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General Motors Corp. is considering two plans that would radically alter its relationship with agencies and dealers.

One, according to executives at a number of regional and local GM agencies, calls for the consolidation of media planning. GM is expected to hear pitches from its primary brand agencies for the planning business in the next six weeks.

The other, according to the same group of executives, would see GM sharply cut its contribution to local dealer association advertising. Currently, GM's contribution averages about 1% of sales, and amounts to tens of millions of dollars a year.

In total last year, the GM dealer associations spent close to $350 million on TV advertising, according to the Television Bureau of Advertising.

GM is in the midst of reorganizing its U.S. sales, service and marketing organizations, and the new plans apparently are part of that process.

"A lot of things are being reviewed," a GM spokeswoman said last week. "This reorganization is causing a lot of areas to be looked at. A lot of teams are looking at ways to be more efficient and one involves dealers, one involves advertising."


GM's primary brand agency line-up includes three shops owned by Interpublic Group of Cos.: Ammirati Puris Lintas and Campbell-Ewald, both Warren, Mich., and McCann-Erickson Worldwide, Troy, Mich. Others are D'Arcy Masius Benton & Bowles, Bloomfield Hills, Mich.; Leo Burnett USA, Chicago; and Publicis & Hal Riney, San Francisco.

While GM's media buying is handled by GM Mediaworks, a subsidiary of Campbell-Ewald, media planning is assigned to brand agencies.

The consolidation of media planning and its separation from both the buying and creative functions is an unusual move. The only other major marketer with such a setup is Coca-Cola Co., which consolidated planning at DMB&B, New York, in 1996.

If GM consolidates planning, it could prove very lucrative for the winning agency. The Coca-Cola unit at DMB&B is said to bring in $5 million to $7 million annually to the agency based on the planning of about $400 million to $450 million in media. With GM's media expenditures easily double that, a GM planning unit should be worth $15 million-plus.


When Coca-Cola made its move, it had 10 creative agencies, each doing its own media planning, according to a Coca-Cola insider.

"We were finding that some were much better at media planning than others," the insider said.

"So we decided to consolidate it all in one place where we could be sure we'd get top-quality planners who would be hired just for that purpose."

Said another executive close to Coca-Cola's planning unit: "It would be a smart move for GM. It would allow them to move quicker and better control the caliber of talent working on their business. It recognizes the strategic importance of media and marketing going forward and their integral role in the communications planning process."

Media executives at GM's brand agencies declined comment.

One issue GM will have to wrestle with is the roles of strategic and tactical planning, factors that have come to the fore since Procter & Gamble Co. made them an issue in its $1 billion TV buying consolidation last year. P&G did not create a separate planning unit, but in consolidating its buying made a distinction between strategic and tactical planning.

Strategic planning, still at P&G's brand agencies, concerns choosing what media to use. Tactical planning, now with P&G's TV buying agency, TeleVest, New York, refers to decisions about what TV networks to use, and how much time to buy on each.


On the second front, if GM cuts its ad contribution to the dealer associations significantly, dealers likely would be forced to spend the bulk of their ad funds on price-oriented promotions rather than on brand image ads, said one media advertiser.

Another executive familiar with GM's plans said the automaker is considering cutting the funds to gain more control over its advertising. GM has been eyeing a restructuring of its local advertising for some time (AA, Aug. 10, et seq.).

Contributing: Jean Halliday

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