CURRENT TRENDS IN AUTOMOTIVE ADVERTISING

Outline

1. The 2010 ad spend rebound

2. Factory vs. dealers

3. Ad spend per vehicle sold

4. Lease advertising

5. Sales event advertising

6. Media channel allocations

7. Hispanic media

8. TV Targeting and Impression Delivery

9. Competitive conflicts in Spot TV pods

10. Offline-online integrations

Terminology

Tier 1 – Manufacturers, Factory

Tier 2 – Local Dealer Associations

Tier 3 – Local Dealers

2010 (e) - a full year projection based on Jan-Sep growth rates

1.0THE 2010 REBOUND

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct

Mill

ions

2007-2008 2008-2009 2009-2010

Online Car Shoppers At A 33 Month PeakSource: Compete

October’s 2.8 million shoppers was the highest since February 2008• Shopper counts represent the potential for sales

Shopper volume has been up an average of 26% y-o-y over the past six months

Consumers that shopped more than one new vehicle in a month counted only once at the market level

The ability to convert shoppers to buyers is a function of price, consumer confidence, mix, availability, dealer counts, gas prices, incentives, etc.

Market Shopper Counts(Unique number of shoppers by month)

Jul-Aug 09: Cash for Clunkers

Automotive ad spending has rebounded…

To 1999 Levels

$10

$12

$14

$16

$18

$20

$22

'99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10(e)

Bill

ions

AUTOMOTIVE AD SPENDING: ALL TIERS

Source: Kantar Media

Relative Rate Of Ad Spend

Segment 2004 2010 (est)

Tier 1 $ 100 $ 81

Tiers 2 & 3 $ 100 $ 51

Total Auto $ 100 $ 67

Total Ad Market$94

Source: Kantar Media

2.0FACTORY VS. DEALERS

Tier 1 share of industry ad spend has been

growing since the 2008 sales downturn

0%

20%

40%

60%

80%

100%

2002-06 2007 2008 2009 2010 YTD

% Share Of Total Auto Ad Spend

DealersFactory54% 55% 59% 66% 64%

46% 45% 41% 34% 36%

Source: Kantar Media

3.0AD SPEND PER VEHICLE

As a whole, the industry has consistentlyscaled ad spending to match sales levels

$0

$200

$400

$600

$800

$1,000

$1,200

2002-06 2007 2008 2009 Jan-Sep '10

$1,115 $1,051 $1,081 $1,055 $1,073

Industry Ad Spend Per Vehicle Sold

Source: Kantar Media

But Spend Rates Vary Widely By Nameplate

Tier 1 Ad Spend Per Vehicle

2007 Jan-Sep2010

% Change

All OEM $579 $685 +18%

Chevrolet $313 $650 +108%

Hyundai $864 $569 -34%

Toyota $361 $562 +56%

Ford $469 $489 +4%

Honda $433 $385 -11%

Cadillac $1,042 $1,997 +92%

Mercedes $760 $1,243 +64%

Lexus $612 $937 +53%

The GM Ad Spending Surge

• Share of voice now greatly exceeds its share of market

• Unique among the leading sales companies

General Motors

% SOV* % SOM Index

2007 20.5% 23.8% 86

2008 25.1% 22.4% 112

2009 30.2% 19.9% 152

Jan-Sep ‘10 24.4% 19.0% 128

* Based on factory ad spending (Tier 1)

Source: Kantar Media

Tier 1 ad spending up $170 million (+27%) through September

Over $180 million spent on Product Safety/Quality messages• 3 rounds of product recalls (Nov ‘09-Feb ‘10)

• Nearly 30% of the media budget

• Allocations peaked in Q3, indicating a lingering problem

4.0LEASE ADVERTISING

Leasing At End of 2008

• Gas prices approach/surpass $4.00 a gallon

• Consumer preference shift towards fuel efficient cars

• Sharp decline in value of trucks & SUVs coming off lease

• Chrysler, Ford, GM take $3 billion in charges for write-downs

• Chrysler exits leasing business entirely while Ford & GM announce severe curtailments

Leasing 2010

Lease activity is rebounding – and so is lease advertising

26%

38%

15%

27% 31%

22%19%

13%

24% 26%

0%5%

10%15%20%25%30%35%40%

2007 H1 '08 H2 '08 2009 Jan-Sep '10

Premium Brands Non-Premium Brands

LEASING SHARE OF SPOT TV AD SPEND: TIER 1&2

Source: Kantar Media

Asian Nameplates Stayed The Course

LEASING SHARE OF SPOT TV AD SPEND: TIER 1&2

H1 2008 H2 2008 2009 Jan-Sep 2010

Chevy 10% 1% 5% 29%

Chrysler 13% 1% 16% 17%

Ford 27% 9% 9% 12%

Toyota 14% 13% 20% 21%

Nissan 8% 23% 22% 34%

Honda 31% 17% 59% 35%%

Source: Kantar Media

Market Variations in Lease Advertising

Houston 19% Dallas

17%

NY: 46%

Miami: 38%

DC: 17%

Houston 17%

Dallas 14%

Phoenix 18%

LA: 26%

Det: 62% Cleve: 33%

Chi: 21%

5.0SALES EVENTS

We’re Having A Sale!

Sales Event Advertising

Literally, a year-round phenomenon

Shorter time intervals between major sales events, as indicated by advertising flights

• Summer and year-end events running longer

Accounting for 43% of Tier 2 ad spend thru September 2010

• vs. 28% last year

6.0MEDIA CHANNEL ALLOCATION

Tier 2 Share of Spend

2.3%13.3%

13.2%71.2%

Other Radio Newsp Spot TV

Jan-Sep 2010

Source: Kantar Media

1.9%14.4%

26.1%57.6%

Other Radio Newsp Spot TV

2007

Tier 1 Share of Spend

0% 10% 20% 30% 40% 50% 60%

Other

Newsp

Inter…

Mags

Spot …

Natl …

2010 (e) 2007

Source: Kantar Media

Gaining ShareNational TV

Internet Display

Losing ShareSpot TV

Magazines

Internet Share Of Tier 1 Ad Spend

Top 5: YTD 2010

0% 10% 20% 30%

Dodge

Mazda

Audi

Lincoln

Nissan

15.3%

16.8%

17.1%

18.6%

22.6%

0% 5% 10% 15%

2007

2008

2009

Ytd '10

5.4%

5.7%

9.6%

11.2%

Total Tier 1

Source: Kantar Media

Ad Networks

Kantar has been monitoring 35 ad networks since Dec 2009

We break out estimated impression delivery into components

Publisher Direct

Ad Networks

Total Impressions

Duplicate Sites

Exclusive Sites

Ad Networks – Select Auto Manufacturers

% of Impressions From Ad Networks

< 10% 10-20% >20%

Impression

Duplication

< 10% DodgeLexus

CadillacFord

InfinitiToyota

10-20% Hyundai

20-30% ChevyAcura

Mazda

>30% Nissan Mercedes

Source: Kantar Media

7.0HISPANIC MEDIA

Share Of Spend Allocated To Hispanic Media

2007 2008 2009 Jan-Sep 2010

Tier 1 4.9% 4.7% 3.2% 3.6%

Tier 2 3.3% 3.0% 2.5% 2.7%

Source: Kantar Media

Hispanic Media Share

0%

5%

10%

15%

VW Toyota ChevyNissanHonda Ford

10.2%8.4% 7.9% 7.6%

5.2%3.8%

Tier 1: Jan-Sep 2010

Source: Kantar Media

Dealer Association GroupsWith At Least 3% Of Ad Spend In Hispanic Media

5.8% 5.4% 4.7%

Source: Kantar Media

8.0TV TARGETING

Background

Who are auto manufacturers targeting?

Two types of target audiences

• Planning targets: detailed and descriptive

• Media buying targets: broader and more general

TV impression delivery analysis shows the outcome of targeting decisions made during the buying process

• Compare approaches taken by different advertisers

Analysis

Manufacturer advertising (Tier 1)

• Broken out by make/model

January-September 2010

All monitored Broadcast and Cable networks

Commercial audience (C3) impression delivery by sex/age

• Audience composition indices

• Median age

Auto Segments

Crossover Utility Vehicles

Compact Cars/Wagons

Full-Size Pickup Trucks

Luxury Nameplates

Measures

Median Age

M18+ Delivery Index

Commercial Audience BenchmarksBase: All Network/Cable Viewing

% Comp Index

M18+ 43.6% 100

Median Age

50.3 years

100

120

140

90

CUVs

34 38 42 46 50 54 58

Median Age

M18

+ D

eliv

ery

Inde

x

Kia Sorento

Chevy Equinox

Ford Escape

Hyundai Tuscon

100

120

140

90

Compact Cars/Wagons

34 38 42 46 50 54 58

Median Age

M18

+ D

eliv

ery

Inde

x

Kia Soul

Scion

Ford Focus

Honda Civic

100

120

140

90

Full Size Pickup Trucks

34 38 42 46 50 54 58

Median Age

M18

+ D

eliv

ery

Inde

x

Dodge RamChevy

Silverado

Ford F-Series

100

120

140

90

Luxury Nameplates

34 38 42 46 50 54 58

Median Age

M18

+ D

eliv

ery

Inde

x

Lexus

BMWMercedes

And One More…

Mid-Size Family SedansSex/Age Delivery Indices

Vehicle Ad $ (MM) Male Fem 18-34 35-44 45-54 55-64 65+

Chevy Malibu $80 100 100 86 99 101 108 108

Ford Fusion $112 101 99 88 98 106 111 106

Honda Accord $67 110 92 91 101 106 107 101

Hyundai Sonata $81 108 94 90 100 104 109 100

9.0COMPETITIVE CONFLICTS IN SPOT TV PODS

Background

Share of Media Ad Revenues Derived From Automotive Category

All Media Spot TV Newspapers National TV

9.7% 18.6% 13.1% 8.2%

• Advertisers vie for same inventory

• Competitive clutter

• Lack of separation from competing messages

Analysis

Spot TV – Top 10 DMAs

June 2010 vs. June 2007

Local news programming only

All auto advertising• 112,000 ad occurrences within 70,000 commercial pods

Metric: % of auto occurrences which aired in pods with multiple auto advertisers

Spot TV: Top 10 DMAs

JUNE 2010

Auto = 21% of all Spot TV $

Local News = 29% of auto $

61.3% of auto ads aired in pods w/ 2+ auto advertisers

• Exactly 2: 39.2%

• 3 or more: 22.1%

JUNE 2007

Auto = 30% of all Spot TV $

Local News = 28% of auto $

68.6% of auto ads aired in pods w/ 2+ auto advertisers

• Exactly 2: 39.6%• 3 or more: 29.0%

June 2010

Local News: % Of Auto Ads Airing in Pods With:2+ Auto

Advertisers3+ Auto

AdvertisersWashington, DC 74.2% 36.1%

Boston 72.3% 36.6%

New York 63.5% 22.3%

Philadelphia 61.2% 20.5%

Atlanta 60.5% 18.8%

Houston 59.9% 19.8%

Dallas 56.2% 19.9%

Los Angeles 53.9% 14.2%

Chicago 53.2% 12.7%

San Francisco 52.2% 11.3%

22 Point Spread

And The Lucky Number Is….

TIME POD POS

POD SIZE

LEN PRODUCT

6:26:59 pm 1 7 15 New England Toyota Dealer Assn Camry Leasing

6:27:15 pm 2 7 30 New England Chevrolet Dealer Assn Silverado

WMUR – Manchester NH

6pm Local News on 6/24/10

And The Lucky Number Is….

TIME POD POS

POD SIZE

LEN PRODUCT

6:26:59 pm 1 7 15 New England Toyota Dealer Assn Camry Leasing

6:27:15 pm 2 7 30 New England Chevrolet Dealer Assn Silverado

6:27:45 pm 3 7 30 Mercedes Benz Dealer Assn C300

6:28:15 pm 4 7 30 Volvo XC70

WMUR – Manchester NH

6pm Local News on 6/24/10

And The Lucky Number Is….

TIME POD POS

POD SIZE

LEN PRODUCT

6:26:59 pm 1 7 15 New England Toyota Dealer Assn Camry Leasing

6:27:15 pm 2 7 30 New England Chevrolet Dealer Assn Silverado

6:27:45 pm 3 7 30 Mercedes Benz Dealer Assn C300

6:28:15 pm 4 7 30 Volvo XC70

6:28:45 pm 5 7 30 Autofair Hyundai

6:29:15 pm 6 7 30 New England Ford Dealer Assn Focus & Fusion

WMUR – Manchester NH

6pm Local News on 6/24/10

And The Lucky Number Is…. 7!

TIME POD POS

POD SIZE

LEN PRODUCT

6:26:59 pm 1 7 15 New England Toyota Dealer Assn Camry Leasing

6:27:15 pm 2 7 30 New England Chevrolet Dealer Assn Silverado

6:27:45 pm 3 7 30 Mercedes Benz Dealer Assn C300

6:28:15 pm 4 7 30 Volvo XC70

6:28:45 pm 5 7 30 Autofair Hyundai

6:29:15 pm 6 7 30 New England Ford Dealer Assn Focus & Fusion

6:29:45 pm 7 7 30 Toyota Dealer Assn Corolla Leasing

WMUR – Manchester NH

6pm Local News on 6/24/10

10.0OFFLINE – ONLINE INTEGRATIONS

Toyota “Auto-Biography” Campaign

Print AdTV Ad

Web Display Ad

Directing Consumers To The Web

Hyundai “Uncensored” Campaign

TV Ad

Web Ad

Ford – QR Tags

Mobile Web SiteNewspaper Ad

RECAP

Recap

Auto advertising expenditures track with industry sales at an aggregate level

Factory ad budget increases are offsetting dealer declines

Lease messaging has bounced back in 2010 but ad budget allocations still vary widely by geographic market

Sales event messaging continues to expand

Recap

Internet display and national TV are gaining share of budget while Hispanic media budgets are limited

Tier 1 use of ad networks is varied

Competitive conflicts in local TV ad breaks are exacerbated by auto advertiser’s preferences for the same inventory

Tactics for online-offline integrations continue to evolve

64© 2009 Kantar Media

THANK YOU !