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Auto Dealer Closings Means Tougher Times For Local Media

Chrysler is closing a quarter of its dealers in a matter of weeks, a strategy that might help save the company but will wipe out thousands of jobs and a lot of local business owners.

General Motors Corp. announced today that they are closing 1,200 dealerships in the next few weeks.

A lot has been made about the impact of the closings of Chrysler and GM dealerships on local economies, but not a lot has been said about the impact on local media.

Local media - including local TV, radio, newspapers and outdoor - will really feel the pinch. The average car dealer spends about $341,000 on advertising. Typically, about 75% of that budget will be allocated among broadcast, print, online and outdoor media.

During good times, automotive advertising will make up about 10% to 15% of local advertising spending. This includes both spending by the individual dealers and by dealer groups. The impact on national advertising will be minimal, but the impact on local markets will be felt for many years.

eBay Comes Full Circle

In 2003, I put together an analysis of the impact of eBay and Craigslist on the newspaper industry. In short, I concluded that the private party business for newspapers was about to go over the cliff. Not quite the answer the requesting audience had expected.

This morning’s news that eBay has launched an online automobile selling site closes the loop. eBay Motors has developed what might be called Craigslist for Cars, a local classified ad section for individual sellers.

The site is intended to connect buyers and sellers within a 100-mile radius of their local markets.

Losing private party auto liner ads will negatively impact the print ad revenues from dealers. The readership of those auto classified pages with their large dealer display ads is bolstered by the liner ads placed by private parties. As the liner business slips away, so does the readership and the response advertisers can expect from their ads.

It is not a surprise that eBay would finally take a shot at the private party liner ads. I’m just wondering what took so long.