Who Will Win, Who Will Lose As GM, Chrysler Shift Focus

Yes, There Will Be Cuts, but Some Media, Digital and Ad Agencies Will Benefit

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DETROIT (AdAge.com) -- When GM and Chrysler knocked on doors in Washington again last week to request another $21 billion in federal loans, there wasn't much mention of marketing in the recovery plans they submitted, as it wasn't required.

But here's what you can discern from their documents: They will be marketing fewer brands -- and marketing them longer, beyond the launch phase; there will be more emphasis on fuel efficiency in messaging and product; and there will be more financial resources allocated to digital media.

Auto spending
Sources: TNS, Automotive News Data Center
Chrysler wouldn't discuss its spending plans beyond saying outlays "would be reduced in calendar-year 2009 compared to calendar-year 2008," though one executive close to the company said Chrysler will spend only $125 million on media this year. If so, that's a drastic cut, considering the company spent $1.2 billion in measured media in 2006, $1.1 billion in 2007 and $719.3 million in 2008, according to Ad Age DataCenter analysis of TNS Media Intelligence data, which exclude outdoor and national spot radio.

But GM, which earlier promised to slash marketing spending by $600 million in the next four years, said once it's eliminated four of its eight brands, there will be greater spending behind the quartet left.

It all adds up to this: What first might appear a losing situation for many in Adland could still yield some winners among creative, media and digital agencies, along with certain social-media providers and websites.


Fewer models

Both carmakers dropped more models in their latest trip to Washington. GM said it will have just 36, down from the 40 it had planned earlier, by 2012, mainly under the Chevrolet, Cadillac, Buick and GMC brands.

Chrysler will eliminate another three models: the Dodge Durango SUV, its Chrysler sibling Aspen and the Chrysler PT Cruiser. Chrysler earlier said it was dropping four: its PT Cruiser convertible, Crossfire and Pacifica, along with the Dodge Magnum.

Even so, GM argues that its marketing spending per brand and nameplate will actually improve, since the dollars will be spread among fewer brands and the four remaining marques will face less competition from their soon-to-be-former siblings: Hummer, Saab, Saturn and Pontiac, which will get a severe lineup cut.

A spokeswoman said the four-brand approach "will allow for regular cadence of new, great products and the ability to better focus our reduced marketing resources on the cars, trucks and crossovers that really generate profit."


Fuel-efficient messaging

Creative will also likely feature more fuel-efficiency messaging, said Tony Kuhn, executive partner of consultant Kelmenson, Davis & Associates. He said fuel efficiency is high on the list of priorities for car buyers, who believe the cost of gas will rise again.

GM plans to use its sale events this year to spotlight product attributes including quality and fuel economy, not just discounts, Mr. LaNeve said.

As for Chrysler, "For the 2009 model year, 73% of our product lineup offers improved fuel economy compared to last year's models," the spokeswoman said. "At one time, the message was further down in the creative, but now fuel efficiency ranks among the top messages that consumers want to see."


The drive to digital

Tucked in GM's hefty 117-page plan is a statement that the company "will continue to lead the industry in digital and search-marketing capability." A GM spokeswoman elaborated: "You'll continue to see more digital and social-media activation as integral parts of our advertising and marketing efforts, because it's cost-effective, efficient and allows for deeper customer engagement on their terms."

Both GM and Chrysler are looking to influence prospects close to purchase, roughly three to six months out, said Scott Miller, CEO of product and marketing consultant Synovate Motoresearch. The marketers can get better return on investment online, where they can identify prospective new-vehicle buyers and try to drive them to showrooms earlier, he said, which would benefit third-party auto-shopping sites, social sites and auto blogs.

"We are focused on our interactive lead strategy," the Chrysler spokeswoman said. "We increased our leads from 270,000 in 2007 to 605,000 in 2008, which resulted in thousands of incremental sales. To achieve this increase, we made it easier for customers to submit a request for information on our own Chrysler, Jeep or Dodge site, and we now have the industry's leading third-party lead-acquisition and distribution system."


Launch 'em and keep 'em

Steve Wilhite, president of Jumpstart Automotive Media, Mr. Wilhite said automakers are likely to support their brands beyond the so-called "launch 'em and leave 'em" approach. "They need to intelligently support products over their life cycles, since they won't have the [research-and-development] budgets for the kind of product proliferation that had existed," Mr. Wilhite said. He said intelligent spending vs. the same big-budget, mass-media tactics is the way to go.

None of that bodes very well for national TV spending.

Winners/losers

SHIFT TO FEWER MODELS:
WINNERS: Campbell-Ewald (Chevy); Modernista, (Cadillac); Burnett (Buick and GMC); Starcom MediaVest (media for all four GM brands). BBDO Detroit, (creative for Chrysler); Omnicom's PHD (Chrysler media)

LOSERS: Deutsch, Los Angeles, (Saturn's creative); McCann Erickson, Birmingham, Mich., (Saab); Modernista, Boston, (Hummer); Leo Burnett, Detroit and Chicago (Pontiac); BBDO Detroit, Troy, Mich. ( Chrysler, Jeep and Dodge)

SHIFT TO MORE DIGITAL MEDIA:
WINNERS: Local TV stations; third-party car sites Edmunds.com and KBB.com; Facebook; Google; GM's search partner SMG Search; Martin Retail Group which handles a chunk of GM's media buys for regional dealer ad groups; Velocity, an affiliate of Campbell- Ewald; Digitas, Buick and GMC's digital agency; Organic, Chrysler's online agency.

LOSERS: National broadcast and cable TV networks; print media.

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