'Historic' Creative Alliance Between Omnicom, IPG Ends Chevy's Agency Review
"At first it didn't seem like it was going to happen -- it was very complex," said Joel Ewanick, VP-CMO of General Motors, referring to Commonwealth, the alliance between rival holding companies Omnicom Group and Interpublic Group of Cos. to handle the automaker's global creative account for Chevrolet.
The Detroit-based joint venture will tap the talents of San Francisco-based Goodby Silverstein & Partners and its newly established Detroit office, and that of McCann Erickson Worldwide. The entity will initially have about 280 employees coordinating Chevrolet's multibillion-dollar global creative campaigns across all platforms. Omnicom and Interpublic have equal ownership of Commonwealth, but profit will be distributed based on geography.
While agency companies have long teamed up to service business, especially on an international scale, such a cooperative approach is unusual for landing new business.
"This is a historic day for GM, the end of a long process, very well thought-out, to find the best method to build the brand globally," said GM's VP-CMO Joel Ewanick during a conference call announcing the move, which required months of back-and-forth deliberation. "We're up against Toyota and Ford and Hyundai and Volkswagen , and we need to have a more clear and concise and consistent message."
"At the top of these companies, there is a natural sort of antipathy, and their interests are at odds with each other," said Jeff Goodby, principal at Goodby Silverstein. "But that doesn't extend down into the companies themselves. We closed the door the day that we met, and I said, 'Listen, the agency thing, the network thing, that 's gonna be checked at the door.' "
"The way was to create a new, 50-50 structure. ... We took a wall down," said Nick Brien, chairman-CEO of McCann Worldgroup. "There had to become complete trust -- not only courage to create a whole new model but the depth of the relationships between Jeff and the four amigos." He was referring to the global board that will run Commonwealth based on hubs around the world, including McCann creatives Linus Karlsson, Prasoon Joshi and Washington Olivetto, and Mr. Goodby.
Commonwealth will immediately begin to transition responsibility for Chevrolet creative work in most global regions, with the exception of China, India and Uzbekistan. Activities there will continue to be managed by agencies specific to those countries, although that may change in the future, Mr. Ewanick said.
There are no time constraints on his "dream team," with Commonwealth "a long-term proposition," Mr. Ewanick said. "We're not looking at it as some sort of experiment. We are committed, both feet in, right now." One of the first tasks, he said, would be, "what do we do with the 'Chevy Runs Deep' theme line, or do we need a theme line? We hope to have that decided this summer."
Until now, Goodby has led the Chevrolet creative account in the U.S., the brand's largest market, while McCann has been Chevrolet's agency of record in many global markets, including Mexico, Canada, Brazil, India, Japan, China and Latin America. Mr. Goodby said that several jobs now in his San Francisco office would relocate to Detroit.
The agency review, under way since October, is part of GM's plan to cut expenses companywide and drastically reduce the number of agencies it deals with. In January, GM awarded its media-buying business to Aegis' Carat."These agency consolidations are expected to create about $2 billion in savings over the next five years, with a portion used to take advantage of key global marketing opportunities and strengthen the focus on our global Chevrolet brand, and a portion hitting the bottom line," Mr. Ewanick said. Much of the savings would come from production expenses worldwide, rather than by closing agencies. Outside agency work will still be commissioned but arranged through Commonwealth, he added.
Mr. Ewanick, who earlier this year acknowledged that he sometimes makes a decision on a review in the evening and then changes it overnight, said that the review should have been done "years ago."
The extending process made the decision a relief at Goodby. "For a long time it's been the elephant in the room," said an agency insider. It's been a stressful situation knowing "we might not be [on the account] in a while."
Since unloading a barrage of ads during the Super Bowl, including the snippy spot for the Silverado truck that took a dig at a Ford driver who didn't survive a mock apocalypse, Chevrolet has been aggressively chasing market share, hoping for a 13% increase in sales in the U.S. this year. Chevy has also been offering customer incentives of up to $3,500 on some models, and low, company-sponsored, finance rates.
The Chevy brand accounted for $1.1 billion in ad spending in the U.S. last year, according to Kantar Media, about 25% of GM's global ad budget. In 2011 Chevy sold 1.77 million cars and light trucks, according to data from Automotive News. Sales were driven by the Cruze compact. The hybrid-electric Volt, whose aura was tarnished late last year when federal investigators found that the car's batteries could catch fire in severe crashes, was recently named European Car of the Year.
The brand is also in the process of reshaping some of its 3,100 dealerships to create airy, user-friendly environments. The campaign includes everything from sales training from "value-based leadership" experts at the Disney Institute to TV spots from Goodby aimed at allaying shoppers' fear of getting the hard sell at their local dealer.