GM's ax to cut into marketing budget

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General Motors Corp. plans to cut its rising North American marketing costs, say executives close to the carmaker.

GM's North American Operations is said to have a target amount. That figure hasn't been learned, though one executive said it's somewhere between $100 million and $200 million.

Some cutback decisions may already have been made, but the entire plan apparently hasn't been finalized.


In its latest 10K filing to the U.S. Securities & Exchange Commission, GM said that in 1997 it spent $4.1 billion globally on advertising and sales promotion, which includes non-measured media such as promotions, brochures and annual dealer meetings.

GM's U.S. measured media spending rose 37.5% to $2.2 billion in 1997, according to Competitive Media Reporting (see story on Page 57).

In North America, GM's planned cuts of its so-called "Consumer Influence Budget" will affect all six of its vehicle divisions. But the general managers of the divisions will continue to have the authority to dole out dollars to the various brand managers.

New-product launches aren't expected to be affected. Executives speculated that older, slower-selling vehicles may get less money.


Below-the-line marketing cuts are likely but wouldn't be enough to reach the desired figure, so advertising is expected to take a hit.

GM still plans major TV pushes during certain times of the year, such as National Football League games this fall. So the time frame for the coming moves is shorter--probably from April to October.

Phil Guarascio, VP-general manager of marketing and advertising at GM's North American Operations, declined comment.

A GM spokeswoman wouldn't confirm specific plans for cuts but said: "The focus in 1998 is on the mix of marketing dollars and making that more effective."

From 1995 to '97, she said, GM was "definitely gearing up our ad budget to support brand management and the number of our brands. Brand teams are all looking at how they're spending their marketing dollars and what makes the most sense for them. There's more emphasis on cost efficiencies now, which is nothing but good business."

GM's Agency Production Council, unveiled recently by Mr. Guarascio to seek ad-production savings, is "the most formal way we're looking at leveraging our advertising dollars," the spokeswoman said.

Several magazine sales reps said GM hasn't yet signed 1998 contracts, and that could be tied to the planned cuts, executives said.

GM, seeking better print creative and better measurements, is significantly trimming its magazine spending this year in favor of TV.


"GM's [ratio] of print vs. TV [ad spending] is higher than Ford or Chrysler," Mr. Guarascio said last Friday at a meeting of the Magazine Publishers of America and the Magazine Representatives Association. "We are going to seek a mix [of media] based on our brands."

"One of the hot topics on Wall Street today is how much GM's spending will have to go up to stop the slide in its market share," John Casesa, managing director of Schroder & Co., said about the cutback plan. "I would think GM will shift money out of some categories into others."

Copyright March 1998, Crain Communications Inc.

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