GM Headed for Agency Consolidation?

Automaker Could Cut Down to One Holding Company to Help Slash $600 Million

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DETROIT (AdAge.com) -- Now that General Motors Corp. needs to trim marketing costs by some $600 million in the next four years, will it also need to trim agencies?

GM said it will focus on only four of its eight vehicle brands including Chevrolet, which accounts for more than half its annual vehicle sales.
GM said it will focus on only four of its eight vehicle brands including Chevrolet, which accounts for more than half its annual vehicle sales.
With GM to focus on only four of its eight vehicle brands, according to its plan filed with Congress last week to qualify for proposed federal loans, the marketer is likely to require fewer agency resources and could consider consolidating its accounts at a single holding company, some auto experts speculated. The company "would do that it in a minute if it would save them a bunch of money," a former GM executive said.

Interpublic and Publicis
Interpublic Group of Cos. and Publicis Groupe handle the bulk of GM's U.S. accounts. The automaker spent $1.6 billion in measured media in the first nine months of 2008, according to TNS Media Intelligence, and $3.01 billion last year in measured and unmeasured media, according to Advertising Age estimates.

"The consolidation of marketing services has to happen, although it would be a challenge to fold in Chevrolet because it's so big," said Dan Gorrell, president of AutoStratagem, who said he had no inside information from GM about such moves. "It makes sense if you're co-coordinating the four brands."

If it should decide to do so, GM could follow the road taken by Germany's Daimler after it acquired Chrysler Corp. in 1998 and call a shootout between the two holding companies for the works.

In that 2000 jump ball, Omnicom Group topped FCB Worldwide (now owned by Interpublic) for Chrysler's consolidated $2.4 billion global creative and media account. Omnicom shops still handle most of Chrysler's accounts. GM is the only one of the Big Three automakers to work with two holding companies; Ford Motor Co. is married to WPP Group.

Priority: providing efficiencies
Interpublic Chairman-CEO Michael Roth said during his speech Dec. 9 at the 36th annual Global Media and Communications Conference in New York that Interpublic's priority right now is providing GM with efficiencies wherever possible. Speaking to Ad Age following his presentation, Mr. Roth discounted the possibility of GM consolidating its entire portfolio under a single conglomerate, citing the carmaker's preference to work with more than one holding company.

"But you never know," he added. "I'd like to see it, but only if we're the ones getting the business."

Publicis Chairman-CEO Maurice Levy isn't likely to let that happen without a fight. Mr. Levy outfoxed Interpublic when, in 2007, he quietly negotiated with top GM executives, including Chairman-CEO Rick Wagoner, to consolidate its U.S. Buick-Pontiac-GMC creative account at Leo Burnett USA. Interpublic's McCann Erickson, Birmingham, Mich., had been Buick's U.S. agency since the 1950s, and sibling Lowe, New York, had inherited the GMC account from McCann in the late 1990s. Mr. Levy did not return an e-mail today for comment.

A GM spokeswoman had no comment on whether the automaker is considering an agency consolidation, adding that the company never talks about "such private discussions" and called any talk about the matter "speculation."

History-busting times
Historically, GM hasn't put all its advertising eggs in one conglomerate's basket, partly so as not to rely so heavily on one partner. But these are history-busting times, with GM admitting in an ad this week that "despite moving quickly to reduce our planned spending by over $20 billion," the automaker is "precariously and frighteningly close" to the bottom of its cash barrel.

GM told Congress it will focus on four core brands to qualify for federal loans and continue as a viable company: Chevrolet, which accounts for more than half its annual vehicle sales; Cadillac; Buick; and GMC. The automaker announced earlier this year it was studying whether to sell Hummer and had started a strategic review of what to do with Saab, while also talking to Saturn dealers about the future of that brand.

In addition to Buick, Pontiac and GMC, Publicis' agencies handle GM's media buying and playing; its Digitas has a big chunk of GM's digital work. Interpublic's Campbell-Ewald has Chevrolet and McCann Erickson has Saab and corporate advertising, while Deutsch, Los Angeles, has Saturn. Independent Modernista, Boston, handles Cadillac and Hummer.

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