By on August 27, 2011

GM spent $4.26 billion for advertising last year, globally. 67 percent, or $2.85 billion were spent in  the U.S.  A good chunk of this budget, around $3 billion, are up for review. Meaning: The agencies that handle it must come up with concepts and defend theirs against concepts of other agencies that want to handle the funds. Please note that this has nothing to do with creative ideas, or not in the true sense of it. We are talking media buying here, buying time on network, space in magazines, clicks on Google. It should be as interesting as deciding whether your accounting work will be done by Peat Marwick or by KPMG. (Loud howls of protest from the media agencies, who are as proud of the cleverness of their media plans as the CPA firms are pleased with their creative accounting.)

The adworld is abuzz about the move, $3 billion possibly changing to new handlers can shake up carefully cultivated relationships. The question everybody is asking: “Why?”

The answer most people are giving: “Money.”

After all, what else can a media buying agency bring to the table than a few more gross rating points for a few dollars less? It could also be that GM simply wants to reduce its ad spend, something that can be obscured while changing media agencies.

Former Chrysler marketing executive Julie Roehm, now a consultant, has different other suspicions. She is quoted by Automotive News [sub] as saying: “I don’t think it’s about cost cutting. It’s smoke and mirrors to hide bigger problems.”

She points towards Omnicom’s Goodby, Silverstein & Partners, an agency that was brought in by  Chief Marketing Officer Joel Ewanick withouth a review. That agency has come under criticism for turning in unremarkable work, their “Chevy runs deep” slogan fails to resonate. Their godfather Ewanick recently tried to deflect criticism by giving Goodby Silverstein “B and C work” grades. That only lasts so long. Nothing however focuses the attention of upper management as much away as the decision of who will spend their $ 3 billion in the future.

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23 Comments on “GM Asks The $3 Billion Question...”

  • avatar

    It’a always been the GM way of business to pit more than one part of it’s company againist another. The desigb studios have been up againist one an another in the past to come up with their best, why wouldn’t advertising?

    It just make good business sense to not have complacency and stagnation in a large corporation like this like they have had in the past.they have the product to flaunt like the Cruze, they need the best advertising to promote it.

  • avatar

    I wonder how GM establishes that $4.26 billion number–about $1800 per vehicle? In addition to the outside agencies, does it include GM’s salaries too? GM office space? That fancy parking-garage cement look in the RenCen isn’t cheap, you know.

    I’ll take the rebate instead, thank you.

  • avatar
    bumpy ii

    Another $3 billion question is why GM spends 2/3 of its advertising budget in a market that only provides about 1/4 of its sales.

  • avatar

    GM’s ads have been floundering for a while. There’s not any sort of consistent direction, message or results. On top of that their use of the “new” medias have been rather poor. Having the adspend get opened up is going to only help.

  • avatar

    perhaps we should consider the words of Jesus… “Forgive them, they know not what they do.”

  • avatar

    i think GM is on the right track. From the article, GM has reduced ad spending by 8 percent in the first quarter while sales rose 12% IRC. In addition incentives are down by 500$ per car on average in NA and the average transaction price is up by another 500$ a car. It will be interesting to know how much Toyota and VW spend on advertizing globally since they are they are only a million or two units off from equaling GM.

    “Already in the first quarter of 2011, the automaker’s ad spending was down 8.3 percent even though it returned to the Super Bowl — where 30 seconds of commercial time cost as much as $3 million — after sitting the game out amid its bankruptcy. GM spent $3.37 billion on global media last year, according to the Advertising Age Data Center. If the first-quarter cuts in marketing hold up all year, that could mean up to $279 million in savings.”

    • 0 avatar

      I understand GM is not out of the woods yet or has learned from its past missteps completely. But, to give credit where due, GM is taking baby steps at righting itself and it is going to take a while. Has 100K less employees than Toyota with higher sales, has no debt thanks to illegal bailouts, and is finally coming out with products that can go toe in toe with the Japanese models. The Cruze is the real deal, the Sonic looks promising and the so does the next gen Malibu.

      a good read

  • avatar

    Or, in other words, who will give the largest kickbacks and/or perks and do the deed in the proper manner so as to enrichen GMC upper-echelon decision makers via the best deal.

    No proof but, c’mon folks, it is how the game is played.

  • avatar

    I’d like to see some context, such as the per-vehicle advertising dollars spent by each mfr in the US market.

    There are two things about car advertising:
    1. Most of it is stupid/vapid/worthless in terms of telling the consumer what they need to know. My car, when driven through autumn leaves, will blow them around just as well as yours.
    2. True Believers and True Haters of a brand don’t respond to car advertising. Ads may or may not be effective in getting people to switch, so the per-vehicle cost goes way up.

    • 0 avatar

      Exactly! I read somewhere that car ads have little or no effect on consumer car buying decisions… so why do they spend so much?

      • 0 avatar

        They guys who were good at math became engineers or accountants and worked hard in college, then worked hard to climb the corporate ladder. These are serious guys, and are now the CEOs CFOs.

        The guys who partied in college went into advertising.

        The party guys have figured out how to get large amounts of money away from the serious guys.

  • avatar

    It should be as interesting as deciding whether your accounting work will be done by Peat Marwick or by KPMG

    I only worked there after the K and G were added, but from what I can recall of the long-timer’s comments, you were better off when it was just Peat Marwick. Much, much better off.

    • 0 avatar
      Robert Schwartz

      Which is to say that Peat Marwick merged with some other firms and the result is now called KPMG. The PM in KPMG is Peat Marwick. So you should say something like “Deloitte Touche Tohmatsu or KPMG”.

      • 0 avatar

        I think Deloitte Touche Tohmatsu (or Toilet Douche Tomato, if you worked there) goes by “Deloitte.” now.

        All I know is that I could probably wallpaper a large house with my obsoleted business cards thanks to mergers and marketing and I’m not that old.

      • 0 avatar
        Rick T.

        I am so old that I remember eight big accounting firms:

        Arthur Andersen
        Arthur Young & Co.
        Coopers & Lybrand
        Ernst & Whinney
        Deloitte Haskins & Sells
        Peat Marwick Mitchell
        Price Waterhouse
        Touche Ross

        Personally worked for Arthur Andersen in the 70’s.

  • avatar

    We are talking media buying here, buying time on network, space in magazines, clicks on Google

    It sounds as if someone at GM is questioning their current mix, and probably wants to see less print and more online.

    That seems like a reasonable thing to do. Magazine ads are expensive, and are attracting fewer eyeballs. I’m not seeing the problem here, except for the company that currently manages the account.

  • avatar

    I am not sure I would quote Julie Roehm – isn`t she the one who screwed up at Chrysler and then last all of 10 months at Wal-Mart and then was fired for inappropriate behavior :

    She describes herself as “a powerful, charismatic marketing visionary” and they self praise is no praise at all!

  • avatar

    I’m surprised they have the same company buying google search as buys primetime TV. That’s seriously old school.

  • avatar

    I just need to know one thing: Do these numbers include the Transformers movies?

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