GM boosts budget slice for non-traditional marketing

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General Motors Corp. will devote more of its marketing budget this year to relationship marketing, such as sponsorships and the Internet, and less to traditional media.

And the industry's largest marketer also will continue to spend heavily on incentives.

Traditional media, primarily TV and print, now account for about 60% of the company's marketing budget, excluding incentives, said John Middlebrook, GM's general manager-vehicle brand marketing and corporate advertising. That compares with up to 75% five years ago, he said.

But when you add incentive spending, "money spent for traditional marketing certainly is in the minority," Mr. Middlebrook said.

competitive

He would not say how much GM will spend on incentives in 2003, only saying that the company will remain competitive.

GM spent about $3.5 billion on incentives last year, according to CNW Marketing/Research Inc. CNW defines incentives as consumer and dealer cash rebates, lease subventions, floor-planning help, and dealer and salesperson bonuses linked to contests and sales goals.

The effectiveness of traditional mass media is expensive and difficult to measure, so automakers continue to seek cheaper, more targeted ways of reaching customers. For example, thanks to log-on requirements, companies have a much better idea of who visits their Web site vs. who pays attention to a network TV commercial or a magazine ad.

"Traditional marketing has been coming down as we increase Internet," Mr. Middlebrook said. "And as diversity spending goes up, which it's going to quite a bit, that takes you sometimes into different [marketing] channels. We're doing more with [customer relationship marketing] and direct mail. Traditional marketing will continue to go down."

Toyota Division's marketing chief plans a similar shift.

"In the future, you're going to see an absolute explosion in models, even more so than we've seen today," said Jim Lentz, Toyota's VP-marketing. "As a result, that's probably going to change the way we have to advertise cars. We're going to have to spend more money on marketing and less on advertising."

scion targets young

Mr. Lentz estimates that Toyota Division spends about 80% of its U.S. marketing budget on traditional advertising vs. about 25% at Toyota's new Scion Division, which is targeted at younger buyers. Toyota Division spent $453.5 million on measured media in the first nine months of 2002, according to Taylor Nelson Sofres' CMR. Publicis Groupe's Saatchi & Saatchi, Los Angeles, handles Toyota's account, while independent Attik, San Francisco has the Scion assignment.

GM remains the biggest automotive advertiser. The company's spending on traditional media hasn't decreased comparably to the percentage drop in the overall marketing budget. GM's main agencies include Interpublic Group of Cos.' McCann-Erickson, Troy, Mich. (corporate, Buick); Campbell-Ewald, Warren, Mich. (Chevrolet); Lowe, New York (GMC and Saab); and General Motors Mediaworks, Warren, Mich. (media buying); Publicis' D'Arcy Masius Benton & Bowles, Troy, Mich. (Cadillac and Pontiac); General Motors Planworks, Detroit (research and planning) and Leo Burnett, Chicago (Oldsmobile); Omnicon Group's Goodby, Silverstein & Partners, San Francisco (Saturn); and independent Modernista! Boston (Hummer).

GM spent $1.8 billion on traditional media in 2001, according to CMR, and $1.4 billion through the first three quarters of 2002. CJ Fraleigh, GM's executive director of corporate advertising and marketing, said the ad budget will increase in single digits this year.

But GM's magazine spending dipped 11.1% to $224.8 million for the first nine months of 2002, compared with the same period in 2001.

GM also is shifting money, including from broadcast network TV, into network cable TV and from mass magazines to vertical titles. Vertical magazines typically are read by a targeted audience, such as those who read Rodale's Bicycling, compared with the broad reach of Time Inc.'s People.

"Magazines are not in trouble," Mr. Fraleigh said. "There are some magazines you can run the same ad, and it's got a lot more effect than another ad because of how people consume that magazine, and the same is true for a Web site and a TV program."

For example, he said, consumer automotive magazines are effective.

"The real prize is going to be for the people that figure out how to establish and maintain an appropriate relationship with current and potential consumers," Mr. Fraleigh said. "And it's not just going to be one big mass push."

Ms. Cantwell is a reporter for Automotive News.

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