GM rolls out $2.6 bil media review

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General Motors Corp., the country's biggest advertiser, is conducting the largest account review in ad history, putting its $2.6 billion U.S. media planning account into play.

"This is the largest media review on the planet Earth," said an executive close to GM. "Maybe there's a larger media review in some solar system, but not this one."

Three agencies will participate in the pitch: Interpublic Group of Cos., led by Lou Schultz, CEO of its Initiative Media Worldwide; Bcom3 Group's Starcom MediaVest Group led by Jack Klues, CEO of the media holding company, and Bob Brennan, its chief operating officer; and Carat North America, led by David Verklin, CEO.

TOILING AROUND THE CLOCK

The participants, none of whom would comment, were said to be toiling around the clock for the pitch that will take place in mid-July. A decision is expected six weeks later. The client brief, said executives familiar with the review, is to build a new media department for GM.

Mike Browner, executive director-media at GM, heads the team conducting the review. Mr. Browner did not return calls for comment.

Without a consultant, GM sent the contenders a six-page request for proposals written by Mr. Browner asking for agency recommendations on research, strategy and organization. It did not request a specific media plan, but solicited ideas for an overall approach. The RFP also asked for a compensation estimate and identified a selection committee. There was no mention of media buying or media cost.

"They want what doesn't exist," said an executive close to the review about the automaker's desire to have a standalone media planning entity. "They are saying, `Tell me what can I have that nobody could have, something only I could afford.' "

INTEGRATION, EFFICIENCY

The review reflects the marketer's "continued efforts to better integrate the brands and for cost efficiencies," a GM spokesman said. "We are looking to integrate our promotional activities as well."

The planning-only review encompasses all divisions of GM -- including Buick and Cadillac, but excluding Saab and Saturn, the spokesman said. Media planning now is handled by 17 agencies -- including GM's diversity and interactive accounts -- for both national and local work, he said.

Media-buying services are expected to remain with Interpublic's GM Mediaworks, Warren, Mich., under Marc Goldstein, the exec VP who heads national broadcast in New York, and Linda Thomas-Brooks, the exec VP-managing director who heads the print side in Warren, the GM spokesman said. McCann-Erickson Worldwide's Local Communications will retain spot buying for GM's regions.

For Carat, the stakes are huge. A GM win would double the size of Carat's U.S. operation. Mr. Verklin will pitch for the media shop, which is considered a long shot. Carat has auto accounts in Europe, but none in the U.S. Its billings in North America are just more than $2 billion; the company bills more than $10 billion worldwide, placing it fifth in Advertising Age's ranking of top worldwide media specialists.

Interpublic's Mr. Schultz will pitch for incumbent creative and planning shops McCann-Erickson Worldwide, Troy, Mich., which handles Buick; Campbell-Ewald, Warren, which has Chevrolet and OnStar; and Lowe Lintas & Partners Worldwide, New York, which handles GMC trucks. Interpublic's current share of the GM pot is approximately $1.3 billion; Initiative claims more than $5 billion in billings in North America.

The fact that Mr. Schultz will lead the pitch, rather than McCann Universal Chairman Ira Carlin or Exec VP-Media Mark Stewart of McCann in New York, is somewhat of a surprise. Some said it's because Messrs. Schultz and Browner are close friends who often go hunting together.

"At [Interpublic], there are two new media brands," quipped an executive. " Universal McCann and Lou Schultz."

Messrs. Brennan and Klues are working on behalf of Bcom3's Leo Burnett USA, Chicago, which handles Oldsmobile, and D'Arcy Masius Benton & Bowles, Troy, Mich., which has Cadillac and Pontiac. Starcom MediaVest's share of GM's account is now $1.3 billion, more than one-sixth of the agency's total North American billings of $6 billion.

JOBS LIKELY LOST

GM's media-planning consolidation will result in hundreds of jobs lost at ad agencies now handling the work. But two managers close to GM said the winner will need to staff up quickly and likely would draw from some of that agency talent.

The review was the brainchild of Phil Guarascio, who retired May 1 as VP-general manager of corporate advertising and marketing at GM, executives said.

"This has been something that Phil has been talking about for a number of years," said an executive who requested anonymity.

But GM's brand management reorganization in 1995 and regional restructuring last year put the matter on the back burner (AA, May 1). Now that regional sales' units are functioning smoothly, the executives said, the review started full-throttle under Mr. Browner's guidance.

Two managers close to the car companies point to DaimlerChrysler's dedicated media planning and buying agency, PentaCom, Troy, Mich., as the most efficient and easiest to work with in Detroit and a model for the review. PentaCom makes media decisions for DaimlerChrysler faster than counterparts do for GM and Ford Motor Co., which uses Ford Motor Media, Detroit, for buying. Like GM, Ford's ad agencies do the planning.

The size of GM's planning review more than doubles that of Procter & Gamble Co.'s $1.2 billion consolidation of media planning and buying at MediaVest in November 1997. DaimlerChrysler consolidated its $1.8 billion global media buying at several agencies in early 1999 and consolidated its $600 million planning and buying at DCMA, London, for all markets except North America and Germany earlier this year.

MEDIA SEPARATION

This review, like the P&G review before it, is sure to trigger speculation concerning the so-called ascendancy of media in the advertising business, or rather the bifurcation of the media business from the ad business.

Once again, one of the largest advertisers in the country has decided it doesn't want to bundle media, leaving open the question whether this may spell the end of media and creative being under one roof.

"GM is so focused on media they are about to build their own media department," said an executive close to GM. "This isn't about price. GM's got Mediaworks to deal with price."

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