Ford is going on a fitness quest, and it's taking WPP along.
The global auto giant is in the midst of what executives have described as a "fitness" initiative that includes slashing $14 billion in spending on materials and engineering in the next five years. Ford is also revamping its lineup to to include fewers cars but more SUVs, which are more profitable and continue to rise in popularity with consumers. Marketing will also come under the microscope as Ford continues to evaluate its relationship with WPP, whose dedicated Global Team Blue agency handles the majority of the automaker's global advertising.
The changes come amid disappointing profit results. The automaker last week reported that its 2017 pretax profits fell 19 percent to $8.4 billion, as its profit margin dropped to 5 percent from 6.7 percent in 2016, Automotive News reports.
"Ford is a strong company, I'm proud of it. But we simply have not done and enough to truly be fit today," CEO Jim Hackett said on the earnings call, according to a transcript. "We have the opportunity now to make step change improvements across our business in areas like product development, manufacturing and marketing."
A key figure shaping the marketing overhaul is Kumar Galhotra, the president of Ford's Lincoln brand who added the title of Ford Motor global chief marketing officer as of Nov. 1. Galhotra, 53, who grew up in India, has an engineering background and in a previous role oversaw engineering of all cars, trucks, SUVs and crossover vehicles for Ford and Lincoln brands. Ad Age caught up with Kumar at the recent North American International Auto Show in Detroit to sound him out on his marketing views and get an update on the company's talks with WPP. Below, a lightly edited transcript.
You have an engineering background. How does that influence how you view marketing?
I bring a data analytical perspective to marketing. But I fully realize that the discipline is a very interesting mix of art and science and we've got great marketing teams in each region who I will be learning from.
How would you like to see Ford's marketing improve?
I am a firm believer in the fact that the brand really lives in the public psyche and in consumer's mind, especially since it's a 115-year-old brand. A deep understanding of what does it stand for with those consumer's minds is something that we monitor all the time and something for me to learn quickly. The entire landscape of our industry is changing very rapidly. So how do you take what the brand is at present, how do you make it evolve with autonomous vehicles with mobility with electrification.
What does that look like, ultimately?
It's too early to tell. Our initial view is we want to be the world's most trusted mobility company. Trust is a very important currency right now. The Ford brand is highly trusted in all of our markets. As we move from purely selling vehicles to a mobility company, how the brand evolves with that is going to be very very critical.
That is a mindshift, isn't it?
Yeah. One of the big challenges is being able to articulate what that future is going to be. And once you articulate what the future is going to be, what is the role our brand will play?
Are you sticking with the 'Go Further' tagline?
What is going on with your negotiations with WPP?
That's been pretty much a part of our overall 'fitness' initiative with Jim Hackett, our new CEO. It doesn't have to do only with marketing, it has to do with the entire company. We need to be a fitter company as we go into this future. And we are examining all parts of our business to be more efficient, to be more fit. And part of that is our relationship with the agency. Is the model we are working with today, is that the most efficient model? We don't know if it is or it isn't. But it is a substantial enough part of our business that it needed to be part of that fitness exercise. And that's all it is right now. We are evaluating the marketing model, not necessary anything else.
So are you committed to staying with WPP. Or would you be open to working with other holding companies?
We don't know yet. We've got to do the fitness exercise first.
'Fitness' sounds like cost-cutting. True?
No. It means more efficiency and effectiveness, not necessarily cost.
From an agency perspective, what does this mean?
We are at a very early stage of defining the model. So it would be too early to talk about it.
WPP uses a dedicated shop called Global Team Blue. Will this change?
That is a model. And that's what we need to evaluate, the right model going forward. We just began this exercise. So I'm not being coy. We just don't know yet. We will have to redefine the model for ourselves sometime this year.