|C.J. Fraleigh had harsh words for holding companies, agencies and the TV upfront.
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'Soft and flabby'
In his remarks at the conference in the Grand Hyatt New York, Mr. Fraleigh warned that such companies will lose their customers in the same way GM had lost its own market dominance over the years. He said agency conglomerates have become "soft and flabby" and went on to slam holding companies as "more revenue models than consumer solution models. Many people who lead these organizations are under more pressure to 'hit the numbers' than to provide solutions." He urged agencies to stop being so conservative.
With David Bell, the chairman-CEO of one of these giant holding companies, Interpublic Group of Cos., sitting just yards away, Mr. Fraleigh said ad agencies no longer have the ability to consistently sell products by coming up with the big idea. GM has agency relationships with Interpublic and Publicis Groupe.
Turning then to media companies, Mr. Fraleigh, a former PepsiCo marketing executive, said TV networks were no longer providing business solutions. "While we clients love being on the Super Bowl and other top network programming, I have to step back and question the absurdity of paying double-digit increases in the upfront for a dwindling audience." The "upfront" refers to when TV networks sell the majority of their ad inventory for the upcoming fall TV season.
Airing a clip from the movie The Matrix: Reloaded, which featured GM's Cadillac brand, Mr. Fraleigh said he would continue to look for innovation outside of advertising. "We are moving hundreds of millions of dollars in incremental marketing spending to non-traditional programs -- that's hundreds of millions on top of what we've moved before."
Despite the criticism, Mr. Fraleigh did single out independent ad agency Modernista for its work on GM's Hummer brand, which has appeared in hip-hop videos and in ads on the cover of Variety magazine.
He referred to the positive impact the firm's successful 24-hour test-drive programs have made -- an idea that he said originated from a GM finance executive. With the help of product placement agency Norm Marshall & Associates, GM has also placed Pontiac vehicles on the HBO hit drama The Sopranos. He added that the automaker was looking at ways to exploit GM's stake in XM Satellite Radio.
$17 million for incentives
Mr. Fraleigh was introduced to the audience as having a $3 billion marketing budget and $17 billion for incentives. In what appeared to be a call for non-roster shops to approach the auto giant, he said: "I've got a blank check up here -- it could be made out for $10 million or $100 million or more. I'd love to put your name or your company's name right here if you have the right ideas, the ones that provide us with outstanding business solutions and help us sell product."
He added that small companies can win, regardless if they were part of a holding company. When asked by AdAge.com if agencies might find it difficult to come up with brave creative ideas given the tough economic environment and constant client changes, Mr. Fraleigh said he understood that stability was important, but that loyalty wasn't a problem for successful agencies.