GM to ad agencies: We need to talk

August 7, 2008

general-motors.jpgHow tough are things at General Motors?

Not only has the car maker scaled back on its advertising budget, but now it wants the ad agencies it works with to cut their fees by as much as 20 percent this year and next, according to a Wall Street Journal article.

It’s no surprise GM has pulled back on some marketing — just look at any figures over the past year. It’s not like anybody else in Detroit is going gangbusters with their spending either — Ford and Chrysler have also cut their spend, data from TNS shows.

But the WSJ article underscores the risks to the advertising and media industry posed by the meltdown in Detroit. Car makers, after all, are huge clients for advertising agencies. The money they spend also fuels revenue for the media companies that carry the advertisements, from television to print and beyond.

Here’s what the article says about the GM move:

“The owner of Cadillac and Chevrolet works with dozens of agencies around the country, including Publicis Groupe‘s Leo Burnett and Interpublic Group‘s McCann Erickson and Campbell-Ewald.

Several ad executives familiar with GM say the cuts could translate into more than $20 million in total savings for General Motors, but likely will mean layoffs for the agencies involved.”

If GM gets its way, you can bet others will be clamoring to follow suit.

Keep an eye on: 

  • Warner Music Group posted a smaller quarterly loss as improved sales in Europe softened the effects of the slowdown in the global music industry (Reuters)
  • Google has sold Performics, the search agency it got in the acquisition of DoubleClick, to Publicis Groupe (AdAge)
  • A flurry of films arriving in North American theaters between now and September are opening on a Wednesday — long considered a moviegoing dead zone — as studios seek to build early buzz for movies ahead of the traditional Friday dash to the multiplex (Reuters)
  • LA Times, which has struggled of late, is posting some solid traffic gains on its Reader’s Representative Journal blog (paidContent.org)

(Photo: Reuters)

One comment

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If you make a cheaply built, overpriced product that is too expensive to operate you should fire your senior management and your ad agency at the same time. I have been in and out of the car business for years and if it doesn’t say Toyota or Honda its junk. Sorry but quality is job one was a load of garbage. You all got to greedy and ripped of America too long. Welcome to bankruptcy Chrysler, GM, and Ford. No corporate skunks deserve it more.

Posted by David Crosby | Report as abusive