GM Eyes Digital Increase

NEW YORK General Motors is expected to further increase the proportion of media dollars it spends on digital media, particularly on the local level, according to a report issued today by Merrill Lynch.

The embattled car manufacturer plans to allocate more of its national ad budget to the Web even as the company faces widespread spending cuts and heavy revenue losses, according to Merrill.

In the new report, analyst Lauren Rich Fine wrote that based on recent conversations she’s had with top GM marketing officials, “more of GM’s marketing budget will go online despite an already 10-15 percent share of the national ad budget [being spent on the Web],” said Fine. “Online as a percent of total spend will rise as will the total dollars spent online despite the company’s continued auto sales challenges.”

The company is also nudging its local dealers to spend more online, said Fine. On the local level, currently just 9 percent of GM’s media dollars are allocated to digital properties.

GM’s plan to shift more ad dollars to the Web would seem to contradict recent statements by Yahoo, which partly blamed softness in the auto ad market on GM’s recent growth shortfalls.

More online spending from GM should also be good news for i-shop Digitas, which claims the automaker as a client. Boston-based Digitas was forced to lower its own revenue guidance in July partly because of looming budget cuts by GM. (Digitas said it expected less business from GM and Delta Air Lines, with revenue from those accounts down a combined 14 percent for the year.)

A GM representative declined to comment on the Merrill report.