GM, Hyundai respond to Ford cutting EV ad spend

If Ford follows through on the EV ad cuts, and other automakers follow, it could have serious ramifications not only for media properties that rely on auto ads, but also for agencies that create them. Ford’s agencies include Wieden+Kennedy and BBDO with WPP handling media.

Automotive is the third-largest ad-spending sector in the US, behind only personal care and household products and retail, according to the Ad Age Datacenter.

Farley’s Super Bowl comment would appear to be a dig at competitors GM, Kia and BMW, which all ran expensive celebrity-filled spots in this year’s game. GM was a repeat buyer, having also used the 2021 game to push its “Everybody In” EV awareness campaign that seeks to establish the company as a mass maker of electric cars at all price points for various consumer types.

More demand than supply

EV demand of late has not been the problem—it’s more about supply as the automotive industry continues to deal with long-running supply constraints caused by COVID-related plant shutdowns and persistent microchip shortages that have affected vehicles of all types. The situation has caused auto brands to curtail some ad spending, especially sales-driven spots (because there is a less of a need to boost dealership traffic if there are not enough cars to sell).

EVs still only account for about a fraction of the total automotive market, but electric sales continue to gain momentum as nearly every mainstream automaker begins producing more. EV market share reached 4.2% in the first quarter, up from 1.9% in the same quarter last year, according to Edmunds.

Farley at the investor conference suggested that Ford’s EV sales have been so good that advertising is, according to a transcript of his unnecessary remarks. “We haven’t needed [it] for Lightning,” he said referring to the new electric F-150 Lightning, which recently began sales. “Mustang Mach-E we advertised [but] we took the ads out because we’ve been sold out for two years.”

On Thursday, Ford reported that Mach-E in May had its best sales month ever at 5,179 vehicles, up 166% from the same month a year ago, while Ford moved into second place behind Tesla for the month in total US EV sales.

Hyundai is pressing forward with its EV ads despite low vehicle supplies and strong demand. That includes a big-budget campaign starring Jason Bateman touting the Ioniq 5 EV crossover.

“The inventors are challenged but we still want to build up the equity and the nameplates that are electrified,” said Hyundai Chief Marketing Officer Angela Zepeda. “We spent a good amount of money against [the Ioniq] to really get that name out, even though we had practically pre-sold every Ioniq 5 even before we did any Tier 1 advertising,” she said. “We still feel like we want to very much still advertise. Because the inventory shortages won’t last forever.”

Some analysts are skeptical Ford will be able to eliminate EV ad spending in the long term.

“In light of limited production capabilities, it makes financial sense to shift away from advertising in the short term as many EVs are sold out for the next few years,” said Jessica Caldwell, executive director of insights at Edmunds. But “once there are more EVs available in the market, consumers will be seeking brands with the most compiling selling points—and at that point, advertising will play a more critical role in a brand’s identity and success.”

Michelle Krebs, an executive analyst at Kelley Blue Book owner Cox Automotive, noted that new EV models such as the F-150 Lightning, are benefiting now from “so much free publicity.” But “new brands and nameplates must be established and not all can rely on free publicity to do the job. And competition will heat up. New EVs are being introduced constantly. Advertising will be needed to get noticed. Tesla’s path is the dream but that won’t be the path for most brands,” she said, referring to Tesla’s method of avoiding traditional advertising while benefiting from word-of-mouth buzz.

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