DETROIT General Motors will dismantle the local marketing group (LMG) concept that it has used since 2000 and create what it calls local marketing associations (LMA) to replace it.
The LMAs will give dealers total control over the creative content of their local advertising. Under the past plan, local dealer groups were required to use advertising created by their brands national agency.
Well end the LMG process, and now the ad agencies will work for the dealers and not report to the manufacturers, Brent Dewar, GM vice president of field sales, service and parts, told Automotive News. Were passing the control to the dealers.
Theyll have more creative say in the process. It might mean more work for them, but we think theyre up to it.
The change is the result of months of discussions between the company and dealers about how local marketing could generate more retail sales. A sub-committee of the National Dealer Council, made up of dealers and GM executives, came up with the new plan.
Dealers who chose to participate in an LMA will have two options the turn key program or customization, Dewar says. Turn key means the dealers chose to maintain the relationship with that brands current ad agency. So Chevrolet dealers who opt for this will use Campbell-Ewald. But now Campbell-Ewald reports to the dealers, not the factory, in terms of creating local advertising.
The customization option allows LMA dealers to use a different advertising agency. The benefit either way is (the LMA) allows the marketing to be more local, Dewar says.
The LMG structure will continue until March 31. Then in April, GM will help administer the transition to the LMA process, Dewar says.
Dealers contribute a fee to help fund the LMGs. Dewar would not say if the fee would change. Presently, the fee typically amounts to 1 percent of sticker price, excluding shipping. Dewar says the cost to dealers might rise if the LMG chooses a different ad agency.
Customizing will cost you more and that will be more out of pocket, but if thats their priority, were allowing them to choose that, Dewar says. Today they dont have that choice.
Web and retail calendar
GMs 2008 marketing budget will be higher than this years budget, Dewar says. He declined to give specific figures, but Dewar says GM will use the additional money to commit more financial resources to help dealers go digital.
GM will help LMA dealers build up Web advertising and gather sales leads from Internet shoppers. GM will provide those dealers with Web elements such as links and building a Web site.
Well provide the Web connectivity, so thats a big investment, Dewar says.
Another difference is that GM will now plan part of its retail calendar around dealers local events. That means if a dealer group in Texas wants to do an event during the state fair, GM will enhance it with either more incentives or some special marketing.
Its a lot more work this way bottom up rather than top down but the goal is to be more effective, Dewar says.
Dealers wanted control
Many GM dealers have complained about the lack of creative input they are allowed in the current LMGs. In fact, some dealers chose to not join the LMG or have withdrawn from them because of frustration over this issue. Dealers who worked on the changes hope the new LMA process will inspire more dealers to join.
This goes to the heart of those concerns, says Duane Paddock, co-chair of the National Dealer Council and owner of Paddock Chevrolet in the Buffalo, N.Y., area. If the dealers want to go outside the turn key program, they have the ability to do that. Entrepreneurs are individuals who like to be in control.
William Bridges, another member of the LMG subcommittee, says many dealers are split on whether to customize their ads with new agencies or use the brands existing agencies. That will likely vary by region, says Bridges, who owns Capital Cadillac in Atlanta. For example, in some markets localizing ads is more necessary, such as Texas where truck sales are emphasized more than they would be on the East coast.
Paddock says local control will generate floor traffic and improve sales.
There are many different advantages, Paddock says. We can go to market faster. As a group you have the ability to move quicker. If you have that creative control, you can make that change in a faster period of time.