Mr. Fraleigh's challenge: While GM's ad spending has been rising annually, its market share keeps sliding. The automaker has also made recent ad missteps, including the 1999 launch of Saturn's all-new L-Series and Cadillac brand's confusing "Power of &," dropped this year.
The automaker has spent heavily since its 1995 move to brand management, creating personalities via advertising for virtually every vehicle nameplate. The outcome was supposed to bolster the vehicles' brand image to the point consumers would be willing to buy at a premium. Instead, incentives have become an increasing part of moving the metal for GM and other Detroit carmakers.
In a joint interview with Advertising Age Detroit Bureau Chief Jean Halliday and sibling publication Automotive News, Mr. Fraleigh spoke about his plans for GM's spending and agency relationships, among other topics.
Q: What's your biggest priority?
Mr. Fraleigh: From an advertising and content standpoint, it's Cadillac. My reason for jumping into Cadillac is the billions of dollars put in place to bring new products to market and we need to get that signal out to new consumers. You can't signal a fundamental change by just talking about features and benefits of the vehicles. We need to emotionally connect with people. By the end of the year or early next year, you'll see the new Cadillac message and hopefully it will be wildly successful, but the message will be different.
Q: What was missing at Cadillac?
Mr. Fraleigh: The biggest thing was the product. It wasn't the advertising team. The product there right now is for one target consumer and the products on the way are for another. The products coming out in the next couple of years are aimed at a younger target, who is buying other luxury cars now. I'm personally involved with the D'Arcy team (Bcom3 Group's D'Arcy Masius Benton & Bowles, Troy, Mich., has the account). We've got a real strong team at Cadillac and I think we've got a great team at D'Arcy. D'Arcy has really bulked up as an agency. They're all new people. My guess is there were probably people missing that were really demanding and knew how to get great work.
Q: Would you say you're a demanding person?
Mr. Fraleigh: Yes. I would say that.
Q: Are any GM agencies facing reviews?
Mr. Fraleigh: No.
Q: Are any in trouble?
Mr. Fraleigh: We are working through that now and D'Arcy and Cadillac are not one, to be clear here. Some of our agencies and brands and our advertising are working really well and some of them we are working to bring up to par and where they need to be. We are trying to work through all internal solutions right now.
Q: Where do you see GM's ad spending going? Taylor Nelson Sofres' CMR said it dropped by nearly 24% in the first quarter vs. a year ago. Will those kinds of cuts continue?
Mr. Fraleigh: I see our overall spending being relatively flat. At the end of the year, ad spending may be up 8% or down 9%. I don't see significant increases or decreases year over year. I do see a shift from traditional national media to local initiatives, but that will vary by market. I don't see us putting 35% of our budget into events. Is the Internet going to play an increasing role? You bet. But the best way to get the message out is still TV. Most of our national advertising is aimed at brand building and most of our local advertising is aimed at moving vehicles.
Q: Are you satisfied with the current agency compensation packages or will they change?
Mr. Fraleigh: I would definitely see our agency compensation evolving and hopefully [agencies] would see that too. Ideally, I want a system that is motivationally based on performance. I'm not approaching this as trying to beat costs out of the agencies because my first priority is getting better creative. We had talks with our agencies on this and we'll probably start looking at it in 2002. One of our agencies said `I don't mind being accountable for sales and profits, but what about making some of our compensation based on industry awards?' I'm open to that idea. If we are hurting as a company, our agency should feel some of that pain in terms of the partnership. But if they're doing a great job in a down industry, they shouldn't be held back from above-average compensation. I think the agencies should be held more accountable for their work. We haven't opened the hood on that one yet.
Q: Would there be more money on the table if the agencies did a good job?
Mr. Fraleigh: Potentially yes, but if you do that, there's more money at risk. Among our agencies there's wide spectrums and tolerances for risk. Some are less averse.
Q: Have you made any changes since your arrival in January?
Mr. Fraleigh: Yes. We're rolling out some of the changes this week to our ad processes. A couple of core principles is the clarity of ownership. Who owns the advertising? We're moving to a more simplified, streamlined process. Before, we had 12 people at the agency, our brand people and our divisional people working on legal issues [in ad claims], creating potentially 72 points of contact. You don't get resolution to an issue. We are going to demand that the [divisional] ad director is the primary point for all legal matters with the divisional legal people. They'll own all the legal issues.
Q: What about GM's proprietary pre-ad testing process with Diagnostic Research International?
Mr. Fraleigh: DRI is a very strong organization doing what they do. We can certainly get good advertising with DRI. DRI is not on the ropes. There's more short-term opportunities, like when it's used and how it's used. Am I looking at the ad process and every element of it? Yes. What I think we can do a better job of is leveraging the qualitative side of research vs. the quantitative side.
You're not going to get greatness with quantitative research. If you employ that research in advertising, you're going to get average advertising because you're only eliminating the downside.
I don't want advertising that appeals to most people out there. I want advertising with a strong emotional appeal. DRI is not bad, but if you use it as the sole basis for what advertising to produce, you're missing the point. I never believe or hold on to one piece of research. It's this balance between numbers and insights. Marketing and advertising is an art. Science can kind of lead you part of the way, but somehow you have to bring in the human element. You've got to let the creatives go a little bit.