GM Tells Regional Dealers They Can Pick Their Own Shops

$500 Million in Billings No Longer Controlled by Detroit

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DETROIT (AdAge.com) -- General Motors Corp. is revamping its regional dealer ad groups and allowing them to pick their own creative or media agencies -- putting some $500 million in billings at risk for the incumbents.
Brent Dewar
Brent Dewar

"It's a back-to-the-future scenario," Brent Dewar, VP-field sales, service and parts for GM in North America, told Advertising Age.

That's because the new system, explained to dealers today, is similar to how GM operated its dealer ad groups in the past, allowing them to choose their own creative and media agencies.

Local marketing groups
GM eliminated the dealer ad groups in 1999 only to re-form them in 2000. While participation was voluntary, the local marketing groups, or LMGs, had to use the national agencies and the automaker controlled the accounts.

Under the new system, the agencies will report to the dealer groups -- not GM -- a move that should give the retailers more flexibility in their individual markets, Mr. Dewar said. GM's goal is more effective advertising at the local level. "We weren't as local as we needed to be," he said.

The dealers will now have two options: Stay with the incumbents or select a new shop. Mr. Dewar said the dealer groups, however, will have to fund any customized regional work from any new agencies themselves. But the national shops will still provide creative in a "tool box" at no extra cost to dealer groups that decide to hire another agency.

Mr. Dewar expects LMGs in major markets to stick with the incumbents, and he predicted the new system could attract new dealer groups, especially in mid-market towns.

Agency contracts being extended
GM is extending its agency contracts that expire at the end of the year through March to give the new local marketing associations, as their now being called, time to do agency reviews if they want, said GM's Mark Degnan, director-local advertising group and CRM marketing. The new system starts April 1.

Mr. Degnan said GM now has 750 dealer ad groups. The groups spent $489 million in measured U.S. media in the first nine months of 2007, according to TNS Media Intelligence.

Among GM's shops are two from Publicis Groupe: the dedicated General Motors Planworks, Detroit, for media buying and planning; and Leo Burnett, Detroit and Chicago, for Buick, Pontiac, GMC. Interpublic Group of Cos. has three working for GM: Campbell-Ewald, Warren, Mich., on Chevrolet; Deutsch, Los Angeles, on Saturn; and Lowe, New York, on Saab, although McCann Erickson, Birmingham, Mich., assumes that brand nationally Jan. 1. Independent Modernista, Boston, handles Cadillac and Hummer.

William Bridges, a Cadillac dealer outside Atlanta, co-chaired a study group of competitive dealer ad group practices with Mr. Dewar earlier this year. He said funding for short-term sales programs (such as year-end sale-a-thons), will now be funded by GM and its vehicle divisions rather than the dealer groups. Mr. Bridges said the biggest shift is that agency accountability moves from Detroit and its regional business offices to local dealer groups.

"This will enhance dealers' satisfaction with the process," Mr. Bridges said.
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