GM consolidates $3B global media account with London's Carat
GM marketing chief Joel Ewanick: "Carat has an innovative approach to drive significant marketing value."
NEW YORK -- General Motors has consolidated its $3 billion global media-buying and planning account with London-based Aegis' Carat unit as part of its ongoing effort to create efficiencies and cut costs and agencies.
"We wanted a media-agency partner with the sophistication to leverage global marketing opportunities," Joel Ewanick, GM's global chief marketing officer, said in a statement.
"Carat has an innovative approach to drive significant marketing value, and their service model has been tailored to align well with our global and regional brands. They are uniquely positioned to help us form strong media partnerships and drive significant global efficiencies."
A decision is still pending on a creative review for GM's biggest brand, Chevrolet. The two massive pitches were launched in late 2011 with an eye toward savings and efficiency for the carmaker.
The media account will be run globally by Martin Cass, and be overseen in the United States by Carat President Doug Ray.
The selection followed a review by the third-largest global advertiser, as ranked by the Advertising Age Data Center. The Data Center estimates that in 2009, GM spent $3.37 billion on global media. In its 2011 annual report, the company reported worldwide advertising costs of $4.26 billion in 2010.
GM's global marketing team, led by Ewanick, oversaw the review, with the help of search consultancy R3:JLB.
Ewanick told Automotive News, a sister publication of Ad Age, that the automaker expects to see a reduction in expenses of millions of dollars, or more, merely by reducing the number of marketing partners it works with around the world.
Prior to the review, the company worked with 40 agencies worldwide, and more than 50 worked on Chevrolet. Media-buying duties in India and China were not included in the review.
In the final stage of the review process, GM heard pitches from four agency holding companies. Due to regional conflicts, two of the four contenders created teams at the holding-company level. Carat, which had managed the account in Europe, competed against Omnicom Media Group, Interpublic Group of Cos. (the incumbent in Latin America) and Publicis Groupe's Starcom (the U.S. incumbent).
The matter of conflicts added complexities to the review, but didn't slow down the process. Within Omnicom, auto clients include Nissan, Porsche, Mercedes-Benz and Mitsubishi.
IPG's Universal McCann works with Chrysler and BMW in the U.S., while Initiative works with Hyundai's namesake and Kia brands in the U.S. and in various global markets such as Germany and Australia. Universal McCann ran the majority of the business in Latin America, supporting Colombia, Chile, Argentina and Ecuador. In partnership with creative shop McCann, it managed the media business in Venezuela, Peru, Uruguay and Paraguay.
In its annual report, GM reported that of the $5.1 billion spent on worldwide "advertising and sales promotions," GM North America accounts for $3.4 billion, GM Europe for $800 million, GM International Operations for $600 million, and GM South America for $300 million. The automaker spent about 67 percent of its 2010 worldwide advertising and sales promotion money in North America.
Boost to Carat
Tripling its billings and regional footprint with GM gives a huge boost to Carat 's business, and it's a huge influx of billings for the Aegis network, which recently sold research group Synovate.
In 2006, Carat 's parent Aegis won the $750 million account in Europe from Universal McCann. Though it's a hefty sum that hasn't wavered much, the debt crisis likely has put the stability of the business to the test. But the marketer is undergoing change in the region. The automaker announced that after a 37-year GM career, Nick Reilly, president of GM Europe, has elected to retire in March 2012. Karl Stracke will succeed Reilly as president of GM Europe.
There's fresh leadership at Carat as well. Martin Cass, former Carat North American CEO, has yet to announce his new role within Aegis after a shakeup that promoted Doug Ray to U.S. president.
The results of the review deal the biggest blow to Starcom, which had a very strong year in 2011 but will now begin 2012 with a sizable loss.
In May 2005, the automaker moved its $3.5 billion U.S. media-buying account from IPG's GM Mediaworks into Publicis' Starcom MediaVest Group, Chicago.
The move consolidated GM's U.S. media services within Starcom, whose GM Planworks unit since 2000 was handling the automaker's U.S. media planning. In 2009, the team eliminated the standalone unit and moved the account within the firm's standard operations under president and buying chief Mike Rosen.
For IPG's Universal McCann, it means the loss of a sizable budget and growth opportunity in the Latin American auto market. The loss will make a dent. A story in the Los Angeles Times reported that "in Brazil, the region's top market, more than 3.5 million cars and light trucks were sold last year -- up 86 percent compared with 2006. Its economy is growing fast and wages are rising."
However, the holding company could hold onto the buying in Brazil, where media is supported by the creative shops as a government mandate.
Omnicom doesn't stand to lose anything on the media side, as the holding company's GM relationship is on the creative side, with Goodby Silverstein & Partners, which handles North American creative duties for Chevrolet.
The media group likely remained a contender due to the creative relationship, as well as the personal relationship that could have formed during Ewanick's stint at Nissan and Porsche, both currently global media clients at Omnicom.
GM filed for bankruptcy and was reorganized with a federal bailout in June 2009. In 2010, the company earned $4.7 billion, compared to a $4.4 billion loss in 2009. Through the first nine months of 2011, GM posted net income of $8.54 billion. The company expects to report 2011 results in mid-February.
GM's recovery has been punctuated by the subcompact Chevrolet Cruze, which has become a top-selling compact in the United States, thanks in part to inventory and supply problems facing its usual Japanese competitors, Toyota and Honda.
Ewanick has consistently emphasized product-differential marketing -- what he calls "swim lanes" -- to define brand identity.
"We have to be very strict about it," he said in an Automotive News interview recently. "If not, we run this risk of going back to where we were in 1983. You could easily see how you go back to badge engineering if you're not careful."
Automotive News staff contributed to this report.