Agencies: Japanese Disaster Impacting Auto, Electronics Spending

It may seem as small consequence compared to the human tragedies that have befallen Japan since an earthquake and tsunami wreaked havoc on the devastated island nation, but the natural disasters are also wreaking havoc on the advertising budgets of Japanese brands, especially imported cars, in the U.S.

Asked what categories were most likely to experience cutbacks in ad spending as a result of the tragedy, about two-thirds (65%) of agency executives cited Japanese automotive and electronics brands, according to a survey of 20 major agencies conducted March 16 & 17 by media planning and buying software supplier Strata.

Two-thirds of the agency executive said it was either very or somewhat likely that Japanese auto dealers would reduce their ad spending.

Asked how much they expected to see Japanese auto dealers reduce their ad spending two-thirds of the agencies said it was somewhat or very likely.

On the plus side, U.S. agency executives said they expected to see a corresponding increase in ad spending by domestic auto dealers seeking to take advantage of potential share gains.

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Overall, the shops surveyed by Strata said cutbacks by Japanese brands would have little or no impact on their business. Only 15% cited a "moderate" effect.

""It will be a positive impact because inventory is up and costs are down," an anonymous agency executive told Strata, adding, "But actually it could go either way. In the short run, PACS may buy up ad inventory negatively affecting us by raising the rates we can offer other clients. In the long run, inventory may ease because Japanese brands can't advertise, and so this may help our business by making advertising inventory cheaper."

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