Last week, the Senate approved a $2 billion extension of the much-praised cash for clunkers program. It is estimated that the program, which offers consumers a federally backed rebate of up to $4,500 to exchange their old vehicles for more fuel efficient ones, has already generated more than $920 million in rebates and more than 220,000 in vehicle sales. Cash for clunkers has already shown the impact that a government-run incentive program can have on the economy, but there is no reason that Uncle Sam has to keep the program to himself. Private companies and investors can get in on the action too, and have every reason to do so. Here's how.
When the federal government banned tobacco advertising on television in 1970, RJ Reynolds and other big tobacco companies were forced to look for new ways to keep their brands in the public eye. One of the most profitable places they discovered: NASCAR stock cars. Big Tobacco launched the Winston Cup Series and what some have called the beginning of the "modern era" of stock car racing. Other companies followed suit, placing their advertisements all over cars, tracks, drivers, and pit crews. Now NASCAR attracts more Fortune 500 companies as advertisers than any other sport, with some sponsors paying up to $20 million a year to sponsor cars.
Companies today—like Big Tobacco in the 1970s—are struggling to get their message out in new media environments. With the advent of DVR and YouTube, and with studies showing that Internet advertising is not nearly as effective as more traditional media, advertisers have been forced to get creative, from innovative product placement techniques to placing ads in toilet stalls. There is, however, still one environment where Americans are truly captive and just waiting to be sold on a new product: their cars.
It is estimated that Americans now spend nearly 4.2 billion hours per year stuck in traffic. From the introduction of the Model T in 1908 and the corresponding growth in roadside billboards, advertisers have recognized the opportunity afforded by automobile traffic. Ever since Lady Bird Johnson helped pass the Highway Beautification Act in 1965, however, billboard use has been curtailed and four states have even banned them outright. But millions of Americans—many in clunkers—still spend hours every day staring at the bumper of the car in front of them. Why not place an ad there?
Private companies should start their own cash for clunkers incentive programs by subsidizing consumers' purchases of more fuel-efficient cars via corporate sponsorship. There are millions of Americans who drive "close-to-clunker" vehicles with low fuel efficiency that would love the opportunity (and the $4,500) to trade-up and purchase a hybrid or other more fuel-efficient vehicle. By sponsoring individual drivers, companies would not only gain access to prime ad space but they would also get a chance to spend tax-deductible advertising dollars toward a worthy cause, linking themselves to green initiatives and socially responsible behaviors. The government could also sweeten the pot by providing a tax credit (as it does already to consumers of hybrid vehicles) to companies willing to sponsor drivers.
The cash-for-bumpers market would be a free market and consumers would be able to compare competing offers, as well as their own preferences for the products to be displayed on their bumpers. It provides consumers a chance to express themselves (and their brand loyalty) and to save money on gas at the same time. For those who may be worried about individuals whoring themselves out to corporate sponsors, you need only get on Facebook for a few minutes to witness that this sort of behavior is already widespread. (And people don't even get paid to do it!) In an era where people are already Friends or Fans of everything from Jello Pudding Pops to Spam, do you think anyone is going to care if you have a Netflix logo on your car, particularly if the company has helped you finance a brand new sedan that gets 32 mpg? Those stuck behind you in traffic may be cursing you out as a "sellout" under their breath, but what they're more likely to be thinking is: "Where do I sign up for that?"
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The Stimulist is journalist Carlos Watson's original take on the daily news: a tasty mix of rising stars, provocative ideas, and inspiring stories. Enjoy responsively: