General Motors' media-buying agency is changing the way it does business with local TV stations.
GM Planworks says it is eliminating "share deals." Such agreements place the bulk of GM's money for local TV advertising with the same handful of stations -- generally large network affiliates -- in each market year after year. GM spends hundreds of millions of dollars annually on regional TV spots.
Instead, GM Planworks is encouraging all TV outlets in a market, both broadcast stations and cable systems, to bring GM their best offers.
"Our partners understand that this is an opportunity to build business and were focused and listening to what we were asking of stations," GM Planworks said in a statement. "Our approach will result in a more robust marketplace for GM's local media investments."
The new system takes effect in the second quarter of 2006. It also affects the spending GM Planworks handles for local dealer spots.
Share deals guaranteed a TV station a minimum share of GM's ad business. In return, the station agreed not to air other automakers' ads in a commercial segment that included a GM spot.
The stations also agreed to give GM extra commercial time. That time sometimes was worth an additional 15 to 20 percent on top of the ads GM bought.
In some cases, share deals made it difficult for a station to accept commercials from other automakers. The bonus spots became very expensive. But stations that didn't have share deals often were prevented from building their business with GM.
Share deals also limited GM's ability to advertise on stations whose ratings improved or whose viewers matched the target audience for a particular vehicle.
In place of the share deals, GM Planworks expects all TV stations to compete for GM business. Price efficiency will be a key factor. GM says it also is looking for creative deals that engage potential vehicle buyers, such as exclusive sponsorships of programs.
GM is cutting its national advertising budget by more than $200 million this year. GM Planworks officials did not say whether GM's spending on regional TV advertising will change as well.
TV industry sources say that in some local markets, GM's spending in the first quarter has been flat. In others, they add, it is down as much as 40 percent.