LOS ANGELES (AdAge.com) -- For General Motors Corp., 2007 must seem like a long time ago. Not that the automaker was without its share of financial problems even then, but that summer it was preparing for a major tie-in with Paramount Pictures and DreamWorks Pictures' eventual blockbuster "Transformers."
For GM, it was a significant move to become a major player in entertainment projects. It would no longer simply give away its cars and trucks. They would be central to the plot or serve as characters -- and what better forum for that than a movie whose stars are robots disguised as cars?
But when Paramount's sequel, "Transformers: Revenge of the Fallen," blasts into theaters this July Fourth weekend, GM may not even be alive in its present form to reap all the benefits of what is expected to be another worldwide blockbuster. And wither the movie studio, which often relies on marketing partners to help sell films during the crowded summer action-movie season?
Though only a few of the GM models featured in the first "Transformers" were available for purchase at dealers, the carmaker nonetheless benefited from its heavy exposure in the Michael Bay flick. The film grossed some $900 million worldwide, and insiders familiar with the film's DVD-sales demographics said "Transformers" helped Chevrolet cull a list of some 500,000 consumers interested in its soon-to-relaunch 2010 Chevy Camaro, which will hit dealers this spring, and more than 10,000 consumers reportedly preordered the muscle car last fall.
A GM spokeswoman said the first film gave GM "measurable improved perception of the Chevy brand and generated widespread consumer awareness" but declined to offer specific data.
These days, many are well-aware of not only GM and Chevy but all of Detroit and its deepening financial crisis. Today GM reported a global net loss of $30.9 billion for 2008, including a net loss of $9.6 billion in the fourth quarter. The automaker disclosed that it will slash marketing in North America by $800 million this year alone.
GM's troubles mean Paramount faces its own logistical challenges in marketing the sequel. While production insiders said GM spent "tens of millions" integrating its products into and promoting the first film, they say the sequel will get far less, if any, TV marketing support from the carmaker.
Making up the shortfall
A Paramount spokesman declined to comment on the marketing of the film, saying its plans were still being firmed up. But if GM does scale back, Paramount may be forced to make up the shortfall on its own. Hollywood studios in recent years have enjoyed a $30 million to $50 million boost in "soft" promotional support for their blockbusters from consumer brands that tie in to films. That marketing gravy means a studio can scale back spending where its marketing partners are heavying up.
GM's new austerity comes at precisely the wrong time for the movie, said "Revenge of the Fallen" insiders, who noted that even though the Camaro featured in the "Transformers" sequel will finally be available for purchase at dealers, GM won't provide nearly as much, if any, "Transformers"-themed TV support.
"There's no huge budget there," said one marketing insider familiar with GM's marketing plans for the movie, speaking on the condition of anonymity for fear of angering GM bosses.
The same insider added, "You're not going to see any TV media that I know of. Even though you can make a case for it from a marketing standpoint, it's the kind of thing that might get you roundly criticized in light of today's climate. It's viewed as too risky, sort of like Citibank's deal with the Mets. GM can't afford to do that."
GM executives, who have already been raked over the coals for flying to Washington in corporate jets to seek bailout cash, are said to fear being pilloried by congressmen and watchdog groups for using their bailout funds in the same way executives at Citigroup and Bank of America were browbeaten for considering using money from the Troubled Asset Relief Program for sports-related deals.
A new frugality
Indeed, in the past 12 months, the carmaker has been forced into a new frugality, abandoning many long-standing entertainment-marketing initiatives. It terminated a relationship with Tiger Woods as Buick's spokesman with a year left on the contract and dropped out of the Academy Awards telecast as a major sponsor.
In a statement, a GM spokeswoman declined to speak to the company's plans for promoting the film, saying only that Chevy's integration into "Revenge of the Fallen" is "a great opportunity to connect with new and returning movie fans, on their terms, in a dynamic way. The new characters represent the change going on in Chevy showrooms -- from the exciting Camaro, the 21st-century sports car, to the game-changing Volt."
Opinion appears divided as to whether that will prove true, given how uncertain GM's future is.
While the "Bumblebee" Camaro in "Transformers" is priced attractively at Chevy dealers ($23,000 for the base model vs. the National Automobile Dealers Association's average new-car cost of $28,400), none of the other featured characters' alter egos will be for sale. Those characters include "Sideswipe," a concept Corvette handpicked by Mr. Bay from GM designers' drawing boards; "Jolt," a stylized Chevrolet Volt; and "Mudflap," an all-electric version of the planned Chevrolet Beat called the Chevy Spark, which won't be offered until 2011 at the earliest.
Value in brand integration
Still, Karen Sortito, formerly exec VP-worldwide promotions at MGM Pictures, said the branding exercise has value even without a big promotional push on TV from GM.
Ms. Sortito, who integrated BMW's Z3 roadster into the 1996 MGM James Bond film "GoldenEye," said while that was a success, BMW was reluctant to integrate its 7 series cars into subsequent "Bond" films because it was not a launching a new model. But when pushed, she said, BMW refused to leave the franchise. The reason: "Building your image sometimes makes more sense, even if it wasn't going to move the needle on your car business," Ms. Sortito said.