DETROIT -- Dealers say General Motors' local marketing groups are a work in progress.
Both sides say improvements have been made over the years to resolve differences in advertising creative work and how dollars are spent. But compromises are needed to get more dealers to participate in the program, dealers say.
Local marketing groups have been a sensitive issue since GM killed an earlier system in 1999 but continued to levy a 1 percent fee that had gone to the local groups. Dealers objected, but GM said the funds continued to go to local advertising run by its regional offices.
GM started the current system in 2001, adding another 1 percent fee for dealers who chose to be in the local groups. Today the biggest complaint dealers have is that the local marketing groups, called LMGs, do not give them enough voice in the creative work.
"Most dealers understand that we need LMGs, but most dealers feel we need more say in the creative in our market," says Mike Bowsher, Pontiac dealer council chairman and owner of Carl Black Buick-Pontiac-GMC in Kennesaw, Ga.
No cookie cutters
Specifically, dealers want more input in the overall look of the TV spots because they argue it's not "one size fits all," Bowsher says. Local advertising creative work sometimes is force fed to dealers, Bowsher says.
"Don't show my trucks in the desert," he says. "I'm not in the desert."
One of GM's goals has been to have local marketing group advertising reinforce GM national advertising. But that can be taken too far, dealers say.
"No two dealerships are alike anymore, and we don't have cookie-cutter dealerships," says John Rogin, owner of Rogin Buick in Livonia, Mich. Rogin is a member of GM's Northeast regional dealer council.
"Everyone feels they know what is best, and those who speak the loudest - sometimes the biggest dealers -- get the most influence. I don't think that's going to change at all."
For its part, GM is listening, says Brent Dewar, GM's vice president of marketing and advertising. He says GM is not able to please every dealer because with any creative process there are risks and some ideas that just work better than others.
Likewise, not everyone gets a say.
"I'm head of marketing, and I don't get a say in everything," Dewar says. "We're definitely listening to them because to be a great marketing organization, we have to be great in every market. It needs to be bottom-up."
GM is guiding dealers away from traditional media choices for all products and advertising, Dewar says. GM will offer more counseling this year to local marketing groups on media alternatives, he says. Those choices include Internet, TV, radio, newspaper and event marketing, depending on the product and brand.
"The media landscape is changing, and the more we can help our partners do the right things, do what they want to do, the more it allows for easier communication," Dewar adds.
GM also is upping the amount it matches against dealer dollars in GM co-op funds, says Marc Lockhart, Cadillac dealer council chairman and owner of Lockhart Cadillac in Indianapolis.
For 2006, GM will offer co-op dealers a match of 50 percent of whatever amount the dealer puts in the co-op fund, says Lockhart. That compares with a match of 25 percent in recent years, Lockhart says. The dealer's contribution is capped at 1 percent of the list price, minus freight fee, per vehicle sold.
"That (the match) will be used for our specific market," Lockhart says. "It gives us more of a chance to be effective in each market because L.A. is not the same as Miami."
The increased matches also will give dealers more flexibility. As Lockhart notes, Cadillac needs to go to market differently than Chevrolet. Cadillac dealers now can tailor national advertising to their market.
Another improvement GM made is giving each brand its own local marketing group board made up of dealers from all over the country, says Ed Peper, Chevrolet general manager. He says Chevrolet has had a creative board on its advertising council since April 2005.
"We run our creative past them. They helped create the Red Tag ads," Peper told Automotive News during the Detroit auto show in January.
One top priority for the Chevrolet dealer council chairman this year is to get more Chevrolet dealers involved in local marketing groups.
"When we're talking about the local marketing group process, we could make it more attractive for dealers. Our goal should be 100 percent participation," says Roger Moody, who is president of Friendly Chevrolet in Fridley, Minn. "There are more benefits for being in the local marketing group process than there are negatives."
Another issue facing dealers in factory towns such as Detroit is that customers who use an employee discount to buy a vehicle are not charged the local marketing group fee, says Gordon Stewart, president of Stewart Management Group in Harper Woods, Mich.
Typically, on a nonemployee purchase the factory adds 1 percent to invoice price, which goes to the local marketing group. Therefore, if 80 percent of a dealer's business comes from GM employees, only 20 percent of his sales bring in advertising dollars, he says.
"We've always had a lower budget than Ford dealers," Stewart says. Stewart says Ford puts an advertising charge in its employee pricing program. GM led dealers to believe it would instigate such a change last fall, he said.
"With the health issues and other labor problems, it got back-burnered, and there are now bigger issues for GM to tackle," Stewart says. "But some dealers aren't patient."
Dewar says the problem is GM does business differently in markets with a large number of employees. He admits GM must continue to "refine" that process.
Rogin says the employee pricing puts dealers in factory towns at a significant disadvantage. He says it's the No. 1 issue factory-town dealers in local marketing groups have with GM. He knows it's on "the table."
Rogin says he is patient with GM because he knows that getting employees to pay more to help support local marketing for dealers would have to be negotiated with the UAW.
You may e-mail Jamie LaReau at [email protected]