GM's Woes Trickle Down to Campbell-Ewald

Automaker Plans Huge Shift to Digital; Shop Lays Off 50 as Chevy Cuts Back

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DETROIT (AdAge.com) -- It looks as if the General Motors Corp. fallout is already beginning.

Faced with cutbacks from its biggest client, Chevrolet, and plans by the automaker's parent to shift a substantial chunk of its massive budget to digital and one-on-one plays, Campbell-Ewald has let 50 staffers go.
Anthony Hopp, chairman-CEO of Campbell-Ewald
Anthony Hopp, chairman-CEO of Campbell-Ewald

The layoffs at the Warren, Mich.-based agency crossed most departments, but employees who worked on Chevy were hardest hit, including the brand's catalog group, executives close to the matter said.

Both Anthony Hopp, chairman-CEO of the Interpublic Group of Cos. agency, and a Chevrolet spokesman declined to comment. A spokesman for the shop said Campbell-Ewald doesn't comment about "rumors of layoffs," adding, "We shuffled a lot of people around," mainly to three areas in which clients are most interested: digital, customer-relationship marketing and analytics, he said.

GM's priorities
Those areas, not coincidentally, are in GM's crosshairs as it puts a lot more emphasis on areas such as one-on-one marketing and digital plays such as gaming, viral and mobile marketing.

The number isn't huge -- the layoffs account for less than 5% of the agency's employees, based on the spokesman's count of 1,400 employees in the U.S., with most in Michigan. But psychologically it is significant for Campbell-Ewald, which was formed in 1911 and did its first Chevrolet project in 1919. It won the business officially in 1922 and has held it ever since.

The agency did lose two chunks of Chevy's business, motor sports and Major League Baseball, to sibling Deutsch, Los Angeles, in fall 2005, but the move lasted only a year; the business came back to Campbell-Ewald.

It appears that Campbell-Ewald is girding for the worst, as GM reported an adjusted net loss of $23 million globally for calendar 2007, the largest annual loss in its history. GM's auto operations in North America, its biggest market worldwide, posted an adjusted loss before tax of $1.5 billion vs. $1.6 billion in the same period a year ago. Chevy sales were down 12% in the first quarter.

The automaker has not hesitated in the past to cut agency fees when necessary, said two executives close to the matter. "I see nothing on the horizon to indicate GM is going to be going on a spending spree," one of them said.

Campbell-Ewald ranked No. 17 among the top 25 agency brands, based on revenues from traditional advertising in Advertising Age's latest annual Agency Report last spring. The agency tallied 2006 revenues of $145 million, a 4.5% jump from 2005.

Other sources
The layoffs aren't due to Chevy alone, however. Last year, Campbell-Ewald resigned the Bissell account, tried unsuccessfully to defend its National City account and lost GM's AC Delco account in a consolidation.

In the plus column, after recent reviews, Campbell-Ewald won the U.S. Mint, Olympic Paint and Carhartt accounts, as well as projects for Shire Pharmaceuticals, Cintron, the Federal Deposit Insurance Corp. and Meijer, the spokesman said.

"We are growing our business," said the spokesman, noting that the shop is in three undisclosed pitches.

The government sector has been the fastest-growing part of Campbell-Ewald's business in the past four or five years, he said. (The agency also handles the U.S. Postal Service and the U.S. Navy.)

The shop's business is now split 50-50 between advertising and marketing services, the spokesman said. "Advertising is becoming less and less of what we do in terms of paid media."
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