Starcom defies the odds with $2.9 billion GM win

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When it finally came down, the decision in the largest advertising showdown ever was a stunner.

General Motors Corp. bucked conventional wisdom last week when it consolidated media planning responsibilities for its $2.9 billion account at Bcom3 Group's Starcom MediaVest Group. Industry speculation had heavily favored Interpublic Group of Cos.' Initiative Media Worldwide. The third contender was Carat Media.

The media agencies all made their final pitches to GM on July 20, and the decision to go with Starcom was announced five days later. "They clearly impressed us," said John Middlebrook, VP-general manager of vehicle brand marketing at GM.

The mood at Initiative Media was subdued, said one executive at the media agency. The company, which declined comment on the loss, had been seen as the favorite for several reasons. Interpublic's GM Mediaworks and Local Communications Inc. already handle all media buying for the automaker, and many people felt it made sense to put buying and planning under one roof. In addition, Initiative CEO Lou Schultz has close ties to Michael Browner, executive media director at GM.

CONSIDERING ALTERNATIVES

So favored was Initiative that when the review began in late June, one observer noted, "If the decision comes down within a week, we will all witness the coronation of Lou Schultz. If it takes longer, that would mean they are seriously considering the alternatives."

GM's decision is likely to lead to job cuts. Two hundred planners across 17 creative agencies currently work on the GM business. And while some of them may be hired by GM Planworks, the media group Starcom will create from scratch in Detroit or its suburbs, many won't.

"I don't count on a lot of them coming in to work with us," said Jack Klues, CEO of Starcom MediaVest. "I'm going to first draw from the 1,300 people that are domestic Starcom MediaVest people. Certainly people who GM likes and who have made contributions to their business. Both MediaVest and Starcom have international networks that we are going to draw from. And we will continue to use headhunters to fill jobs."

HIRING THIS WEEK

Mr. Browner said Planworks expects to have a staff of 150 to 200 people, and hiring will begin this week. The planning unit is expected to be fully operational by the first quarter of next year.

MediaVest's Dennis Donlin, exec VP-managing director on GM's Cadillac and Pontiac business, is seen as a front-runner to helm GM Planworks. Mr. Klues said only that he expects to announce a choice for that post soon.

Mr. Donlin was on Starcom's team for the pitch and "made a huge impression on GM," said one executive close to the review.

Mr. Middlebrook said GM will compensate GM Planworks on a fee system based on the number of people and amount of time spent working on the account plus "appropriate profit margins."

GM Mediaworks and Local Communications are already compensated under similar plans, he said.

WORLD-CLASS

A seven-member committee at GM based its choice of Starcom on specific criteria, said Mr. Browner, who would not elaborate.

But he said Starcom's successful media planning for Cadillac, Oldsmobile and Pontiac worked in its favor, as did the agency's "ability to develop world-class tools for planning."

Mr. Klues said the GM pitch represented "what we want [Starcom] to be all about, which is a strategically driven media organization."

Mr. Klues said Starcom presented an integrated marketing proposal that mixes media planning with strategic planning and other services. "One member of our team had spent her career in account planning," said Mr. Klues. "The brief was clearly seeking something of that nature."

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