Aegis media agency Carat has won General Motor‘s global media review, landing the $3 billion consolidated buying and planning account.
“We wanted a media-agency partner with the sophistication to leverage global marketing opportunities,” said GM global chief marketing officer Joel Ewanick in a statement. “Carat has an innovative approach to drive significant marketing value and their service model has been tailored to align well with our global and regional brands. They are uniquely positioned to help us form strong media partnerships and drive significant global efficiencies.”
The account will be run globally by Martin Cass, and be overseen in the U.S. by Carat president Doug Ray.
The selection followed a review by the third-largest global advertiser, as ranked by Ad Age’s DataCenter. The DataCenter estimates that in 2009, GM spent $3.37 billion on global media. In its March 2011 10-K, the company reported worldwide advertising costs of $4.26 billion in calendar 2010.
GM’s global marketing team – helmed by Ewanick – lead the review, with the help of search consultancy R3:JLB. A decision is still pending on a creative review for GM’s biggest brand, Chevrolet. The two massive pitches were launched in the back half of the year with an eye toward savings and efficiency for the carmaker.
Ewanick told Automotive News that the automaker expects to see a reduction in expenses of millions of dollars or more merely by reducing the number of marketing partners it works with around the world. Prior to the review, the company worked with 40 agencies worldwide, and more than 50 worked on Chevrolet worldwide. Media-buying duties in India and China were not included in the review.
In the final leg of the process, GM heard pitches from four agency holding companies. Due to regional conflicts, two of the four contenders created teams at the holding-company level. Carat , which had managed the account in Europe, competed against Omnicom Media Group, Interpublic Group of Cos. (the incumbent in Latin America and South America) and Publicis Groupe’s Starcom (the U.S. incumbent).
The matter of conflicts added complexities to the review, but didn’t slow down the process. Within Omnicom, auto clients include Nissan, Porsche, Mercedes-Benz and Mitsubishi. IPG’s Universal McCann works with Chrysler and BMW in the U.S., while Initiative works with Hyundai’s namesake and Kia brands in the U.S. and in various global markets such as Germany and Australia. UM ran the majority of the business in South and Latin America – in South America, it supported Colombia, Chile, Argentina and Ecuador. In partnership with creative shop McCann, it managed the media business in Venezuela, Peru, Uruguay and Paraguay.
In its 10-K, GM reported that of the $5.1 billion spent on worldwide “advertising and sales promotions,” GM North America accounts for $3.4 billion, GM Europe $0.8 billion, GM International Operations $0.6 billion, and GM South America $0.3 billion. The automaker spent about 67% of its 2010 worldwide advertising and sales promotion money in North America.
Tripling its billings and regional footprint with GM gives a huge boost to Carat ‘s business, and it’s a huge influx of billings for the Aegis network, which recently sold research group Synovate.
In 2006, Carat ‘s parent Aegis won the $750 million account in Europe from UM. Though it’s a hefty sum that hasn’t wavered much, the debt crisis likely has put the stability of the business to the test. But the marketer is undergoing change in the region. The automaker announced last month that after a 37-year GM career, Nick Reilly, president of GM Europe, has elected to retire in March 2012. Karl Stracke will succeed Reilly as president of GM Europe, effective Jan. 1. There’s fresh leadership at Carat as well. Martin Cass, former Carat North American CEO, has yet to announce his new role within Aegis after a shakeup a few months ago that promoted Doug Ray to U.S. president.
The results of the review deal the biggest blow to Starcom , which had a very strong year in 2011 but will now begin 2012 with a sizable loss. In May 2005, the automaker moved its $3.5 billion U.S. media-buying account from IPG’s GM Mediaworks into Publicis’ Starcom MediaVest Group, Chicago. The move consolidated GM’s U.S. media services within Starcom , whose GM Planworks unit since 2000 was handling the automaker’s U.S. media planning. In 2009, the team eliminated the standalone unit and moved the account within the firm’s standard operations under president and buying chief Mike Rosen.
For IPG’s UM, it means the loss of a sizable budget and growth opportunity in the Latin American auto market. The loss will make a dent. A story in the Los Angeles Times reported that “in Brazil, the region’s top market, more than 3.5 million cars and light trucks were sold last year – up 86% compared with 2006. Its economy is growing fast and wages are rising.” However, the holding company could hold onto the buying in Brazil, where media is supported by the creative shops as a government mandate.
Omnicom doesn’t stand to lose anything on the media side, as the holding company’s GM relationship is on the creative side, with Goodby Silverstein & Partners, which handles North American creative duties for Chevrolet. The media group likely remained a contender due to the creative relationship, as well as the personal relationship that could have formed during Ewanick’s stint at Nissan and Porsche, both currently global media clients at Omnicom. According to the Ad Age DataCenter, Omnicom shops had worked with GM’s former Chrysler units since 1926, when Dodge Brothers Corp. hired the Ross Roy agency (acquired by Omnicom in 1995 and folded into BBDO in 2001).
In June of 2009, after huge, spiraling losses and drastic drops in market share, GM went bankrupt, despite a multi-billion-dollar federal bailout. Tens of thousands of jobs were lost, wages and benefits slashed, but a “new GM” rose from the ashes; for all of 2010, the company made $4.7 billion, compared to the $4.4 billion loss in 2009.
GM’s forward thinking since pulling out of bankruptcy – a new CEO in Dan Akerman and Ewanick’s appointment as CMO – has registered a huge hit in the subcompact Chevrolet Cruze, which has been the No. 1-selling compact in the U.S. for months, thanks in part to inventory and supply problems facing its usual Japanese competitors, Toyota and Honda.
Ewanick has consistently emphasized product-differential marketing – what he calls “swim lanes” – to define brand identity. “We have to be very strict about it,” he said in an Automotive News interview recently. “If not, we run this risk of going back to where we were in 1983. You could easily see how you go back to badge engineering if you’re not careful.”
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