GM Cuts $600 Million Off Ad Spend -- Yes, Really

Automaker Says It's Less Than TNS Reported, but Media Owners Still Got Burned

By Published on . 4

DETROIT (AdAge.com) -- GM slashed ad spending by more than $600 million last year, a drop so stunning it should convince even the staunchest doubters that the age of mass-media marketing is going the way of the horse and buggy.
GM's ad spend numbers would suggest a cut so enormous that the falloff is greater than the total spending of, say, Nike or Volkswagen.
GM's ad spend numbers would suggest a cut so enormous that the falloff is greater than the total spending of, say, Nike or Volkswagen.


Disputes TNS
GM disputes the TNS Media Intelligence figures -- which show a falloff in spending for the first 11 months of the year from $2.65 billion in '05 to $2.03 billion in '06 -- claiming it cut measured spending only 10% (still a considerable reduction of nearly $300 million). But TNS stands by its methodology, which was the same in '06 as it was in '05. The numbers would suggest a cut so enormous that the falloff is greater than the total advertising spending of, say, Nike or Volkswagen.

Whether the cut was as large as the 23.6% indicated by TNS or closer to the 10% estimated by GM, the fact is that the country's second-largest advertiser is demonstrating a shift toward channels such as direct marketing, websites, online video, event marketing, branded entertainment and internet advertising, which are harder to track than the other major media channels. That could have major repercussions, not only for "old" media companies, underscoring their need to accelerate the shift to digital platforms, but also for ad agencies whose direct and digital siblings increasingly outstrip them in revenue and who may be tempted to reunite those growing units with their stagnating ad offerings.

Corporate ad spending
"We weren't down that much," said Mark LaNeve, GM's VP-sales and marketing in North America, pegging the drop at 10% and adding that 2007 spending will be flat. He conceded GM had a "big drop" in corporate ad spending -- not surprising considering the auto giant's successful move last year to abandon multi-vehicle discounts that caused steep sales peaks and valleys and reduced profit margins -- but declined to confirm a figure. According to TNS, $303.3 million of the $627.4 million cut came out of corporate advertising (down from $647.1 million to $346.9 million) and the rest came from nameplate spending.

Betsy Lazar, executive director-advertising and media operations, said through a spokeswoman that the automaker is continuing to shift more dollars online and that she believes TNS underreports digital spending.

Pontiac, in fact, went so far as to take the unusual strategy of launching its G5 sport coupe with an all-online blitz last summer. In what Pontiac Marketing Director Mark-Hans Richer dubbed a "radical experiment," the G5 had ads on hundreds of sites ranging from biggies such as Yahoo Music, Google and MySpace to small music and car-related sites. Although Mr. Richer declined to reveal specific figures, he said outlays were 60% to 70% lower than what Pontiac would have spent if it had relied on traditional media.

Decline not 'recognizable'
According to TNS, Pontiac's measured media spending plunged by $84.4 million to $137 million through November 2006 compared with 2005. "I don't recognize that level of decline," said John Larson, general manager, Pontiac.

GM is also doing more experiential marketing, using buzz-building events to create relationships with consumers, said Jim Sanfilippo, exec VP of auto consultant AMCI. For example, Chevrolet, GM's biggest-volume brand, staged a competition for communications college students last year that called for them to be in contact with a Chevy Aveo small car for five straight days. Each member of the team with the most online votes in the "Livin' Large" promotion won an Aveo.

And Saturn last summer staged a nine-market battle-of-the-bands competition called "Have a Nice Gig" that offered the winner the chance to open its sponsored Bon Jovi tour. Saturn said the program generated nearly 10,000 leads and introduced its expanded lineup to a young demographic.
In this article:

Read These Next

Comments (4)