GM TO CUT ADVERTISING FOR INCENTIVE PROGRAMS

Could Slash Ad Budget by $200 Million

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DETROIT (AdAge.com) -- General Motors Corp. will slash 2006 advertising on multibrand incentive programs such as last summer’s employee discounts. The cuts could reduce its total advertising outlay by $200 million, according to Automotive News.
GM's advertising cutback is the latest in a series of drastic measures taken by the financially troubled automaker. In an earlier announcement, Mark LaNeve, VP-sales and marketing, said the company was slashing the prices of 57 of its 76 model vehicles.

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Curtailing program
GM plans to curtail its national incentive programs and, said Mark LaNeve, VP-vehicle sales, service and marketing in North America for the auto giant, significantly cut ad support for the programs. He declined to reveal specifics of the ad budget trims, but said that “we will continue to be very aggressive and not lose any share of voice in promoting our divisional brands, products and local markets.” GM’s corporate agency, Interpublic Group of Cos.’ McCann Erickson, Birmingham, Mich., handles.

GM spent $447 million on corporate ads in the U.S. during the first 10 months of 2005, according to TNS Media Intelligence. (That figure excludes OnStar and Goodwrench but includes broad, multibrand deals.) The automaker’s overall media spending during the period tallied $2.45 billion, according to TNS.

Had highest incentives
In 2005, GM led Detroit with an average incentive of $3,623 per vehicle, while Chrysler Group spent $3,510 and Ford Motor Co. $3,148, according to Edmunds.com, an independent auto information site. Toyota Motor Sales USA spent an average of $961 per vehicle, Edmunds reported.

In its shift, GM will concentrate on promoting launch vehicles and put more emphasis on regional dealer advertising and activities, according to two executives close to the automaker. A GM spokeswoman declined to comment.

GM is trying to recover from what Chairman-CEO Rick Wagoner recently called “one of the most difficult years in GM’s history, driven by poor performance in North America.” GM’s North American auto operations posted an adjusted loss of $5.6 billion last year, and the company faulted, among other things, higher marketing and advertising costs, lower production volumes and a weaker sales mix. In North America, the world’s biggest auto market, GM’s unit sales slipped by 3.1% in 2005 compared to 2004 despite the generous sales incentives.

Seeking efficiency
“We are trying to get more efficient and be more strategic,” a GM spokeswoman said. “We are trying to align mediums and [vehicle] brands to differentiate them.” GM’s Brent Dewar, VP-marketing and advertising in North America, told Advertising Age late last summer that Buick would get “a lot more print” and “much more TV news programming.” Pontiac will be backed by “much more interactive media,” although the brand will still get branded entertainment deals on TV.

As pressure mounts on GM to improve its performance, the marketer this week named Jerome York to its board, effective Feb. 7. Mr. York, the point man for billionaire Kirk Kerkorian, whose Tracinda Corp. holds nearly 10% of GM’s common stock, will serve on the Board’s Public Policy Committee and Investment Funds Committee. Mr. Kerkorian had been pushing the automaker to add Mr. York, 66, to its board for several months.

Mr. York, a consultant to Tracinda, spent 30 years in the auto industry, including stints at each of Detroit's Big Three. At an auto analysts’ meeting in Detroit last month, Mr. York recommended, among other things, that GM eliminate its Hummer and Saab brands.

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