GM considering Campbell Ewald for Cadillac ad work
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Campbell Ewald last week unveiled plans to move its headquarters to office space inside Detroit's Ford Field from the city's suburbs -- fueling speculation it had a major new client in the city. |
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DETROIT -- Cadillac is considering naming a longtime General Motors partner, Campbell Ewald, to become its new advertising agency of record in a deal that could be worth about $244 million in media billings annually, sources have told Crain's Detroit Business, an affiliate of Automotive News.
Campbell Ewald, the longtime agency for GM's Chevy brand, last week unveiled plans to move its headquarters to Detroit from the city's suburbs -- fueling speculation it had a new client in the city.
Crain's Detroit Business has been briefed on the matter by sources familiar with the situation, but who agreed to speak only on the condition of anonymity.
A deal has not yet been finalized and financial terms have not been disclosed, these people told Crain's Detroit Business. No timeline has been disclosed.
In a statement Tuesday, GM said "Cadillac is conducting an advertising agency review over the coming weeks," and that Publicis Groupe's Fallon Worldwide, which is the incumbent on the business, "remains our current advertising agency of record; no change has taken place."
The talks have been characterized as serious, and would represent a relationship renewal between two companies linked since the auto industry's infancy.
Campbell Ewald handled Chevrolet's marketing for GM for 91 years until the automaker shifted to a rival agency in 2010, a change that sent shock waves through an industry known for marketing relationships lasting generations.
The Cadillac scenario, as laid out by insiders and explained to Crain's, has Campbell Ewald eventually taking over the work for the General Motors luxury brand from Minneapolis-based Fallon Worldwide Inc. (Click here to see Fallon's video ads for Cadillac.)
The possible Cadillac agency switch comes as GM has been consolidating its marketing and media buying efforts.
Campbell Ewald CEO Bill Ludwig, in New Orleans this week for the American Association of Advertising Agencies' annual conference, deferred comment to Cadillac via his agency's outside media relations firm, New York City-based B-to-B public relations firm DiGennaro Communications.
An e-mail to Fallon's Detroit office on Monday was not returned, and a spokeswoman at the agency's corporate headquarters referred questions about the Cadillac account to a colleague who hasn't returned a call.
Sources familiar with the situation said Campbell Ewald was hired by Cadillac this year to do an assessment of the brand's entire marketing effort -- basically one ad agency auditing the work of a rival agency on an account it covets.
Months of courting
The Cadillac deal is believed to have been in the works for several months, and the likelihood of a contract may have been the impetus for Campbell Ewald to ink an 11-year lease for office space inside Ford Field, home of the NFL's Detroit Lions. Ironically, the team is owned by the Ford family.
It's unclear if the account shift would mean new hiring.
Campbell Ewald has about 700 staffers now, down from more than 1,200 five years ago. About 600 are expected to make the move downtown when the Ford Field office is ready by the end of the year, and the remainder will move once the company's suburban Detroit office is sold, Ludwig said last week.
GM spent nearly $244 million on Cadillac advertising last year, according to data provided by Kantar Media Inc. That's a decline from $257 million in 2011.
Overall, the automaker spent $1.7 billion marketing all of its brands in the United States during 2012, down from $1.8 billion the year prior, according to Kantar.
Cadillac's U.S. sales declined 2 percent last year to 149,782 units, the first fall-off after two years of year-over-year sales increases, according to the Automotive News Data Center.
But this year Cadillac's U.S. sales in January and February surged 32 percent to 26,961 vehicles. Of those, the new ATS sedan accounted for 6,163 in sales.
Cadillac's share of the U.S. sales market fell to 1 percent last year from 1.2 percent in 2011 and 1.3 percent in 2010.
The brand hasn't been below the single-digit share threshold since 1940 when it was at 0.6 percent on the eve of World War II. Sales peaked in 1978 with 350,813 vehicles sold.
Shifting gears at GM
This would be the first major agency move by Alan Batey, who became GM's interim chief marketing officer in July after Joel Ewanick was ousted over questions about how marketing money was being spent in an English soccer deal.
Former GM marketing chief Mark LaNeve dumped Cadillac's ad agency, the Detroit-area office of Chicago-based Leo Burnett, in 2007 without a review and steered the creative work to Boston-based Modernista.
Leo Burnett had held the Cadillac account since 1935.
The New York office of British creative agency Bartle Bogle Hegarty got what was a $270 million Cadillac advertising account in January 2010 after Modernista reportedly chose not to defend the account in a review handled for GM by New York City-based Ark Advisers.
Leo Burnett now handles advertising for Buick, GMC and the Chevy Silverado at its Detroit-area office and its Chicago headquarters.
Fallon Worldwide, a subsidiary of France's Publicis Groupe, is believed to have about 50 employees on the Cadillac account in offices at Detroit's Renaissance Center, which houses GM's headquarters.
Fallon jettisoned Chrysler's marketing work after less than a year so it could handle the Cadillac account instead.
Fallon had picked up the Chrysler work in January 2010 after the automaker ended a 45-year relationship with Omnicom Inc.-owned BBDO Detroit. That firm closed its suburban Detroit office and cut 450 jobs.
Campbell Ewald has almost half as many employees as it did just a few years ago, with downsizing linked to the loss of Chevrolet and other clients spending less.
Lost business
There had been industry rumblings in 2009 that GM was mulling a change for its Chevy marketing -- and that happened in April 2010.
Ludwig was told of the automaker's decision in an 8:30 a.m. phone call by Jim Campbell, then GM's vice president for Chevy marketing. Staff was gathered and told at noon.
The work went to Publicis Worldwide and its roster of agencies.
But it wasn't a total divorce: Campbell Ewald kept GM's dealer, OnStar and customer relationship-management accounts.
Ewanick was hired from Nissan North America in May 2010 to handle GM's U.S. marketing. He shifted the Chevy account to Goodby, which later agreed to launch a joint venture – called Commonwealth -- with McCann Worldgroup's local office.
The suburban Detroit office of McCann Worldgroup handles Chevy and Cadillac outside of the United States in 60 countries, including lucrative emerging markets such as China, India and Latin America. It also handles GM's corporate work and retail advertising, such as employee discounts, along with Sirius XM satellite radio.
GM in 2012 announced an effort to consolidate its roster of 70 creative agencies in a bid to save $2 billion over the next five years.
That projected savings from streamlining both advertising and media-planning efforts represents, on average, $400 million a year. That's about 10 percent of the automaker's global advertising expenses of $4.48 billion last year.
In January 2012, GM gave its $3 billion media-buying and planning to Aegis Group's Carat unit of London.
The Detroit office of digital marketing firm MRM Worldwide, which has the same corporate parent as Campbell Ewald, already does Cadillac work and is expected to continue to do so with Campbell Ewald.
Ad Age, an affiliate of Automotive News, contributed to this story.
For the Crain's Detroit Business version of this story, click here.
For the Advertising Age version, click here.
You can reach Bill Shea at bshea@crain.com.
