DETROIT -- General Motors CEO Dan Akerson often talks about his desire to reduce cost and complexity. The latest example: GM is chopping the number of its global marketing agencies from more than 100 to just a handful.
GM projects that the consolidation will save $2 billion over the next five years, a company spokesman said last week, confirming a figure that GM executives earlier had cited for Wall Street analysts.
In coming days, GM is expected to name a few major agencies that will get nearly all Chevrolet's creative ad duties, as the automaker sheds most of the 70 or so companies that do Chevy work around the globe.
That's part of a broader effort that in January resulted in GM awarding most of its $3 billion media-buying and planning activities to one firm: Aegis Group's Carat unit of London. That move also shed dozens of agencies.
The projected $2 billion in savings from streamlining Chevy advertising and GM's media-planning efforts represents, on average, $400 million a year. That's about 10 percent of GM's global advertising expenses of $4.48 billion last year. Some of the savings will be plowed back into the marketing budget, the spokesman said, but he declined to say where GM will boost spending. He also declined to say which agencies are in the running for the Chevy work.
Joel Ewanick, GM's global marketing chief, has overseen the agency overhaul. Last year, Ewanick told Automotive News he wants GM's marketing apparatus to operate as one unit, rather than a patchwork of regional departments.
Ewanick is consolidating Chevy's ad work as part of a broader plan to speed the growth of GM's flagship brand overseas and establish it as a true global player.
GM doesn't break out ad spending by brand, but Chevrolet accounted for more than 60 percent of the automaker's unit sales in 2011. In the United States alone, GM spent $1.1 billion on Chevy advertising last year, according to Kantar Media North America, a New York company that tracks ad spending.
The ad-agency shake-up also underscores Akerson's mandate to cut marketing and engineering costs in an effort to increase profit margins. GM officials have said they want to boost pretax margins to 10 percent, which would match the world's most profitable automakers, from 6 percent last year.
In a research note last week, RBC Capital Markets analyst Joseph Spak said GM still has plenty of opportunities for cost cutting, nearly three years after its bankruptcy restructuring.
"GM had been operating in 'crisis mode' for so many years, that basic blocking and tackling was neglected," he wrote. "Additional cost savings and efficiencies are still possible and GM has put better controls and processes in place to realize them."