Is GM Being Penny Wise and Pound Foolish?

Pulling its Super Bowl and Facebook ads will save money, but it could make it tougher to compete

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Is GM Being Penny Wise and Pound Foolish?

When General Motors (NYSE:GM) announced plans to drop paid ads from Facebook (NASDAQ:FB) last week, the biggest news about the automaker’s no-confidence vote seemed to be the timing — three days before the social-media giant’s IPO. But now that GM is drop-kicking its ad buys for Super Bowl XLVII next February as well, it’s clear that the carmaker is following through on a massive — and risky — advertising and marketing overhaul.

The two high-profile decisions are just the latest big strategic moves since January, when the automaker decided to drop Starcom, its media agency since 2005, and award its $3 billion global account to Aegis Media’s Carat. GM also moved its lucrative Chevy contract to a joint venture called Commonwealth, comprised of Goodby, Silverstein & Partners and McCann Erickson.

Even more significantly, GM is shaking up its North American sales and marketing hierarchy.
Alan Batey, Chevrolet’s U.S. vice president for sales and service, will step into the newly created position of vice president, U.S. sales and service. He will report to GM North America President Mark Reuss. Don Johnson, U.S. VP of sales operations, will take over Batey’s job on June 1, and executives in the Cadillac and fleet operations units will step up to fill the open jobs, all of which will report to Batey.

The architect of GM’s new marketing approach is Chief Marketing Officer Joel Ewanick. GM lured Ewanick away from Nissan (PINK:NSANY) in May 2010 — a mere two months after he came aboard from Hyundai (PINK:HYMLF) — where he was responsible for successfully repositioning the Korean automaker in 2009 with its “job-loss guarantee” Super Bowl ads.

Two years into the job at GM, Ewanick’s handiwork is visible everywhere, from replacing the company’s long-time agencies with fresh blood to setting a goal to slash $2 billion from GM’s media spending over the next decade.

And if you’re focused on saving money, the priciest ad buy in the media universe arguably is a good place to start. CBS’s (NYSE:CBS) going rate for 30 seconds of Super Bowl XLVII ad time reportedly will run $3.8 million to $3.9 million, compared with last year’s $3.5 million.

“We understand the reach the Super Bowl provides,” Ewanick said in a statement last week. “But with the significant increase in price, we simply can’t justify the expense.” Over the past decade, GM has been the third-largest Super Bowl advertiser, spending a total of $82 million during that time, according to ad-tracking company Kantar Media.

Ewanick’s decision also may have something to do with last year’s poor showing compared to Chrysler’s blockbuster “Halftime in Detroit” ad, featuring Clint Eastwood and Eminem.

GM also had to contend with the flap surrounding its “Apocalypse” ad for Chevy’s Silverado pickup. The Super Bowl spot depicted four friends trying to escape the Mayan 2012 “end of the world” prophesy. Three friends escaped the disaster in their Chevy trucks; their Ford-driving buddy doesn’t make it.

The ad kicked off a snipefest between Ford (NYSE:F) and GM that eventually included terse letters from lawyers.

Ewanick may see little value for advertising on “America’s Game,” but his former bosses at Hyundai have a different view. Hyundai last week announced that it has committed to an ad buy for Super Bowl XLVII.


Article printed from InvestorPlace Media, http://investorplace.com/2012/05/is-gm-being-penny-wise-and-pound-foolish/.

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