Problems at General Motors, Ford Motor Co. and the Chrysler group spell trouble for the three big holding companies that run the automakers' advertising agencies.
- Omnicom Group's largest global revenue account is DaimlerChrysler AG, which is cutting costs from Stuttgart to Detroit.
- WPP Group's biggest customer is Ford, which is in the midst of a massive restructuring aimed at enabling the company to compete with surging automotive brands from Asia.
- Interpublic Group's top client is GM, which is struggling with a shrinking market share and mounting financial losses.
Interpublic's revenue from GM rose to a record $502 million last year, according to an Advertising Age analysis.
WPP hasn't disclosed its 2005 revenue from its largest account. But its compensation from Ford in 2004 approached a record $633 million, the analysis shows.
Omnicom may be hitting the wall on fees. Its revenue from DaimlerChrysler last year was flat at $419 million.
"Any supplier to (the automakers) is at risk," says John Casesa, a longtime Merrill Lynch auto industry analyst who now runs an independent consulting firm. "It's no different whether the suppliers create advertising or water pumps. It's quite clear that Detroit needs to shrink dramatically."
The car companies are pressing their ad agencies to cut costs and improve efficiency.
WPP is moving the Detroit operations of its agencies - including JWT, Ogilvy & Mather and Y&R - into a single complex near Ford headquarters.
Early this year, Omnicom cut hundreds of jobs at the Chrysler group's main ad agency, BBDO Worldwide in Troy, Mich.
It's not all bad news. U.S. automakers are performing well in some international markets.
GM, for example, sold more vehicles outside the United States than at home in 2005. That means business for global ad agencies.
Last year, Interpublic's McCann Erickson helped GM launch Chevrolet in China.
You may contact Bradley Johnson and Jean Halliday at [email protected]