GM tests fee-based compensation system

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Olds agency Burnett signs up for commission-less pay

As a result of increased activity in non-traditional marketing venues, General Motors Corp. is testing a non-commission-based compensation system with Olds-mobile agency Leo Burnett USA, Chicago.

"Non-measured media are the fastest-growing part of our budget," said Philip Guarascio, VP and general manager-marketing and advertising for GM's North American Operations.

With that in mind, Mr. Guarascio said, GM wants to encourage agencies to develop programs such as the conversion of its World of Motion display at Walt Disney World's Epcot Center into an expanded Test Track attraction that will provide more pizazz while doing a better job of marketing the company's vehicles.

BASING PAY ON `THINKING'

"Compensation will be based on an agency's work and its thinking," Mr. Guarascio said. "An agency can look at a marketing program like Test Track and know that it pays, because we're avoiding a lot of the usual problems of traditional vs. non-traditional media."

The new compensation system has some "risk/reward" elements to it, Mr. Guarascio said. He didn't disclose the GM agency involved, but Burnett's participation was confirmed by others close to the automaker.

Agencies that handle GM's vehicle brands traditionally have been paid media commission, set at around 9% in recent years, plus fees negotiated for each marketing program that falls outside traditional media.

NATURAL FIT FOR OLDS

This is a natural fit for Olds-mobile, a division adopting many of the business practices of GM's Saturn Corp. Saturn and its agency, Hal Riney & Partners, San Francisco, have been the GM pioneers in a compensation system that doesn't include media commission.

Former Saturn marketing executive Steve Shannon, who joined Oldsmobile last fall as general marketing manager, is believed to be playing a key role in transplanting a Saturn-style compensation system into the Olds/Burnett relationship.

SIMILAR TO SATURN

Burnett executives declined to comment on the plan, but it's said to have elements in common with the Saturn/Riney agreement. That pay plan is based on a negotiated set fee with incentives built in for exceeding ad and marketing goals.

Mr. Guarascio said GM will monitor the compensation test through the end of the year to determine whether to extend it to the automaker's other agencies.

For GM, the Test Track pavilion opening in spring 1997 represents a reported $10 million-plus investment to replace the 14-year-old World of Motion.

Part of the attraction will involve visitors joining other "test engineers" in an advanced vehicle ride through a proving ground that includes grueling roadway conditions and severe weather.

AD:VENT HELPS ON EPCOT

GM used Ad:vent, a New York consultancy, to develop ideas for the Epcot exhibit.

Other non-traditional marketing areas for GM include the recent opening of a World Wide Web site that ties in all its divisions (http://www.gm.com), the sponsorship of New York fashion shows and upcoming plans built around the automaker's Olympics sponsorship deal.

Copyright February 1996 Crain Communications Inc.

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