General Motors and P&G Lead the Pack Into the Future

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LOS ANGELES -- The nation’s top two advertisers are set to devote more of their traditional marketing dollars to branded entertainment after a series of successful placements and sponsorships quashed any lingering doubts as to whether the marketing tool is an effective way to reach consumers.
P&G and GM both plan to shift more money from traditional advertising to branded entertainment as a result of their successful experiments with product placements.
During the TV "upfront" negotiations, heavyweights General Motors Corp. and Procter & Gamble Co. said that they will buy fewer commercials during the coming TV season and commit that money to alternative marketing methods, namely branded entertainment.
Broadening brand entertainment involvement
The companies were the leading advertisers in 2004, with GM spending $3.997 billion and P&G close on its heels with $3.920 billion, according to Advertising Age. With the two top ad spenders now interested in entertainment more than ever, Madison Avenue and Hollywood could soon see a surge in the number of branded entertainment projects receiving the greenlight. Each company has recently generated considerable attention and a possible uptick in sales for its wares through prime placements within TV shows like The Apprentice, Survivor, Oprah and Desperate Housewives, as well as films, music, live events and other entertainment opportunities. “There’s no question we’ve stepped up our efforts in the area,” Steve Tihanyi, general director for marketing alliances and regional operations at GM, said, declining to discuss specific budgets. “Our commitment to entertainment-based spending is up significantly year-to-year. We are doing more things and putting together more resources.” Although GM receives proposals for entertainment opportunities on a daily basis, Mr. Tihanyi said that the automaker handled them “very randomly.” After recently making several internal changes to deal with requests, “we are much more strategic in our approach.”
GM sets up a new team
About a month ago, GM set up a new team, headed by Mr. Tihanyi, and made up of reps from the automaker’s Hollywood agency NMA Entertainment & Marketing in Los Angeles; Publicis Groupe’s General Motors Planworks, Detroit; Interpublic’s General Motors Mediaworks, Detroit; and RWorks, GM’s regional promotions unit. (GM Planworks recently landed the automaker’s $3.4 billion media buying account.) The group is the gatekeeper for the deluge of incoming branded entertainment offers and ideas from Hollywood. Mr. Tihanyi has said that in routine conference calls the team sifts through all the opportunities and sets strategies, but unless any of GM’s brands (including eight vehicle brands, the OnStar satellite communications arm and finance unit GMAC) embrace the proposed offers, the team moves on. Not all GM brands will go after the same branded entertainment projects. “One brand may be focused in music, some may get action-adventure films and another romantic comedies,” Mr. Tihanyi said. “Since Saab is positioned as a brand for individualists, independent films would be a good partner.” For others it might be music: Chevrolet, which accounts for more than half of GM’s annual vehicle sales, has ties with country music and has partnered with Rolling Stone magazine for the past two years for a subscriber-only calendar featuring rock and roll and hip-hop musicians. Pontiac is also going more edgy with music tie-ins, having recently sponsored the MTV Awards, a concert series with Jimmy Kimmel Live, and a Summer Solstice Party. “We have so many brands and there are so many channels we can swim down. Potentially every one of our brands can have a lane to swim down.”
Taking brands 'deeper into the content'
Any new deals will “take our brands deeper into the content” to better promote the marketer’s brands, Mr. Tihanyi said. Over at Cincinnati-based P&G, a spokesman declined to comment specifically on plans for branded entertainment, but said the company's approach is to "reach consumers at times and places where they're most receptive to our messages." In June, the company said it will spend about 5% less on commercials on the broadcast networks and commit 25% less of its ad dollars to cable channels. The company spent roughly $2 billion on TV spots in 2004. .
Product placements in TV shows have proven effective venues for raising brand awareness.
One person who has spoken recently with Rob Steele, group president for North America, to which P&G media executives report, said Mr. Steele indicated P&G will be shifting money going forward out of traditional media and more broadly into other areas, including branded entertainment deals such as P&G's early 2004 multibrand link with CBS’ Survivor, which gave contestants a chance to win P&G products and included extensive tie-ins with the show’s Web site and promotions via P&G's BrandSaver newspaper coupon insert and at retail.
Crest and 'The Apprentice'
What helped Mr. Steele make that decision was Crest’s placement in the second season of NBC’s The Apprentice last year, which a P&G spokesman for the company's oral-care group called "the best money we've ever spent." Matt Barresi, associate marketing director for Crest, said an online contest the brand held in conjunction with The Apprentice generated the heaviest single day of traffic ever for a P&G brand Web site, with more than 3 million hits. P&G also has had an extensive brand integration program for its home-care brands on such shows as TLC's Trading Spaces and Clean Sweep and distributed its products extensively to studios to encourage serendipitous product placement, such as Jessica Simpson appearing with a Swiffer WetJet on the cover of Rolling Stone in 2003. Additionally, the company's Herbal Essences brand launched a new ad campaign featuring singer Jadyn Maria last fall via a segment on WB Network's What I Like About You. On the film front, it has helped promote The Aviator and The Sisterhood of the Traveling Pants. But GM and P&G aren’t the only companies making the move.
Other marketers opening their wallets
Marketers across all categories are not only upping their interest in branded entertainment, but also opening their wallets, with companies including Home Depot, Ford Motor Co., McDonald’s Corp., Sears, Toyota Motor Sales USA, Anheuser-Busch and PepsiCo lining up behind GM and P&G to lead the charge. Consider the numbers: Product placement spending will reach a record $4.25 billion this year, a 23% surge over the $3.5 billion spent in 2004, according to research firm PQ Media. It could grow 15% annually through 2009, reaching $6.94 billion, the company said. Separately, Nielsen Media Research reports that in prime-time hours, brands were spotted 29% more during the recently ended broadcast network season that ran from September 2004 to June 2005. That represents 75,975 brand occurrences, up from 58,896 during 2003-04. All of this means that branded entertainment is no longer just an experiment for marketers looking to reach consumers beyond the 30-second spot. It’s become a viable alternative to rise above the clutter of traditional advertising. And despite the fears of lost revenues, it’s not all bad news for the TV networks. Advertisers may end up buying fewer TV spots, but most of the money companies will spend on branded entertainment is expected to go right back into TV –- in the form of programming. Now that producers behind those shows collect sometimes steep integration fees, network executives will just have to become a little more creative in how they land those dollars.
Dodge TV product integrations
Some already have: TNT recently landed Dodge as the exclusive automotive sponsor of its new series, Wanted, that premieres at the end of the month. The 2006 Dodge Charger and 2006 Dodge Dakota will be integrated into the show's story lines and driven by lead characters. Dodge will co-promote the crime series on-air, online, through print and outdoor, as well. But the new allotment of branded entertainment dollars won’t all go to TV. Marketers are eyeing all forms of media, from film tie-ins and promotions to music, short films or Web series on the Internet, video games, live events and placements within magazines, for example. “With the proliferation of the cable TV networks and more people just not watching the major three [broadcast] networks, we are trying to find unique ways to break through the clutter,” Mr. Tihanyi said. “Branded entertainment, if you pick the right properties, gives you the opportunity to do that.” ~ ~ ~
Jean Halliday and Jack Neff contributed to this report.
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