Motor City Shops Hit the Skids

Once-Great Ad Town Feels the Pain as $880 Million in Big Three Biz Drives Off

By Published on .

Detroit's ad community is very, very nervous.

Much of the swagger of Motown's once-mighty auto-ad-agency population, fed by clients with big egos and even bigger budgets, is gone -- replaced by fear as struggling Detroit automakers break their tradition of decades-old agency loyalty.
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Advertising and related services. Source: Ad Age DataCenter, Bureau of Labor Statistics, Mich. Dept. of Labor & Economic Growth
Also see: Michigan and U.S. Advertising Jobs data

In the past year alone, creative accounts on brands that spent some $880 million in measured media last year have fled the city as DaimlerChrysler moved its Jeep brand to Cutwater, San Francisco, and General Motors shifted its massive corporate account to Deutsch, Los Angeles, and its national Cadillac creative to Modernista, Boston. The consolidated Buick-Pontiac-GMC decamps for Leo Burnett on Oct. 1, leading to worries it will be serviced primarily from that agency's Chicago outpost. And it's becoming uncomfortably clear that the remaining member of the Big Three, Ford Motor Co., could land the launch of its Focus some 600 miles east at Arnold, Boston. That agency is pitching against incumbent JWT Team Detroit and a third undisclosed shop.

Advertising employment in Michigan -- which is concentrated in Detroit, traditionally the No. 4 ad market -- has fallen off despite a rebound in U.S. advertising jobs nationwide from the downturn earlier in the decade. The state's share of U.S. ad-spending employment is now 3.2%, down from 4.3% in the mid-1990s.

"There's a lot of nervousness about what will happen with Ford, GM and Chrysler," said Arthur "Bud" Liebler, Chrysler Group's former senior VP-marketing and now principal of PR firm Liebler MacDonald. "The clients are in more distress than the Detroit ad community."

"There's an undertone of uncertainty that plays on everyone's psyche," said Jerry Acciaioli, senior account exec at CBS Digital Media's Detroit-area office and ex-longtime Jeep account chief at BBDO.

More uncertainty lies in Cerberus Capital Management's upcoming majority purchase of Chrysler Group from Germany's DaimlerChrysler and whether the private-equity powerhouse will move the Dodge and Chrysler brand accounts from Omnicom Group's BBDO Detroit.

A Chrysler spokesman said all is well on the accounts with BBDO Detroit, which successfully pitched a new blitz for Dodge slated for fall.

Lost business
With GM's account shifts, there's also anxiety at Chevy's shop, Interpublic Group of Cos.' Campbell-Ewald, that the automaker will ship some work out, as it did in 2006 when it gave sibling Deutsch, Los Angeles, Chevy's baseball and motor-sports accounts for a year.

A Chevrolet spokesman said the client "is locked into a very aggressive schedule" with its Detroit agency for, among other things, the upcoming launches of the new Malibu and two-mode hybrid Tahoe.

Another unknown stirring concern is how and where Publicis Groupe's Leo Burnett will staff its newly won Buick-Pontiac-GMC accounts. GM said the core Buick-Pontiac-GMC team from Burnett "will be headquartered in Detroit but will also utilize Publicis and Leo Burnett resources in Chicago and other locations."

A GM insider said Burnett's proposal, handled at the highest levels of Publicis, called for creative to be based in Chicago. But a GM spokeswoman said, "We are still working through the details of how and where the work will be handled" but that all of Burnett's locations can provide flexible creative service for the three brands, depending on the specific project.
'There's a lot of nervousness about what will happen with Ford, GM and Chrysler,' said Arthur 'Bud' Liebler, Chrysler Group's former senior VP-marketing and now principal of PR firm Liebler MacDonald.
'There's a lot of nervousness about what will happen with Ford, GM and Chrysler,' said Arthur 'Bud' Liebler, Chrysler Group's former senior VP-marketing and now principal of PR firm Liebler MacDonald.

No reductions
McCann Erickson's 250-person office in Birmingham, Mich., was blindsided by the account move since GM had praised its Buick Enclave launch work two weeks before the switch. "We hope to replace the business quickly" so McCann has no plans for staff reductions, said Garry Neel, president-CEO of the office and global GM account chief. "We are not going anywhere." GM accounts for the overwhelming majority of the agency's business. Although an exact percentage wasn't available, its other clients are comparatively tiny and include Honeywell's Prestone antifreeze; Fram engine filter and Autolite spark plugs; Delphi Corp.; and the Detroit Medical Center.

But bringing in business from new categories isn't as easy as it may sound. Detroit agencies "are stuck with the 'automotive stigma' " that cause many out-of-town advertisers to leave them off the pitch lists, said Russel Wohlwerth, principal of Ark Advisors, which is handling the Porsche review. Only independent Doner, Southfield, Mich., and Campbell-Ewald have been able to diversify their client rosters beyond their car accounts, he said.

Campbell-Ewald handles the U.S. Postal Service, Farmer's Insurance, Alltell, U.S. Navy and the U.S. Mint, among others. Doner, however, has been struggling of late. In the non-automotive arena, Doner handles Blockbuster, Serta, HGTV, TNC and Bush Bros. But it, too, has had trouble holding on to accounts: Although it won the $170 million Expedia business, it's also lost Six Flags ($55 million), Sylvan Learning Centers ($60 million) and La-Z-Boy ($35 million). Outback Steakhouse's media ($87 million), which it shared with MPG, is also in review.

Mr. Wohlwerth said marketers have the misperception that shops with big car accounts are dominated by those clients and will treat other accounts like second-class citizens. "The reality is that automotive is one of the toughest battleground categories in the marketplace and requires an incredibly diverse set of capabilities," he said. Plus, he added, big auto agencies will "service the hell out of your business" because they highly value the diversification of a non-auto account.
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