The selection followed a review by the third-largest global
advertiser, as ranked by Ad Age 's DataCenter . The
DataCenter estimates that GM spent $3.37 billion on global media in
2009. In its March 2011 10-K, the company reported worldwide
advertising costs of $4.26 billion in calendar 2010.
GM's global marketing team, under Mr. Ewanick, led the review
with the help of search consultancy R3:JLB. A decision is still pending on
a creative review for GM's biggest brand, Chevrolet. The two
massive pitches were launched in late 2011 with an eye toward
savings and efficiency for the carmaker.
Mr. Ewanick told Automotive News that GM expects to see an
expense reduction of millions of dollars or more, merely by
reducing its number of marketing partners around the world. Before
the review, the company worked with 40 agencies worldwide and with
more than 50 worked on Chevrolet. Media-buying duties in India and
China were not included in the review.
In the final leg of the process, GM heard pitches from four
agency holding companies. Because of regional conflicts, two of the
four contenders created teams at the holding-company level. Carat ,
which had managed the account in Europe, competed against Omnicom
Media Group, Interpublic Group of Cos. (the incumbent in Latin and
South America) and Publicis Groupe 's Starcom (the U.S.
incumbent).
The matter of conflicts added complexity but didn't slow the
review process. Within Omnicom, auto clients include Nissan, Porsche,
Mercedes-Benz and Mitsubishi. IPG's Universal McCann
works with Chrysler and BMW in the U.S., while Initiative works
with Hyundai's
namesake and Kia brands in the
U.S. and in various global markets, including Germany and
Australia. UM ran the majority of the business in Latin and South
America, supporting Colombia, Chile, Argentina and Ecuador. In
partnership with creative shop McCann, it managed the media
business in Venezuela, Peru, Uruguay and Paraguay.
In its 10-K, GM reported that of the $5.1 billion spent on
worldwide "advertising and sales promotions," GM North America
accounts for $3.4 billion, GM Europe for $0.8 billion, GM
International Operations for $0.6 billion and GM South America for
$0.3 billion. The automaker spent about 67% of its 2010 worldwide
advertising and sales promotion money in North America.
Tripling billings and the regional footprint with GM will be a
huge boost for Carat as well as for the Aegis network, which
recently sold research group Synovate.
Aegis won the $750 million account in Europe from UM in 2006.
The hefty sum hasn't wavered much, though the debt crisis has
probably tested the stability of the business. But the automaker is
undergoing change in the region. It announced that Nick Reilly,
president of GM Europe, has decided to retire in March 2012 after
37 years with the company. Karl Stracke will succeed Mr.
Reilly.
The results of the review deal the biggest blow to Starcom ,
which had a strong year in 2011 but begins 2012 with a major loss.
In May 2005, the automaker moved its $3.5 billion U.S. media-buying
account to Publicis' 36 Group, Chicago from IPG's GM Mediaworks.
The shift consolidated GM's U.S. media services within Starcom ,
whose GM Planworks unit had been handling the automaker's U.S.
media planning since 2000. In 2009, the team eliminated the
stand-alone unit and moved the account into the firm's standard
operations under President-Buying Chief Mike Rosen.
Publicis Groupe said in a statement that it "regrets that a
long-lasting relationship with GM has ended" and that it is "proud
of the insight and high level of professionalism that Starcom has
brought to its work on GM's image over the years, and of the
support that we've given to GM through many ups and downs." It said
the Starcom partnership represents less than 0.5% of Publicis
Groupe revenue on a full-year basis and that the relationship would
end in June.
For IPG's UM, the change represents the loss of a sizable budget
and growth opportunity in the Latin American auto market. A story
in the Los Angeles Times reported that "in Brazil, the
region's top market, more than 3.5 million cars and light trucks
were sold last year -- up 86% from 2006. Its economy is growing
fast and wages are rising." However, the holding company could
retain the buying in Brazil, where media is supported by the
creative shops as a government mandate.
Omnicom doesn't stand to lose anything in media, as the holding
company's relationship with GM is on the creative side, with
Goodby Silverstein
& Partners, which handles North American creative duties
for Chevrolet. The media group likely remained a contender because
of the creative, and a personal relationship that could have formed
during Mr. Ewanick's stint at Nissan and Porsche -- both currently
global media clients at Omnicom. According to the Ad Age DataCenter
, Omnicom shops had worked with GM's former Chrysler units since
1926, when Dodge Brothers Corp. hired the Ross Roy agency (acquired
by Omnicom in 1995 and folded into BBDO in 2001).
GM went bankrupt in June 2009, after spiraling losses and
drastic drops in market share, and despite a multibillion-dollar
federal bailout. It cut tens of thousands of jobs and slashed wages
and benefits, but a "new GM" rose from the ashes. The company made
$4.7 billion in 2010 after losing $4.4 billion in 2009.
GM's forward thinking since pulling out of bankruptcy -- a new
CEO in Dan Akerson and Mr. Ewanick's appointment as CMO -- has
registered a hit in the subcompact Chevrolet Cruze. It has been the
No. 1-selling compact in the U.S. for months, thanks in part to
inventory and supply problems facing its usual Japanese
competitors, Toyota and Honda.
Mr. Ewanick has consistently emphasized product-differential
marketing -- what he calls "swim lanes" -- to define brand
identity. "We have to be very strict about it," he said in an
interview with Automotive News. "If not, we run this risk of going
back to where we were in 1983. You could easily see how you go back
to badge engineering if you're not careful."
~~~
Contributing: Stephen Williams
