General Motors Corp.

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General Motors Co. was created on Sept. 16, 1908, by William C. Durant, a former buggy maker and owner of Buick Motor Co. in Flint, Mich., who realized that an auto manufacturer with only one car line stood little chance of long-term survival. Within 18 months, Mr. Durant had brought together about 25 carmakers and suppliers under the GM umbrella, including Olds Motor Vehicle Co.; Oakland Motor Car Co., which was renamed Pontiac Motor Co. in 1932; Cadillac Motor Car Co.; and Rapid Motor Vehicle Co., a truck manufacturer that helped form the GMC Truck division.

By 1910, Mr. Durant had overextended the company and was forced out. He opened Chevrolet Motor Co. on Nov. 3, 1911. In 1916, with Chevrolet holding 54.5% of GM's outstanding shares, Mr. Durant returned to GM as president, a post he held until 1920. In 1918, the company, which had incorporated in 1916, bought Chevrolet's operating assets.

"The Penalty of Leadership"

Early advertising for GM cars, like that of its competitors, emphasized mechanical information and prices. The earliest Oldsmobile ads had headlines such as "The passing of the horse" and "Boarding a horse costs $180, gasoline only $35." Cadillac in 1908 introduced what would become its longtime tagline, "Standard of the world"; Buick in 1911 launched "When better automobiles are built, Buick will build them."

One ad that appeared at the time came to be considered among the best car ads ever created. It ran once, in The Saturday Evening Post on Jan. 2, 1915, under the headline "The penalty of leadership." Theodore F. MacManus of MacManus, John & Adams wrote the ad as a response to rivals' attacks on the new V-8 engine from Cadillac. The ad's only tie to the automaker was the Cadillac name at the bottom of the page. The ad was ranked No. 49 on Advertising Age's list of the 100 best ad campaigns of the 20th century.

After World War I, GM geared up its mass-production capabilities and introduced a new financing plan designed to boost sales of its vehicles through General Motors Acceptance Corp. In 1919, it bought Frigidaire Corp., a company in which Mr. Durant had invested and which was developing an electric icebox (GM sold Frigidaire in 1979). It also acquired a 60% interest in Fisher Body Co. (completing the buy in 1926), opened General Motors of Canada Ltd. and, in 1920, introduced its new export division.

In 1922, GM hired Barton, Durstine & Osborn to create a public-awareness campaign. Campbell-Ewald Co., Detroit, which started its relationship with GM in 1916, handled other advertising. By the mid-1920s, the automaker's ads had been revamped to emphasize styling and performance. Breakthroughs in the use of color and design in both advertising and automobile manufacturing occurred at an accelerated pace between 1924 and 1928.

In 1923, Alfred P. Sloan was named president, a post he held until 1937, when he took over as chairman until his retirement in 1956. Among his early moves, Mr. Sloan set GM's long-term strategy by clearly defining each car company's role, giving each company distinctive price and style directives that were designed to stop internecine competition—"A car for every purse and purpose," as he said in GM's 1924 annual report.

Throughout the 1920s, GM expanded outside the U.S. and Canada. In 1927, the company entered into an agreement with J. Walter Thompson Co., promising the agency its account anywhere outside the U.S. that JWT established an office after GM established a production operation. By 1930, the agency had offices on six continents.

By the end of 1929, Cadillac had introduced its 16-cylinder model, the Series 452, with prices ranging from $5,350 to $9,700. Chevrolet, by comparison, started at $495 and was consistently the best-selling car in the U.S. It topped Ford Motor Co.'s Ford brand in sales for the first time in 1927, selling 1 million more cars than Ford, and, according to GM, remained the top-selling U.S. auto brand for all but four of the next 55 years.

During the Great Depression, car manufacturing dropped by 75%, but GM, like its rivals, continued to advertise. Oldsmobile hired Detroit's D.P. Brother & Co. in the early 1930s, beginning a relationship that would last until the mid-1960s; the agency was bought by Leo Burnett Co., which continued the relationship through the end of the century. In addition to Brother, GM ad agencies by the mid-1930s included Batten, Barton, Durstine & Osborn (handling institutional advertising); Campbell-Ewald (Chevrolet); Arthur Kudner Inc. (Buick); MacManus, John & Adams (Cadillac and Pontiac); and JWT (international).

In 1940, with the beginning of another world war in Europe and Asia, the German government seized control of GM's Adam Opel AG division, and the following year GM Japan ceased operation. By early 1942, GM had switched its entire production operation to support the war effort. It delivered $12.3 billion in war materials to the U.S. armed forces, including airplanes, airplane engines and parts, trucks, tanks, guns and shells—and a Series 75 Cadillac that served as Gen. Douglas MacArthur's staff car.

"See the USA in Your Chevrolet"

Following the war, U.S. car manufacturing boomed, spurred by postwar prosperity and a pent-up demand for new cars. In 1948, Cadillac became the first car to sport fins on its fenders, modeled after the Lockheed P-38 fighter plane. Others soon followed, adding more power and more chrome with each model year.

Oldsmobile in 1948 introduced the 135-horsepower "Rocket" V-8 engine while designing its cars with a body that was sleeker and lower to the ground. Ads from longtime agency D.P. Brother played up the new "Rocket era," with slogans such as, "Make a date with a 'Rocket 8,'" "There's more than a touch of tomorrow in the Rockets of today" and "Presenting a new way of going places in the Rocket age . . . Oldsmobility!"

Chevrolet also had new postwar offerings, the Fleetline "fastback" and the Styleline "bustleback." In 1953, it became the first U.S. car company to offer a mass-produced car with a fiberglass body—the Corvette. In 1954, the automaker introduced what would become one of the best-known jingles ever written: "See the USA in Your Chevrolet." Chevrolet, working with Campbell-Ewald, sponsored "The Dinah Shore Chevy Show" for 10 years through the early 1960s, with the star singing the carmaker's theme song on the TV program each week.

The company also was getting good press. In 1953, during U.S. Senate hearings on his nomination for Secretary of Defense, GM President Charles E. Wilson was asked about possible conflicts of interest. He replied, "I cannot conceive of one, because for years I thought that what was good for our country was good for General Motors, and vice versa."

By 1957, however, the auto industry was feeling the effects of a downturn in the U.S. economy, and car sales slowed. In December of that year, Buick severed its long relationship with the Kudner agency and hired McCann-Erickson, which ended its 12-year relationship with Chrysler Corp. to take the $24 million account; McCann had handled GM's Opel since the company bought the operation in 1929. Several months later, GMC Truck & Coach Division and Frigidaire also dropped Kudner, which retained some GM business, including its $10 million institutional account; its ties to GM continued until 1965. While GM remained the top U.S. advertiser, its ad spending dropped through the end of the decade. In 1959, GM ad spending was $155 million, according to Advertising Age, down from $170 million in 1955, and its share of the new car market had slipped to 42.1%, its lowest since 1949.

As the 1960s began, car manufacturers began offering smaller, "compact" cars made in the U.S. as alternatives to foreign imports, which had captured a small share of the U.S. market. GM introduced three smaller cars in the U.S.—the Buick Special, the Oldsmobile F-85 and the Pontiac Tempest—joining GM's German Opel, marketed in the U.S. by Buick.

While small cars were beginning to be popular with U.S. consumers, the market had not lost its taste for power. In 1964, Pontiac introduced the LeMans GTO-Gran Turismo Omologato. Described as a dragster with sports car handling, the GTO was the first of the era's muscle cars. Within two years, it became one of the hottest cars on the market and remained popular until the early 1970s.

"Baseball, Hot Dogs, Apple Pie and Chevrolet"

By the early 1970s, U.S. automakers were feeling the heat from Japanese and German imports, due in large part to the country's first fuel shortage in 1973, which drove up the price of gas. The smaller foreign cars got considerable advertising mileage out of their fuel efficiency. To counter this, with an emphasis on patriotism, Chevrolet launched one of its most popular commercial jingles ever in 1975, "Baseball, Hot Dogs, Apple Pie and Chevrolet," from Campbell-Ewald.

Through the second half of the decade, GM focused on downsizing and reengineering its products to meet government-mandated fuel-efficiency standards. It backed the restyled cars in corporate ads that touted engineering changes and pushed the idea that the cars were smaller outside but bigger, or at least as big, inside. The individual auto lines ran themes such as Chevrolet's "Now, that's more like it"; Oldsmobile's "efficient family car" for the Delta 88 and luxury "with no sacrifice or compromise" for the 98 Regency; and Pontiac's "redesigned, resized, remarkable."

Coming off a second fuel crisis in 1979, the company found itself facing even harder times. In 1980, GM saw its first loss since 1921, with earnings dropping from $2.9 billion in 1979 to a loss of $762.5 million in 1980; it also dropped to No. 6 among U.S. advertisers, with spending of $316 million. To counter the tough economic conditions, GM offered a series of rebates—with ads themed, "Let's get America rolling." Overall, GM's divisions were pushing fuel efficiency and economy, with messages such as "More Pontiac excitement to the gallon," tailored to fit in with Pontiac's overall "We build excitement" effort.

In 1983, in an effort to address the automaker's revenue outlook, GM Chairman Roger Smith reorganized the company into big- and small-car groups as sales rebounded after four years of declines. GM also announced a joint venture with Toyota Motor Corp. to produce a Toyota-designed subcompact car at one of GM's manufacturing plants; the project resulted in the Chevy Nova, which was rolled out regionally starting in 1985 with a Campbell-Ewald effort themed, "The best of both worlds." The automaker also implemented an import strategy with its partially owned partners Isuzu Motors Ltd. and Suzuki Motors Corp.; that partnership, with the addition of Toyota, produced the Geo, launched in 1988 and promoted nationally in 1989 with the theme "Get to know Geo" from Lintas:Campbell-Ewald.

The automaker followed up with a massive acquisition effort that began in 1984 with the purchase of Dallas-based Electronic Data Systems for $2.5 billion and ended in December 1985 with the purchase of Hughes Aircraft Co., in an effort to gain access to new technology as well as diversify into revenue sources separate from the cyclical auto industry. It also formed the GM Media Council to examine its ad agency relationships and to increase the effectiveness of its advertising efforts. Among the group's first acts were reducing agency compensation from the then-standard 15% commission level and consolidating GM's TV and magazine buying negotiations corporatewide, which allowed the automaker to push the media for lower rates and other concessions.

In 1985, the company announced it was creating a new subsidiary, Saturn Corp. The unit was designed to act as an "experimental laboratory" for trying out new manufacturing, marketing and management techniques, while making GM competitive with Japanese automakers.

"Heartbeat of America"

In 1986, GM's earnings fell below those of Ford for the first time in 62 years. GM, the No. 5 U.S. advertiser that year at $839 million, saw its operating profits drop 15.6% from 1985 to $3.1 billion. At the same time, its share of the new-car market dropped for the second year in a row to 41%.

That year, Chevrolet broke the "Heartbeat of America" campaign by Campbell-Ewald and Crushing Enterprises, New York, which produced the music. At the same time, Buick abandoned its 30-year-old theme "Wouldn't you rather have a Buick?" in exchange for "Buick. Where better really matters," from McCann-Erickson. Two years later, GM's troubled Oldsmobile division came out with, "Not your father's Oldsmobile"; while the tagline proved to have sticking power with the public, Olds dropped it by the 1990 model year following criticism that it was patronizing to the division's older customers.

The 1990s looked like the decade when GM finally would turn its fortunes around. In April 1990, the automaker signed a three-year, $750 million agreement with NBC giving it access to top-rated prime-time shows and sports programming in what the broadcast network called the largest commitment ever made by an advertiser in the history of TV. That fall, the first two models from Saturn were introduced, with a prelaunch teaser campaign themed, "A different kind of company. A different kind of car," via Hal Riney & Partners, San Francisco.

Still, in 1990, GM lost $2 billion. The following year, it lost $4.5 billion worldwide, but in the U.S. it lost $7.1 billion—until that time the worst reversal suffered by any U.S. corporation. Its 1991 share of the U.S. vehicle market was 35%, down from 45.7% in 1980.

In fall 1992, GM's board staged a revolution that forced out Robert Stempel as chairman-ceo. Board member John Smale, retired chairman of Procter & Gamble Co., was named non-executive chairman but given a major say in company positioning, moving GM into brand management.

GM spent the decade rebuilding and reshaping its marketing programs. In 1992, it introduced its own branded credit card, backing the launch with $70 million in promotions and advertising. By the end of the decade, it had 15 million cardholders, which provided a sizable database for the carmaker's promotional programs.

It also expanded its use of sports sponsorships. In 1997, GM signed a 10-year, $1 billion sponsorship deal with the U.S. Olympic Committee, making it the exclusive auto advertiser on U.S. broadcast TV coverage and the official domestic car and truck sponsor of the U.S. Olympic Team through 2008. And in 1999, Buick signed golf pro Tiger Woods to a $20 million to $25 million, five-year endorsement deal to appeal to a younger, 30-to-40-year-old crowd while giving the line more personality.

GM was also active online. In 1996, it launched a Web site to promote its product lines and services, and in 1999, it created a new business group, e-GM, to oversee its e-commerce and Internet marketing initiatives.

The automaker made other changes through the decade as well. In dealings with its ad agencies, GM in 1994 moved from a commission structure to a fees-plus-incentive system. In 1995, GM's board brought brand management to the company, forcing GM to deal with every vehicle line as a brand, with brand managers hired from outside the auto industry. In 1996, it merged Pontiac and GMC, naming the combined unit the Pontiac-GMC division. And in 1998, it underwent further restructuring, replacing its North American sales and marketing operations with a single sales, service and parts system with responsibility for oversight of five U.S. regions.

In its biggest move, however, GM at the end of 1999 announced it was phasing out Oldsmobile, which was no longer able to compete even after a major revamp of its entire line. By 2000, GM also was struggling with Cadillac, which had been the top-selling luxury car in the U.S. from 1950 to 1998 before dropping to No. 6.

In 2000, the company held the largest account review in history at that time, for its $2.6 billion U.S. media planning account. Bcom3 Group's Starcom MediaVest Group emerged the winner, while the Interpublic Group of Cos.' General Motors MediaWorks, Warren, Mich., and New York, retained media-buying responsibilities. The move consolidated media buys from 17 agencies to the dedicated and newly formed General Motors PlanWorks, Detroit.

In 2001, GM's agency roster for its oldest brands was almost identical to its lineup in the 1950s: Campbell-Ewald, Warren, Mich., for Chevrolet; McCann-Erickson Worldwide, Troy, Mich., for Buick; and D'Arcy Masius Benton & Bowles, Troy, the latest incarnation of the original MacManus, John & Adams, for Cadillac and Pontiac. In 1997, it had added Interpublic's Lowe & Partners Worldwide, New York, for GMC.

The company's newly acquired Hummer brand tapped upstart shop Modernista!, Boston, as agency of record in fall 2000. In early 2001, GM consolidated the global account for its Saab unit under Lowe Brindfors in Sweden and moved Saab's U.S. account to Lowe, New York, from its Interpublic sibling Martin Agency, Richmond, Va. Omnicom Group's Goodby, Silverstein & Partners, San Francisco, won the Saturn account in early 2002.

After buyers virtually stopped buying all new cars and trucks in the weeks after the terrorist attacks on Sept. 11, 2001, the automaker started national, cross-brand incentive advertising under the theme "Keep America rolling," jump-starting GM sales. McCann-Erickson, Troy, Mich., GM’s corporate agency, handled the effort.

In the years following, GM continued to increase and advertise its incentives, which company executives had promised would disappear under the brand management system. However, GM's version of brand management didn't work because the brand managers didn’t have control over vehicle development. GM still sold too many look-alike models that it tried to differentiate through advertising alone.

One of the most controversial auto executives of that era was GM's Ronald Aarrella, hired in December 1994 as group VP for North American Sales, Service and Marketing from Bausch & Lomb, where he was President. Mr. Zarrella was the automaker’s brand czar and led the charge on brand management under Mr. Smale’s direction, but the industry outsider attracted criticism for publicly stating cars could be sold like soap. He left GM in fall 2001 after rising as high as president of North American Operations to return to Bausch & Lamb as chairman-ceo.

GM started paring down the number of brand managers in late 2001 and began shifting ad focus to the divisional brand instead of individial models. The number of brand managers dropped from 39 in 1997 to 31 in early 2002, and the title was replaced with marketing director on April 1, 2002.

In 2003, GM was the leading national advertiser, according to Advertising Age, with total U.S. ad spending of $3.4 billion, down 1.4% from 2002, and U.S. sales at $133.9 billion, up 3.2%. Worldwide sales were $185.5 billion, up 4.6% from the previous year.

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