply in percentage terms, to 2.8 percent in 2006 from 2.5 percent in 2005 and from 2 percent through most of the previous decade.

One opportunity for newspaper ad sellers of all kinds of ads is that radio advertising will decline in effectiveness since people will be spending less time in their cars listening to the radio. Of all media, the one best suited to public transportation is a good old-fashioned hard copy newspapers.

Bottom Line

Let?s pause in these protean times to look at a new breed of auto being sold through a new breed of print ad.

The diminutive Daimler Smart Car ?- a popular European two-seater that gets 40 mpg -? will go on sale in the U.S. in 2008. A two-page spread in the June 28 issue of Rolling Stone magazine echoes ad man David Ogilvy?s classic advertising magazine advertising campaign which years ago introduced the VW bug to the U.S.

In the Smart Car ad, except for a photo of the car with ?CO2 CHAMPION? written on the side, and the brand name and tagline ?open your mind? in the upper-right-hand corner, the pages are otherwise blank. Information critical to buyers ?- mileage, cost, when it will be available -- is all available online. The website address is like a doorway on the page into a wealth of information that would never easily fit -- or possibly properly noticed -- on the pages of the print ad.

First imagine what a genius like Oglivy could have done with doorways on the page.

Now imagine what contemporary ad geniuses could do with doorways on the page.

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