SMG Restructures Its GM Operations

NEW YORK For the second time this year, Publicis’ Starcom MediaVest Group is reorganizing operations surrounding its $2 billion General Motors account and will cut approximately 5-10 percent of the staffers working on that business — as many as 150 employees — by year’s end.

As part of the change, SMG relinquishes planning and buying chores for GM’s local dealers. Those duties will now be split by two agencies: Martin Retail Group, a Birmingham, Ala.-based shop also owned by Publicis, and Velocity, a unit of Interpublic’s Campbell-Ewald. Both shops have handled creative assignments for local GM dealers.

Sources indicated that the changes were mutually agreed upon by SMG and the client, without a review, to further GM’s cost-reduction goals while also helping SMG maintain a certain level of profitability on the account while achieving client performance goals.

The restructuring, laid out in an SMG internal memo last week, comes amid efforts by GM to streamline costs, including marketing expenses.

According to Nielsen Monitor-Plus, GM’s local dealer associations have cut spending drastically of late as auto industry sales have plummeted. Those dealer groups spent $190 million on measured media in the first six months of 2008, down 42 percent from the same period a year ago. For full-year ’07, the dealer groups spent almost $600 million, down 22 percent from 2006.

About 100 SMG staffers have worked on the local dealer business, sources said. Those positions and close to 50 others will be eliminated from SMG in the coming weeks. The company is based in Chicago, with outposts in New York and Detroit. Layoffs will likely be spread across the those locations, per sources.

Reps for GM and SMG confirmed the dealer group shift but declined further comment. Sources said that the shop would announce further steps in the reorganization of the GM business within the next few weeks.

In March, after eight years as a separate entity known as Planworks, the GM planning and buying operation was folded into SMG — and a short time later about 5 percent of the positions on the account were eliminated. At about that time, Dennis Donlin, president of Planworks, resigned. He was replaced by Ken Taylor, who continues to run the GM business for SMG.