Dealer Buying Duties Headed For Mediaworks
By Tanya Gazdik
DETROIT–General Motors is planning to remove nearly $1 billion in media buying duties for its dealerships, currently at several dozen agencies, and consolidate those tasks at its GM Mediaworks unit, sources said.
Media planning and creative changes could follow, sources added.
The reassignment would give Mediaworks all the client’s $3.2 billion in buying duties. GM dealers spent about $977 million on ads last year, per Competitive Media Reporting.
The consolidation is part of the vast reorganization of GM’s sales, service and marketing structure. Effective Jan. 1, its field sales and marketing staff will be divided into five regions with 200 marketing teams working with all dealers, no matter which GM brands they sell. Under the current structure, the U.S. is divided into dealer regions for each GM division.
The consolidation is the brainchild of Ronald Zarrella, vice president and group executive of GM’s North American vehicle sales, service and marketing group. He is recovering from heart-bypass surgery that will keep him from returning to the automaker for several more weeks, but GM has continued the process of implementing Zarrella’s restructuring plan.
GM representative Donna Fontana said the automaker intends to unveil additional changes per its reorganization before year’s end.
“We are looking at a lot of different scenarios,” she said. “This reorganization is forcing us to look at everything we do across the board. But nothing has been decided.
“We have to look at what’s going to be more effective, what’s going to be more efficient, what’s going to get us the best product,” she said.
All GM dealer agencies received a letter last week instructing them not to make any “long-term media agreements,” with a cutoff date of March 31, said sources. An earlier letter instructed shops not to make media buys beyond the fourth quarter.
The automaker’s most recent letter “sounded ominous,” said an executive at one shop that received it.
GM’s dealer agencies range in size. Some, like J.W. Messner in Grand Rapids, Mich., which handles nearly $100 million in Chevrolet business, depend on GM for the majority of their work. Others, such as Partners & Shevack, New York, and Lois/EJL in Chicago, have a majority of nonautomotive accounts.
After all media buying is consolidated at Mediaworks, with subsidiary The LCI Group handling the spot TV buying, other changes–more upsetting to dealers than centralized media buying–are being considered, sources said. Consolidating local creative duties with the national shops along the model of Saturn–which GM officials are said to think is both efficient and effective–and a shift of media planning chores from the dealer association shops to the national GM agencies are also being evaluated, according to sources.
Coupled with the media buying consolidation, a shift of local creative and media planning to GM’s national agencies would wipe out the role of the dealer shops altogether.
Loss of fee revenue from local media buying duties would be a blow for GM dealer agencies. In 1996 and ’97, most GM divisions conducted extensive reviews that whittled the number of dealers from several dozen to a handful of “select” agencies (13 for Chevy, seven for Oldsmobile, etc.) that dealers have been strongly encouraged to use. Some shops that survived that process have reduced new-business efforts to concentrate on their expanded GM dealer duties.
A loss of media buying “would be very disappointing given what we’ve gone through [with the dealer agency consolidation reviews] and had been led to believe” would be a stronger local role for the select shops, said the president of one GM dealer agency.
GM’s national shops include D’Arcy Masius Benton & Bowles, Troy, Mich. (Cadillac and Pontiac); McCann-Erickson, Troy, Mich. (Buick); Ammirati Puris Lintas, New York (GMC); Campbell-Ewald Advertising, Warren, Mich. (Chevy); and Leo Burnett, Chicago (Olds).
All decisions on changes in media buying are expected to be made by Nov. 1 and announced shortly thereafter, sources said.
–with Scott Hume
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