General Motors, the nations third-largest advertiser is getting ready to shift about half of its $3 billion budget into digital and one-to-one marketing within the next three years.
And as GM goes, so goes the entire automotive industry -- the leading advertising category that pumped some $9.42 billion into the ad economy last year.
The digital goal is to go well beyond the banner -- GM spent $197 million in online ads last year, according to TNS Media Intelligence -- to encompass gaming, search, mobile and a broad array of interactive applications, according to several executives close to the automaker.
In the last few years GM has shifted several hundred million dollars from TV and print to digital and one-to-one, and that trend will not only continue but accelerate, said the executives.
The clearest sign yet of the automakers plans came in the last couple of weeks with changes at its dedicated media agency GM Planworks.
First Dennis Donlin, longtime general manager and president of the agency, left the shop. He was replaced a few days later by Ken Taylor, who was previously executive vice president-group client leader at sibling Starcom USA, Chicago.
Taylor has been tasked not just with leading the agencys efforts on behalf of GM, but also with reintegrating Planworks into the rest of Starcom MediaVest Group.
Laura Desmond, CEO of Starcom MediaVest Group for the Americas, declined to comment on specifics of the move.
As GM has streamlined and got more agile, it seemed only appropriate to move from a siloed business approach to a more flexible, nimble approach thatd allow them to access all our centers of excellence, she said. She denied this meant a total disbandment of Planworks, noting that no offices would close.
More clout for GMs resources
The idea, according to Desmond and Betsy Lazar, GM director-advertising and media operations, is to break down walls at Planworks, which until now has been a self-contained business unit for GM. With the changes, the unit can share the resources of the entire SMG Group. That means GM will be able, for example, to tap the expertise of MediaVests branded entertainment division, run by Brian Terkelson.
Itll also be able to take advantage of SMGs buying and planning clout, and tap MediaVest and Starcoms top researchers. Also, importantly, itll allow Digitas and SMG to work closely together on digital planning and execution for the automaker.
SMG will now work with GM, much like the way it works with Procter & Gamble or Coca-Cola, bringing a range of resources to bear.
Mark LaNeve, vice president of vehicle sales, service and marketing for GM in North America, declined to talk numbers in terms of GMs media strategy, saying the automaker doesnt yet know what its 2008 ad budget or allocation by media will be.
Like all major marketers, weve moved into digital media in a big way, he said, but the other media types are still very important and will still be a big part of our mix.
But most executives whove worked with GM or other major automakers said that a pattern is developing whereby TV and print are deployed for launches in order to raise awareness, but more of the continuous branding and sales activity is shifting online. Thats taking place as automakers and many of their dealers accept that the purchase process increasingly begins, and sometimes even effectively ends, on the internet.
Bad news for traditional media
At a time when a slowing economy is taking a toll on advertising, the prospect of billions of dollars fleeing TV, print, newspapers, outdoor and radio is unwelcome, to say the least.
According to TNS Media Intelligence, the nations auto industry spent $2.53 billion on network TV last year, a figure which has been steadily declining since 2004. The same holds for magazines, which saw spending fall to $1.69 billion last year from $2.07 billion in 2004.
The worse news: Brent Dewar, vice president of field sales, service and parts for GM in North America, told Advertising Age last December that the marketer will try to persuade its regional dealer ad groups to shift their focus to digital vs. spot TV starting this spring after the dealer co-ops, which spend some $500 million annually, are revamped.
Hyundai Motor America is doubling its online ad spending this year over 2007, according to Joel Ewanick, vice president of marketing, who declined to offer specific figures.
Online is getting to the point where it may be more important than the 30-second TV spot, he said.