Monday, February 06, 2006

STOP THE PRESSES: GM LISTENS TO COHORT

Well not exactly. Here’s the Story. The short version is a 13% (200$million) reduction in core advertising expenditures.

7 Comments:

Blogger Garble said...

GM Cuts $200 Million from Ad Budget
Automotive News
By Jamie LaReau
DETROIT – In the wake of its financial disaster in 2005, General Motors is cutting its 2006 national marketing budget by more than $200 million, sources close to GM say.
The cuts come in a year of crucial product launches and renewed attempts to promote GM's new price strategy.

GM's national ad budget will be about $1.3 billion this year, sources say. Older vehicles and brands such as Buick and Pontiac will suffer as GM concentrates its spending on product launches, including the critical full-sized SUVs and pickups.

The cuts are aimed at improving profits after an $8.55 billion net loss in 2005, says an informed source who asked not to be named.

In a Jan. 20 interview, Mark LaNeve, GM's vice president of vehicle sales, service and marketing, declined to disclose GM's marketing budget. He acknowledged, "We're trying to get costs down throughout the company. I would say one of the last places that we cut is marketing expenses, but we're trying to push down costs in the entire company."

As is normal at GM, LaNeve said advertising support will be based on the potential for revenue from the various vehicles. "So we're spending more on the (full-sized trucks) than we would on the (Pontiac) Solstice launch," LaNeve said.

GM executives say marketing for its redesigned full-sized SUVs and pickups remains substantial. A separate source familiar with GM's advertising strategy says GM's major divisions face varying prospects:
• Saturn will get a budget boost. This year, Saturn will launch the Sky roadster, the Aura mid-sized car and the Outlook crossover.
• Pontiac and Buick will get marketing budget trims.
• Cadillac and Chevrolet marketing budgets remain flat compared with last year.
GM is launching full-sized SUVs now. If sales of those vehicles soar, GM might allocate more marketing money at midyear. But if the vehicles perform poorly, expect more cuts, the second source says. The source spoke on the condition of anonymity to avoid angering GM.

The source says GM spent about $2.5 billion last year in total advertising, including $1.5 billion on national advertising and $1 billion on regional and local marketing. The source was not aware of this year's regional budget.

According to TNS Media Intelligence/CMR, GM spent $1.44 billion in total advertising in measured media during the first six months of 2005, far outdistancing runner-up Ford Motor Co. at $757.5 million. Full-year estimates are not yet available.

TNS says GM spent $2.5 billion for 2004 in total advertising, up more than 18 percent over 2003 ad spending of $2.12 billion.

Automotive News edits raw data from TNS to remove noncore spending such as dealer expenditures, ads for recreational vehicles and ads by captive lenders such as GMAC.
Historically, GM has led media spending among automakers. It will continue to be "the biggest player on the block" this year, says Brent Dewar, GM's vice president of marketing and advertising. Dewar declined to confirm any budget changes.

Dewar says GM has more than enough money to cover vehicle launches. The automaker is taking a nontraditional approach to advertising and will do more "creative things" to stretch ad dollars.

For example, some brands will shift from traditional media such as magazines and TV toward alternative media, such as digital media and events.

The budget cut comes after GM consolidated its media planning and buying under one roof last year in an efficiency move. The new media planning and buying organization is called GM Planworks. Planworks existed before, but it now does media buying as well as planning.

Although GM is sending a "strong message that everyone's got to tighten the belt," the second source says, it will still spend $100 million to advertise during the Winter Olympics, which start Feb. 10.

GM spent about $30 million in January on advertising its new lower pricing strategy for Chevrolet, says the source.

The source says that while Pontiac's budget is lower this year than last, GM is dedicated to advertising the launch of the new G6 convertible. That advertising is scheduled to start during the NCAA basketball tournament in March.

6/2/06 09:11  
Blogger Jack T Briggs said...

Ya know, Cohort was right. I watched the SuperBowl last night (not by choice) and noticed the more I saw a commercial, the less I wanted to buy the product, much less deal with the company ever again. They play these commercials ad nauseum and expect me to want to buy some product or service, when in actuality all I want to do is put a hole in my TV. Commercials are useless. (Unless you're an slow, impressionable lemming, then they probably work very well.)

6/2/06 10:16  
Blogger Garble said...

Homework only permitted me to watch about half the show but I had one of two reactions to the commercials.
"Why did they pay a million bucks to show me this?”
"HA! That was funny. What are they selling again?"
The best commercial I saw was the phone as theft deterrent.
The worst was the one for a razor with 5 blades. The onion did a spoof on that a while ago. Life again imitates art.
What I saw of the game was pretty good though.

6/2/06 10:28  
Blogger Jack T Briggs said...

I thought the game was slow. There was maybe two plays where I was like, Damn! But other than that (with exception of the Seahawks in the first quarter)I think they both weren't playing up to snuff. And the refs were nit-picky as hell.

6/2/06 12:27  
Blogger Cohort Mandibles said...

I got fucking hammered during the stuperbowl. Football sucks and so do the commercials. But it's a great excuse to get wasted. Between me and two other buddies, we almost finished off a whole keg. Awwww yeah.

6/2/06 15:56  
Blogger Jack T Briggs said...

Cohort...wasted? No way. i think you actually rival MY drinking days. I'm so proud. *tear*

7/2/06 04:45  
Blogger Cohort Mandibles said...

lol, I still am trying to rival your drinking.

7/2/06 08:48  

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